The study contemplates an open pit and vertical pit development, which will require an initial capital estimate of A$96-million ($69m) to develop. The pre-tax net present value is A$343 million ($245m) and the internal rate of return of 59%.
Lucapa’s managing director Stephen Wetherall said that study confirms the “great potential” of an innovative hybrid methodology to reopen Merlin, which will be the company’s third diamond mine.
Merlin is located in Australia’s Northern Territory, about 720 km south-east of Darwin. It will be the country’s only producing diamond mine , following the closure of Rio Tinto’s iconic Argyle mine in 2020, after 37 years in production.
It was operated by Rio Tinto until it was bought by North Australian Diamonds, later renamed Merlin Diamonds, in 2004. But the company did very little commercial processing and was wound up last May.
Lucapa currently has two operating diamond mines in Africa — Lulo, in Angola, and Mothae, in Lesotho.
