Skip to main content

Market Overview

MOU SIGNED FOR POWER LINE FUNDING

Share:

PRESS RELEASE

KOPANE DIAMOND DEVELOPMENTS Plc
("Kopane" or the "Company")

POWER LINE FUNDING UPDATE

17 August 2009

MEMORANDUM OF UNDERSTANDING SIGNED FOR POWER LINE FUNDING

Kopane Diamond Developments Plc today announces that a Memorandum of Understanding ("MOU") has been signed
between the Company's subsidiary, Liqhobong Mining Development Company ("LMDC"), Lesotho Electricity
Company ("LEC"), Standard Lesotho Bank Limited ("SLB") and the Government of the Kingdom of Lesotho
("GOL"), in respect of funding of the construction of an electrical power line to the Company's mine at
Liqhobong in Lesotho.

The MOU contemplates funds being lent by SLB to LEC to fund the construction of the power line from LEC's
sub-station at Ha Lejone, which is approximately 30 kilometres from Liqhobong. In addition, LEC and the GOL
will contribute funds towards the cost of the project and the GOL has agreed to provide a sovereign
guarantee to SLB in respect of the loan funding. LMDC will service the loan and its repayment on terms to
be agreed. The cost of grid electricity represents a significant saving over diesel generated power.

The power line project to connect Liqhobong to the electricity grid system is the first phase of a larger
electrification plan to be undertaken in the region by LEC which will provide electricity to communities
along the line route.

The engineering specifications of the power line, together with environmental impact assessment studies,
have been completed in readiness for the start of construction in the second half of 2009, once funding is
in place. It is expected that this will enable grid electricity to be connected to the mine site by the
first half of 2011. The availability of grid power will also mean that it would become more practicable to
undertake a significant expansion of the Company's Satellite Plant from its current capacity of 425,000
tonnes per annum.

The Company suspended production from its Satellite Plant operations in December 2008 as a result of
sharply falling prices available for rough diamonds due to the present world economic situation. Between
October 2008 and the end of the first quarter of calendar 2009, rough diamond prices fell by some 30 - 50%;
since then market indications are that prices have improved and are gradually recovering but not, as yet,
to previously prevailing levels. However, the Company remains confident that the medium and long term
outlook for rough diamond prices is likely to be robust in the face of projected supply shortages.

Frank Scolaro, Chairman of the Company, commented today: "The signing of the MOU is an important step in
the process of funding and constructing the power line to provide electrical power to Liqhobong, which is
necessary to enable the Company to put in place its plans for new plant which will allow the recovery of
over one million carats per annum from the Main Pipe at a much lower cost. We are very pleased with the
support given by all parties to this project, which is a tribute to the future of mining at Liqhobong and
which represents a significant benefit to the people of Lesotho and the shareholders of Kopane."

About Kopane

Kopane is a diamond producer, developer and explorer with core projects at Liqhobong in Lesotho, Southern
Africa. The Liqhobong operations are operated by LMDC which is 75% owned by Kopane and 25% by the GOL. As a
result of the successful development of the operations at Liqhobong and the delineation of a substantial
geological resource in the Main Pipe, LMDC was, in February 2007, granted a 20 year mining licence for the
Main Pipe by the GOL.

LMDC has produced over 350,000 carats of diamonds since operations commenced at the end of 2005. The
principal development project is the Main Pipe which has an indicated and inferred resource of nearly 30
million carats and has the potential to produce at a rate of over one million carats per annum.

Kopane also has a joint venture to explore for diamonds in Finland, managed and financed by Mantle Diamonds
Ltd.

The Company is listed on AIM (and is also traded through the Plus Market), ticker symbol: KDD.

For further information contact:
Kopane Diamond Developments Plc Threadneedle Communications
Frank Scolaro, Chairman Laurence Read/Beth Harris
James Cable, Finance Director +44 (0) 207 653 9850
+44 (0) 20 7963 9590

Finncap
Matthew Robinson/Ed Frisby
+44 (0) 20 7600 1658

e-mail: ir@kopanediamonds.com
website: www.kopanediamonds.com

 

Related Articles (AIM + FOR)

View Comments and Join the Discussion!