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DMC - DiamondCorp plc - Lace Mine Development Costs
DiamondCorp plc
JSE share code: DMC
AIM share code: DCP
ISIN: GB00B183ZC46
(Incorporated in England and Wales)
(Registration number 05400982)
(SA company registration number 2007/031444/10)
(`DiamondCorp` or `the Company`)
LACE MINE DEVELOPMENT COSTS
DiamondCorp plc, the African diamond mine development and exploration company,
is pleased to announce the completion of its detailed review of full-scale mine
development costs and estimated life of mine operating costs for the Lace
project near Kroonstad in the Free State province of South Africa where
underground bulk sampling is now underway.
The results of the review are summarised as follows:
* Mining of the first block of kimberlite between the 26 and 33 levels (-
260m to -330m depth) is scheduled to be undertaken at a rate of 4,000
tonnes per day.
* The first block containing approximately 4.8 million tonnes of kimberlite
will be mined by sub-level stoping, followed by sub-level caving for the
estimated 27.5 million tonnes of kimberlite below the 33 level.
* Ore hoisting will be by conveyor belts to surface and the existing 6.5m x
2.5m vertical shaft will be used for upcast ventilation. This eliminates
the requirement to raise bore a new ventilation shaft.
* The introduction of conveyors has resulted in an increase in development
costs, but provides significant savings on life of mine operating costs
given the anticipated increases in South African electricity tariffs in the
years ahead. It has minimal impact on the development schedule.
* Three diamond selling prices were considered, all using an initial mining
grade of 24 carats per hundred tonnes (cpht) - a base case of US$120 per
carat, a middle case of US$140 per carat and an upper case of US$160 per
carat.
* Diamond grade is forecast to rise to 40 cpht after the first eight years of
mining when the deeper, higher grade CK (coherent) kimberlite is mined.
* A grade of 24 cpht results in annual production of 294,000 carats. A grade
of 40 cpht results in annual production of 490,000 carats.
* Approximately 400,000 tonnes of kimberlite is scheduled to be mined from
stoping development during the 17 months of mine development through to
November 2012 when full-scale commercial production is expected to be
reached.
* Diamond sales revenue from this kimberlite will contribute between
R90,000,000 (GBP8.04 million) and R116,000,000 (GBP10.35 million) towards
mine development costs, depending on grade and carat value.
* Net capital cost estimates to reach full production range from R100,000,000
(GBP8.9 million) to R126,000,000 (GBP11.3 million) depending on revenue
from diamond sales during development.
* Diamond revenue is estimated to be between R196 (GBP17.50) and R261
(GBP23.30) per tonne.
* Operating costs are estimated to be R105 (GBP9.38) per tonne, resulting in
an initial operating margin of between 46% and 60%.
* Initial project EBITDA is estimated to be between R79,000,000 (GBP7.1
million) and R159,000,000 (GBP14.2 million) per annum.
Commenting on the review, DiamondCorp CEO, Paul Loudon said: `The Lace mine has
the potential to be a significant cash generator for DiamondCorp with more than
25 years of mine life.
`At current strong diamond prices, the initial minimum operating margin is
expected to be a robust 46%, rising to very high levels if the diamond grade
improves with depth as forecast in the geological model.
`The 30,000 tonne bulk sample currently underway at Lace will determine the
initial mining grade and carat value at the top of the first mining block.
`We are pleased with the kimberlite we have extracted so far from the 26 level,
though initial mining rates have been hampered by the need to relocate the main
dewatering pumps from the 16 level to the 24 level and major component
breakdowns on a fleet of 30 tonne low profile dump trucks we have hired to
supplement our own fleet.
`These delays mean that while a preliminary grade and carat value will be
available this month, the final results will not be available until July.`
London
6 June 2011
AIM Nomad: Fairfax I.S. plc
AIM Brokers: Fairfax I.S. plc, Ocean Equities Ltd
JSE Sponsor: PSG Capital (Pty) Limited
DiamondCorp plc, Paul Loudon +44 20 7256 2651
Ewan Leggat/Laura Littley, Fairfax I.S. plc +44 207 598 5368
Guy Wilkes, Ocean Equities Limited +44 207 786 4370
John-Paul Dicks, PSG Capital (Pty) Limited +27 21 887 9602
Charmane Russell/Marion Brower, Russell & Associates +27 11 880 3924
Ana Ribero, Blythe Weigh Communications +44 020 7138 3206
Date: 06/06/2011 08:00:05 Supplied by www.sharenet.co.za
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