Lucapa's Lulo Mine To Start Operating In Two Years

(IDEX Online) – Lucapa Diamond Co. plans to start an Angolan mine in about two years that may surpass the country’s biggest diamond producer, Catoca, in price per carat.

The Lulo deposit about 700 kilometers (435 miles) east of Luanda, the capital, could be even more valuable than Catoca, the world’s fourth-largest kimberlite mine, judging by four stones that were sold for an average price of $6,533 per carat, said Lucapa Managing Director Miles Kennedy. That compares with about $100 per carat for Catoca diamonds.

“Beyond doubt from what has washed off the kimberlites into the ancient river channels suggests that the prize once farmed and delivered is going to be substantial,” Kennedy told Bloomberg. “This is a long, scientific game and we’re not trying to over-promote it at this stage, but the early finds are definitely there.”

Angola is encouraging foreign investors to explore for diamonds in the country to further boost its position as one of the top five producers in the world.

It has reduced taxes and state ownership requirements and opened new areas for exploration.

Lucapa should get a license to mine alluvial stones from the 3,000 square-kilometer (1,158 square-mile) Lulo concession by the end of this year, Kennedy said. It may hold 500,000 carats, according to company documents.

A license for the kimberlite pipe will come after more testing in the next two years, Kennedy said. It’s too early to determine output rates, he said.

In May the company recovered four diamonds of “good shape and color” weighing 1.85 carats during the first two weeks of using a new processing unit.

“The potential is there” to be bigger than Catoca, Kennedy said. “There’s no other prospect in the world which has been delivering diamonds of this caliber and value. None. Not one.”

Lucapa has 40 percent in the mining venture, while the Angolan government’s Endiama has 33 percent and closely held Rosas e Petalas SA has the rest. Exploration and production agreements with the government have been extended by two years to May 2016, for both alluvial and kimberlite stones, according to the documents. Previous rules usually gave Endiama about half of most mines.

The Catoca mine produces about 70 percent of Angola’s diamonds by volume. The mine produced 6.5 million carats in 2012, generating sales of $575 million.

Angola produced 9.36 million carats last year valued at $1.28 billion, behind Botswana, Russia and Canada, according to the Kimberley Process.