Lucapa Raises Revenue Expectation for Merlin

RAPAPORT… Lucapa Diamond Company has upped its total revenue forecast for the Merlin mine over the next 14 years amid the increase in rough prices.

The Australian miner reevaluated its outlook based on the strong demand and low supply scenario currently playing out in the market, which has led to a 42% surge in the price of rough diamonds, it said Thursday.

Revenue for the life of mine will come to AUD 2.3 billion ($1.66 billion), according to the latest projection, rather than the AUD 1.6 billion ($1.16 billion) the company originally reported in December.

“The rough-diamond prices estimated in the scoping study…were based on…indexing historic rough prices achieved by previous owners Rio Tinto and Ashton up to 2003,” the company explained. “Post-publication, primarily due to an anticipated shortage in future natural rough-diamond production required to meet forecast retail consumption, the demand for natural rough diamonds has risen significantly and prices have increased rapidly.”

This price rise has prompted the company to update its estimates, it added.

In total, Lucapa expects to produce 2.1 million carats from Merlin over 14 years, though it believes it will be able to run the deposit for longer.

“There are clear opportunities to deliver additional value through mineral-resource extensions, underground development and exploration, as there are a significant number of anomalies on our tenements that have the potential to deliver new source discoveries,” added Lucapa managing director Stephen Wetherall.

Lucapa also owns the Lulo mine in Angola and the Mothae site in Lesotho, as well as the Brooking lamproite and Orapa exploration projects in Australia and Botswana, respectively.

Image: The Merlin mine. (Lucapa Diamond Company)