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Paragon Diamonds: Lemphane Operational Update

Contributed by Fox-Davies Capital

Paragon Diamonds announced an operational update for the Lemphane diamond project.

Paragon continue to make good progress at Lemphane. The valuations are very positive, the drilling is progressing well and the preliminary scoping study indicates a low stripping ratio of 2:1 on over 20Mt of ore. The Mining lease Application is under preparation with mining planned to start in late 2013. This mining will enable Paragon to get a bulk sample of around 100,00t of kimberlite. This should be large enough to confirm the parameters for detailed metallurgical design of the processing plant and give a large enough parcel of diamonds, between 2 and 3,000cts to accurately determine valuations. Being a low grade kimberlite, when measured by carats per 100t but with very large and valuable diamonds, a large bulk sample is required to determine these parameters with any certainty.

A diamond valuation undertaken by WWW International Diamond Consultants Ltd, on a limited parcel of 114 carats of diamonds produced from bulk sampling at Lemphane. These results were very encouraging indicating the presence of large, high value diamonds in the kimberlite with the highest value stone, a 3.71 ct sawable stone values at over $2,300/ct. The company will commission WWW to model the diamond prices once the bulk sampling has produced a large enough parcel of diamonds (circa 1000cts).

At Lemphane, drilling of deep delineation holes, which commenced in January, is well underway, with the first hole approaching 200m depth in kimberlite. The drilling programme is intended to ensure that there is continuity of the kimberlite at depth and increase ore resources. The intention is to define a resource of around 50Mt to a depth of 400m.

Work on the scoping study is progressing, and a preliminary open-pit design has demonstrated the ability to mine in excess of 20Mt of kimberlite to a depth of -180m, at a waste: ore ratio of under 2:1. On this basis, independently calculated mining costs of below US$10 per tonne are indicated. The study has also identified appropriate life-of-pit waste rock and process plant tailings disposal solutions, at minimal haul distance from the pit, and in environmentally stable locations.