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Lace Mine Development Update
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", “the Group” or "the Company")
LACE MINE DEVELOPMENT UPDATE
DiamondCorp, the Southern African diamond development and exploration company, is
pleased to provide the following update on activities relating to the 47 level block cave
development at the Lace mine in the Free State province of South Africa.
Highlights
- Treatment plant modifications completed on schedule and within budget. Plant
commissioning underway with tailings retreatment to re-commence next week. Initial
sale of tailings diamonds planned for September/October
- Underground development activities ramp up on schedule and under budget.
- Successful recruitment of experienced underground personnel continues on
schedule, allowing underground development to move to three shift continuous
operations next month.
- The new boxcut excavation was circa 75% complete at the end of May and costs are
significantly under budget.
- Owner-operated mining fleet providing over 90% availability. Two additional
underground loaders and a 20 tonne dump truck rebuilt in-house on schedule and
within budget during the current quarter.
- The EPCM contract for the design, fabrication and installation of the underground
conveyor belts has been let and the design work is 100% complete. Major conveyor
component orders have been placed and exchange rates on imported items fixed.
- Underground diamond drill rig delivered and 2,000m of underground core drilling
planned before year end, including definition of the bulge.
Treatment Plant Commissioning
The Company has completed the required modifications to the 1.2 million tonne per annum
Lace processing plant to allow seamless transition from treatment of the tailings to
underground kimberlite. Plant commissioning is underway and re-treatment of tailings will
commence next week. The modifications were completed on schedule and within budget.
Tailings re-treatment will operate initially on a single shift until the market price for the Lace
tailings diamonds is established with the first sale anticipated in September. If prices achieved
result in sufficiently attractive operating margins, the Company will look to increase to two
shifts and potentially three shift operations before year end as approximately 3.5 million
tonnes of tailings remain on site and available for processing. Tailings retreatment economics
should be assisted by the recent weakness in the South African Rand and the reported
improvement in diamond prices.
Development Activities April-June 2013
Surface and underground development activities accelerated in the period April to June.
Trackless mining crews focussed their blasting activities on upper level conveyor belt declines
and the loading loop on the 200m level. A handheld drilling crew advanced the 165m level
vent raise which will allow temporary ventilation for continuous blasting conditions down to the
470m level.
Crews achieved the scheduled development metres during the period with cumulative cost
per metre to the end of May c.15% under budget due to tight cost control and the operational
efficiency of the Company’s owner-operated mining fleet.
The Company continues to be successful in recruiting experienced underground personnel.
The total mine workforce now stands at 161 employees and underground development will
move to three shift continuous operations in July. Change houses sufficient to accommodate
more than 300 employees at full-scale operations will soon be completed.
Excavation of a new 66,000 bank cubic metre (bcm) boxcut which will provide the surface
entrance to the twin conveyor belt and services declines for the life of the mine is 75%
complete. The boxcut is three weeks behind schedule due to encountering more competent
ground earlier than expected which is slowing down the mining rate. This delay will have no
impact on the overall development schedule as the activity is not on the critical path and the
more competent ground is a positive with respect to mine portal stability. The boxcut
development is 40% under budget on a bcm basis, as a result of owner-operated fleet
efficiencies.
Mining fleet rebuild programme
The Company’s decision to develop a core competency in rebuilding in-house its heavy
equipment mining fleet is already yielding results in terms of operating efficiencies. The first
fleet of rebuilt underground trucks and loaders are providing better than 90% availability and
operating significantly under budget with respect to diesel consumption.
In the past three months, a 9.5 tonne underground loader, a 7.4 tonne low profile
underground loader and a 20 tonne underground dump truck have been completely stripped
and rebuilt in house on schedule and within budget. The Company’s heavy equipment
workshop is rebuilding these machines for between 25-50% of the price of new machines.
Two more loaders, two more 20 tonne dump trucks and a single boom face drilling rig are
next in line to be rebuilt.
Other activities
During the past quarter, the engineering, procurement, and construction management
(“EPCM”) contract for the underground conveyor belt design, fabrication and installation was
awarded. The design work is 100% complete and detailed drawings are now being generated
and verified. Orders have been placed for the major imported belt and drive components,
thereby fixing exchange rates.
The Company has taken delivery of a new Boart Longyear LM30 underground diamond drill
rig and a programme of 2,000m of underground core drilled is planned to be completed
before the end of the year. This drilling will be undertaken from inside the kimberlite to better
define margins of the bulge as well as the 47 level block cave area.
Corporate and administration
The Company’s AGM will be held at 2pm on Tuesday 2 July 2013 at the offices of City Group
plc, 30 City Road, London, EC1Y 2AG.
In addition to routine agenda items, shareholders are being asked to approve a change in the
nominal value of the Company’s existing shares. The interests of existing shareholders (both
in terms of their economic interest and voting rights) will not be diluted by the capital re-
organisation and neither will it impact on the number of ordinary shares in issue.
The Company currently has project debt facilities totalling R320 million (£21.3 million)
available to it which is sufficient to fully finance the 47 level block cave development at the
Lace Mine.
Contact details:
DiamondCorp plc UK Broker & Nomad
Paul Loudon, Chief Executive Panmure Gordon (UK) Limited
Tel: +27 56 212 2930 Dominic Morley/Adam James/Hannah
Euan Worthington, Chairman Woodley
Tel: +44 20 3151 0970 Tel: +44 20 7886 2500
Joint Broker JSE Designated Advisor
SP Angel Corporate Finance LLP Sasfin Capital (a division of Sasfin Bank
Ewan Leggat/Laura Littley Limited)
Tel: +44 20 3463 2260 Kim Dawson
Tel: +27 118097794
DiamondCorp Overview
The Lace mine (DiamondCorp 74% interest) contains 33.1 million tonnes of kimberlite with an
indicated and inferred resource to a depth of 855m containing approximately 13.4 million
carats at an average grade of 40.1 carats per hundred tonnes. At a carat value of $160 per
carat, the resource has an in-ground value in excess of $2.1 billion. The deposit will be mined
by block cave mining, with three caves planned over the next 25 years on the 47, 67 and 85
levels (at depths of 470m, 670m and 850m respectively). The kimberlite is open at depth, and
also contains a significant bulge between 250m and 360m depth with the potential to add
additional tonnage and diamonds not currently included in the resource statement.
The 47 Level block cave development is forecast to cost R286 million (£19 million) and
commence commercial production in the first half of 2015. The development is fully financed
through R320 million (£21.3 million) of project debt facilities provided by the Industrial
Development Corporation of SA, Tiffany & Co. subsidiary Laurelton Diamonds and
DiamondCorp convertible bonds.
24 June 2013
Johannesburg
Designated Advisor
Sasfin Capital
(A division of Sasfin Bank Limited)
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