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Lace Mine Project Update
DiamondCorp plc
AIM share code: DCP & JSE share code: DMC
ISIN: GB00B183ZC46
(Incorporated in England and Wales)
(Registration number 05400982)
(SA company registration number 2007/031444/10)
("DiamondCorp", “the Group” or "the Company")
LACE MINE PROJECT UPDATE
DiamondCorp, the Southern African diamond development and exploration company, is
pleased to provide the following update on the underground development and tailings re-
treatment activities at the Lace diamond mine in the Free State province of South Africa.
Highlights
- Underground development remains close to schedule and within budget.
- The programme for installation of the underground conveyor belt system is on
schedule and fabrication of the first two legs has been completed.
- Surface piling for the raise boring of the life of mine vent shaft has been completed.
- The plant processed 149,957 tonnes of tailings against a budget of 140,000 tonnes in
the three months ending 31 March 2014.
- Diamond recoveries for the period totalled 6,953 carats at a recovered grade of 4.64
carats per hundred tonnes (cpht) against a budget of 5.00 cpht.
- The recovered grade in March was 5.81 cpht and April to date is 5.77 cpht.
- Diamond sales for the year to date have totalled 7,505 carats at an average price of
US$63 per carat.
- The 400 tonne per hour (tph) tailings sand screen is to be replaced with a
conventional de-grit circuit in May.
- Underground core drilling designed to better define the rim of the Main Pipe for
finalised cave layout and definition of the „Bulge? area has intersected significantly
more high-grade kimberlite on the eastern side of the pipe above the 345m level than
was projected in the original Lace geological model.
- This Upper K4 Block has the potential to add at least 1.0 million tonnes of additional
kimberlite to the Lace mine plan which could be mined, without the requirement for
additional project finance, while the 47 Level Block Cave development progresses.
- The Company remains on track for the commercial production ramp up from
underground kimberlite mining to commence in H2 2015.
Underground development
The Company?s 74%-owned subsidiary, Lace Diamond Mines (Pty) Limited (LDM) continues
to ramp up underground development close to schedule and within budget.
At the end of March, underground tunnel development was 21% complete versus a scheduled
24% (1,508m against 1,777m), and is being achieved at 95% of the project budgeted cost per
metre (R33,616/m against R35,327/m). Development rates were impacted during the period
due to mechanical breakdowns on face drilling rigs and heavy seasonal rains which caused
slippery roadway conditions on the boxcut ramp. The rains have now ceased, and the rigs are
again providing good availability.
Surface piling for the life of mine vent shaft was completed in the period, well ahead of
mobilising the raise bore due in the second half of the year.
Pleasingly, the underground mining fleet is providing 88% availability. The last underground
loader required for full production is currently being assembled and is scheduled for
completion within the current quarter. Operating costs are within budget for the Company?s
rebuilt trucks and loaders.
The design and detailed drawings for the underground conveyor belt system is on schedule
(95% complete) and under budget. Fabrication of the first two legs of the conveyor belt to be
installed is 100% complete and has been delivered to site. Fabrication of the third leg has
begun. There is a total of eight legs to the conveyor system, which will be progressively
commissioned between Q4 2014 and H1 2015.
The Company has experienced no labour issues and continues to hire the personnel it
requires. The labour force at 31 March 2014 totalled 287. The underground development is
now operating with three mining crews on a three shift basis. A fourth crew will be recruited
when additional development ends and the production level become available. Safety
remains a major priority for the Company, with the lost time injury frequency rate for the year
to date standing at zero.
The Company remains on track for the commercial production ramp up from underground
kimberlite mining to commence in H2 2015.
Tailings retreatment
Following adjustments to the bottom screen size cut reported previously, tailings retreatment
continued on two shifts in January and February, and three shifts in March.
During the period ended 31 March, the plant processed 149,957 tonnes of tailings against a
budget of 140,000 tonnes. Diamond recoveries totalled 6,953 carats at a recovered grade of
4.64 cpht against a budget of 5.00 cpht. Production in January and February was from the
oldest and lowest grade section of the dumps. The recovered grade for March was 5.81 cpht
and April to date is 5.77 cpht.
