Lucapa inks 35 year diamond mining licence pact

Lucapa Diamond Company Limited has signed agreements for a 35 year licence to mine the exceptional world-class alluvial diamonds at the Lulo Diamond Concession in Angola’s Lunda Norte diamond province.

The agreements were signed by Lucapa and its mining partners Endiama and Rosas & Petalas signed the diamond mining licence agreements in a ceremony held in the Angolan capital of Luanda late on November 21, 2014). The mining licence covers a 218km2 area within the 3,000km2 Lulo Diamond Concession, which includes more than 50kmof the Cacuilo River, its valleys and terraces.

The company in a release stated that the mining licence is the culmination of six years of continuous investment in exploration and bulk sampling programs for kimberlite and alluvial diamonds at Lulo and represents the most critical milestone yet toward Lucapa’s goal of building a premium diamond mining house.

Apart from the mining licence agreement, Lucapa has negotiated a new shareholders’ agreement with Endiama and Rosas & Petalas as well as By Laws for a newly-incorporated diamond mining company. Lucapa retains a 40 per cent shareholding in the new mining company and continues as sole operator of the Lulo diamond mine. The new agreements also include pre-emptive rights for Lucapa and its fellow shareholders.

Some of the key points of the mining licence agreements are: Licence is for an initial 35 year term, the maximum period under Angola’s new Mining Code; Licence includes rolling 10 year extension options; Lucapa is able to repatriate its share of dividends and capital gains; Licence agreement enables Lucapa to be repaid all past and future alluvial exploration and; development expenditures from free cash flow; Favourable tax and royalty regime including 25 per cent corporate tax rate and 5 per cent royalty rate; Ability for continuous (24 hour) mining operations; Lucapa’s kimberlite and alluvial exploration licences at Lulo remain valid and in place until May 2016. Lucapa may re-apply for extensions to these exploration licences towards the end of their terms, in line with the Mining Code.

“We have been recovering some of the best diamonds in the world from both our alluvial and kimberlite bulk exploration activities at Lulo and we look forward with tremendous excitement to recovering more of them when mining commences on a commercial scale. The A$6 million of Lulo diamonds recovered from our bulk sampling at Lulo and sold have achieved average selling prices of close to A$7,000 per carat, which is extraordinary when compared to the average global sale price of just US$120 per carat. These diamonds include large exceptional stones, rare Type IIa diamonds, fancy pinks and fancy yellows making Lulo a truly unique and exceptional concession. We would like to thank the Angolan Government and our partners, Endiama and Rosas & Petalas for their continued support, which is evidenced by the fact that the 35 year diamond mining licence we have negotiated is for the maximum period allowable under Angola’s Mining Code and has occurred within five months of our formal licence application being lodged,” said StephenWetherall, Lucapa Commercial and Development Executive Director.