Paragon Diamonds has completed mining lease terms and is set to commence work on stage one production at its Lemphane Kimberlite project in the Kingdom of Lesotho.
The Lemphane Kimberlite project is one of the five known diamondiferous kimberlite pipes in the region and the only one that has no historic mining activity.
The lease has been granted for an initial ten-year period and is renewable for three consecutive ten-year periods. It was issued under section 33 of the Mines and Minerals Act 2005.
The approved programme of stage one production will target a minimum of 500,000t a year production rate to recover around 10,000ct a year, at a minimum average value of $750 per ct.
Stage one production is also intended to produce a maiden inferred resource at Lemphane and a definitive feasibility study for the second stage.
The Lemphane's mining lease will be held by Meso Diamonds, which is 85%-owned by Paragon and 15%-owned by local Basotho shareholders.
Under the terms of the mining lease deal, the Lesotho Government will hold 20% of the project, of which 10% will be free carried and the other 10% will be funded through project dividends.
The mining lease also includes provisions to maintain a 15% local Basotho shareholding.
An initial royalty of 4% will be payable to the government upon production, and is subject to review within five years.
Paragon Diamonds chairman Martin Doyle said that stage one production is expected to increase the average value per carat, build on the robust economics and provide a bankable mineral resource.
"Having previously recovered stones of up to 8.9ct with values in excess of US$2,400 per carat, we have already demonstrated Lemphane's potential to yield large high-value diamonds," Doyle said.