Nov 27, 2014

Lucapa Gets 35-year Diamond Mining Licence in Lulo, Angola

Lucapa Diamond Co Ltd has signed agreements for a 35-year licence for diamond mining at the Lulo Diamond Concession in Angola’s Lunda Norte diamond province with its partners Endiama and Rosas & Petalas, a private Angolan company. It thus makes an important transition from exploration to becoming a diamond miner.

The mining licence is the culmination of six years of continuous investment in exploration and bulk sampling programmes for kimberlite and alluvial diamonds at Lulo.

The three partners formed a newly-incorporated diamond mining company in which Lucapa retains a 40% shareholding and continues as sole operator at the site. Thirty-five years is the maximum period allowed under Angola’s new Mining Code and also includes rolling 10-year extension options.

The licence covers a 218 km2 area at Lulo and includesmore than 50 km of the Cacuilo River, its valley and terraces, where Lucapa has been recovering exceptional world-class diamonds through bulk sampling.

Lucapa had successfully identified extensive areas of diamond-bearing Calonda Formation gravels, hosting diamonds of exceptional size, quality and value within the 218 km2 mining licence area. These include fancy pink and fancy yellow gems, a significant population of Type IIa diamonds and exceptional large stones of up to 131.4 carats.

Lucapa Commercial and Development Executive Director StephenWetherall said, “The A$6 million of Lulo diamonds recovered from our bulk sampling at Lulo and sold have achieved average selling prices of close to A$7,000 per carat, which is extraordinary when compared to the average global sale price of just US$120 per carat.”

The agreements enable Lucapa to recover 100% of its alluvial exploration and development expenditure (past and future) fromfree cash flow as well as to repatriate dividends and capital gains.

Lucapa’s original kimberlite and alluvial exploration licences remain in place until May 2016 and the company may re-apply for extensions to these exploration licences towards the end of their terms, in line with the Mining Code.