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Lemphane Lesotho (80%) (Gov’t of Lesotho holds 20%)
Summary Project Details
Project area: 6 Ha

1) Located 27 km from the world-class Letšeng diamond mine operated by Gem Diamonds (64Mt at ~ US$2,500/carat)
2) Last remaining kimberlite to be developed in Lesotho
3) High value/large stone mining model in place
4) Initial 48Mt kimberlite tonnage estimate (in house estimate of 1 million carats) – significant upside potential
5) Current in-house estimated value of US$1.8 billion
6) Open pit modelled for the first +15 years followed by 10 years underground
7) Established operational and regional infrastructure
8) Mining licence secured
9) Targeted to commence Stage 1 production H1 2015

The Lemphane Kimberlite Pipe Project is located in Lesotho, one of the world’s most diamondiferous countries. Lemphane is one of, if not the last remaining kimberlites to be developed in the world and has an excellent address being located close to the world class Letšeng pipe, which is Lesotho’s largest with 64.7Mt of kimberlite and a US$2,500 per carat average value of stones recovered. Paragon is advancing Lemphane towards Stage 1 production by H1 2015 and sees the Project developing into a large stone/ high value diamond mine, where the majority of revenues are generated by a small number of large exceptionally high value stones.

A bulk sampling programme carried out by the Company in 2013, has demonstrated the potential for Lemphane to hold large and valuable diamonds: 300 carats were recovered at Lemphane at an average value of US$358/ct, with the largest stone at 8.9 carats valued in excess of US$2,400/ct. As Lemphane is developed, the Company expects the average value of its diamonds to rise, as was the case at Letšeng, and as a result the stage 1 production phase will serve to further define the resource at Lemphane. An independent size frequency and revenue modelling report backs up management’s view that as larger volumes of kimberlite are processed, the proportion of larger diamonds recovered will improve, which will increase the average value of the diamonds recovered at the project. The report, which was based on 300 carats of diamonds recovered during the 2012/3 bulk sampling programme, highlights that preliminary diamond values from Stage 1 production will be between US$930 – US$1,025/carat for grades of 2 carats per hundred tonnes, while the size frequency study indicated that 12% of carats will be over 9 carats. Significantly, the report predicts the recovery of exceptionally large sized diamonds of 100+ carats, even in the early stages of production.

Stage 1 production at Lemphane will cover a two year period during which 1 Mt of kimberlite will be mined and processed out of the estimated 48.6 Mt of kimberlite at the site. The Company expects at least 20,000 carats will be recovered in Stage 1 at an estimated average value of US$930 per carat, more than double that recovered during the bulk sampling programme. Stage 1 (2015 – 2017) production is forecast to generate revenues of US$9m – US$10m per annum. Stage 2 (2017+) will see production ramped up to 3Mt/year within a three year period and peak production is expected to hit 65,000 carats per year of high value diamonds. Based on existing estimates of 48.6Mt of kimberlite, the open pit Life of Mine is forecast to be in excess of ten years, and that does not take into account the potential for the subsequent underground development of at least a further 25Mt at Lemphane. With all this activity in mind, the year ahead is set to be a highly exciting period for Paragon, as the Company looks to unlock the substantial in-situ value at Lemphane, which it currently estimates at US$1.8bn.

Click here to view Lemphane geophysical signature and site detail (click to open/close)

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