Lucapa Diamond Company has unveiled plans to restart production at its Merlin diamond mine in teh Northern Territory, targeting a phased investment totalling $25 million.
The project aims to deliver 314,000 carats over the next five years and includes a new exploration programme to uncover additional deposits.
Phased Approach to Merlin Mine Restart
The Merlin mine restart will proceed in two phases. The first phase, scheduled to last 18 months, will target ore extraction from five shallow open pits. This phase requires an investment of $15 million and is expected to produce 67,000 carats valued at $415 per carat. The estimated total revenue for this phase is $42 million.
The second phase involves vertical pit mining in the Gawain pit, a process that will take 27 months to complete at a cost of $10 million. This stage is forecasted to yield 247,000 carats at an average price of $545 per carat, generating an estimated $204 million in revenue.
Funding Strategy in Progress
Lucapa is considering several financing options to fund the project. Potential strategies include establishing offtake agreements, raising debt, selling royalties on production, or forming a joint-venture partnership. Discussions with prospective funding partners are ongoing.
Lucapa has commenced an airborne survey of the Merlin site—the first such survey in 25 years. The company aims to identify further kimberlite pipes and base metal deposits, taking advantage of the site’s proximity to Glencore’s McArthur River zinc and lead mine.
“We believe our large landholding is highly prospective for more premium-quality diamond deposits and may also host other minerals including base metals, given its proximity to Glencore’s McArthur River zinc and lead mine and the same associated geological structures,” said Alex Kidman, managing director of Lucapa.
The results of the survey are expected in the first quarter of 2025, with the findings potentially influencing future expansion plans.
