Lucapa Diamond Company has put its feasibility study for the Merlin mine on hold while it weighs a smaller-scale, lower-cost alternative in light of a prolonged softening in demand for rough.
The plan will take into account lower production and cost options for the Australia deposit, which Lucapa acquired in 2021, it said Monday. The options under examination include using existing resources such as the trial mining plant and other equipment to get Merlin into production.
The miner forecast last year Merlin would bring in revenue of $1.66 billion for 2.1 million carats over a 14-year period. However, Lucapa sees the move as part of a wider strategy to prioritize its funds in the near term, given the current state of the diamond market and the economic environment, it noted.
Work on the smaller-scale development option is already at an advanced stage, as it uses some of the existing information from the original feasibility study, the company explained.
“Lucapa is in the fortunate position to be debt-free and have two profitable producing mines,” said Lucapa CEO Nick Selby. “For the next 12 months, we will focus on further strengthening our balance sheet. Rathen than raise capital to fund the original Merlin development, we will focus on a lower-cost pathway to development using existing resources. We believe that this is in the best interests of shareholders.”
Lucapa expects the new plan to be finalized next year, it added.
Main image: The Merlin mine. (Lucapa Diamond Corp.)