The 400 tph sand screen commissioned in February did not achieve the required
performance and has been demobilised from site. In accordance with the supplier contract,
the Company only paid for mobilisation and demobilisation costs. The Company is now
installing a conventional de-grit circuit which has the potential to increase tailings throughput
to 120,000 tonnes per month. This is expected to be commissioned in May.
Sales of diamonds from tailings recovery for 2014 commenced in February, with ten sales
scheduled for the year. Sales for the year to date (including carryover of year end stock)
totalled 7,505 carats for proceeds of $471,160. The average sales price of $63 per carat is in
line with our forecast for the year.
At current exchange rates, the budget grade and sales price, and operating costs after the
installation of the de-grit circuit, the tailings re-treatment is forecast to generate positive
cashflow of R9 per tonne.
Demand for rough has improved and prices have increased 5-10% over the prices achieved
in December. The Company is forecasting the market to be steady to modestly higher for the
balance of 2014, with potential for price strengthening in 2015 as world economies continue
to recover.
Underground drilling
Underground core drilling designed to better define the rim of the Main Pipe for finalised cave
layout and definition of the „Bulge? area, as previously announced, has intersected
significantly more high-grade kimberlite on the eastern side of the pipe above the 345m level
than was projected in the original Lace geological model. This block is predominantly higher
grade kimberlite (K4 hypabyssal, otherwise called coherent or CK kimberlite) and has thus far
been defined over an area of approximately 75m x 75m on the 250m level, and is being
actively delineated above and below to add to the resource base.
No kimberlite of any type above the 345m level is included in the current mine plan, as
definition drilling from surface was not possible due to the presence of old workings. This
Upper K4 resource drilling is now being completed from underground with the Company?s
own rig and drilling crews, under the direction of the Company?s independent consultants.
The Upper K4 Block now being defined has the potential to add at least 1.0 million tonnes of
additional kimberlite to the Lace mine plan which could be mined while the 47 Level Block
Cave development progresses.
In the current Lace geological model, the K4 kimberlite becomes volumetrically dominant
below the 500m level. Previous microdiamond analysis of the K4 kimberlite has predicted 57
cpht as recoverable in diamond sizes larger than 1.18mm. Microdiamond analysis of core
from the current drilling is underway and tunnels to independently bulk test the block are
being driven off the existing decline development. Kimberlite from the bulk test will start to be
processed in the third quarter of 2014 and be completed by year end.
Mining of the UK4 Block by conventional stoping could commence in the first quarter of 2015
and reach 30,000 tonnes per month by the third quarter of 2015. Development of the block
would be financed from existing project finance facilities. MPH Consulting Limited has been
appointed as the competent person with respect to the bulk test as well as the preparation of
an updated resource statement in the second quarter of 2014, based initially on the new core
drilling and microdiamond work, then subsequently on the bulk test.
Core drilling of the Bulge area provisionally indicates that the zone is largely lower grade
(volcanoclastic) kimberlite, meaning that the total recoverable diamond content is likely to be
significantly less than the UK4 Block. Mining of the UK4 Block has the potential to provide
significant additional cashflow which would allow the Bulge to be bulk tested and (if
warranted) financed from internally generated cashflow, whereas mining of the Bulge alone
would require additional project finance. Further, the UK4 Block has the potential to provide
high grade ore while the 47 Level Block cave is developed and matures and smoothes out the
potential lumpiness in tonnage which can occur in the early stages of caving. For these
reasons it is considered a high priority development target, and the zone where underground
production drilling will now concentrate.
Competent Person
Mr. Paul Sobie, P.Geo., President of MPH Consulting Limited, being an Independent
Qualified Person and a member in good standing of the Association of Professional
Geoscientists of Ontario, Membership # 0374, has reviewed and approved the technical
content of this news release.
30 April 2014
Contact details:
DiamondCorp plc
Paul Loudon, Chief Executive
Tel: +27 56 216 1300
Euan Worthington, Chairman
Tel: +44 7753 862 097
UK Broker & Nomad
Panmure Gordon (UK) Limited
Dominic Morley/Adam James
Tel: +44 20 7886 2500
JSE Designated Advisor
Sasfin Capital (a division of Sasfin Bank Limited)
Megan Young
Tel: +27 11 445 8068
Date: 30/04/2014 08:00:00 Produced by the JSE SENS Department. The SENS service is an information dissemination service administered by the JSE Limited ('JSE').
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