Wrap Text
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 tunnel development remains close to schedule and under budget;
- The owner-operated mining fleet continues to provide over 90% availability and is
operating under budget.
- The new boxcut is completed and the twin declines have commenced from the base
of the ramp.
- The underground conveyor belt system is on schedule and within budget with
installation of the first leg about to commence.
- Tailings re-treatment has been optimised to maximise dump treatment rates, diamond
output and reduce operating costs. Changes to bottom size screen panels mean that
90% of the forecast diamond production is now being recovered from less than 50%
of the head feed tonnage. The first sale of diamonds from tailings will now take place
after the Indian Diwali festival in November.
- A diamond beneficiation joint venture has been signed to give the Company the
option of sharing in the polishing profits of large and high value diamonds which fall
outside the Laurelton Offtake Agreement. The first diamond beneficiated has already
netted the company 185% of its reserve price.
- Initial drilling of the Bulge area from underground confirms the potential for additional
kimberlite between the 260m and 470m levels which is not currently in the mine plan.
Underground development
The Company’s 74%-owned Lace Diamond Mines (Pty) Limited (LDM) continues to ramp up
underground development close to schedule and within budget.
Underground tunnel development is currently 11% complete versus a scheduled 12%, and is
being achieved at 95% of the budgeted cost per metre. Until now, underground development
has been limited to two crews operating three shifts while blasting of the temporary vent raise
which by passes the blockage in the vertical shaft was completed. With the completion of this
vent raise and installation of surface exhaust fans this week, multi blast conditions now exist
underground and the rate of development can increase to more than double the current rate
of 200m per month.
The underground mining fleet continues to provide over 90% availability, with operating costs
running at 87% of budget. The mining fleet rebuild costs are running at 95% of budget, with
the last of the dump trucks and underground loaders (LHDs) required to achieve maximum
underground development rates currently being assembled in the workshop and scheduled to
be commissioned by year end. With the completion of these two 20 tonne dump trucks and
two LHDs, the full development and production fleet of five trucks, five LHDs and four face
drilling rigs will be in place. In addition, an order has been placed with Sandvik for a new long
hole drilling rig required for drilling the undercut levels of the block cave. This drilling rig is
scheduled for delivery in the second half of 2014 and the rand-euro exchange rate has been
fixed.
The new life of mine (LOM) boxcut was completed in September and development of the twin
declines from the base of the ramp has commenced. Steel sets for reinforcement of the portal
area are now being installed.
The design and detail drawings for the underground conveyor belts conveyor belt system is
on schedule (65% complete) and within budget. Fabrication of the first leg of the conveyor
belt to be installed is 95% complete and installation is about to commence. Procurement and
exchange rate protection on all long lead time and imported items is 100% complete.
Tailings retreatment
The 1.2 million tonne per annum dense media separation (DMS) plant at Lace was
successfully re-commissioned during August with material from the 3,000,000 tonnes of
tailings remaining from mining activities which took place between 1902 and 1931. The
refurbished plant will now allow seamless transition from tailings re-treatment to processing of
kimberlite from underground development.
During the commissioning process, management undertook a series of trials to optimise the
bottom size screen panels on the plant with the aim of maximising throughput and operating
margins on the tailings.
Particle size analysis of the dump material overlaid with diamond recoveries and sales figures
from 2008-2009 tailings re-treatment showed that approximately 50% of the dump material is
smaller than 1.5 mm and that the lower value diamonds recovered in the 1.2–1.4 mm range
accounted for less than 10% of total diamonds recovered by weight and less than 3% of
revenue.
As a result of this analysis, modifications were made to increase the bottom screen cut size in
the plant which is now recovering 90% of the diamonds previously recovered from less than
50% of the front end tonnage. In September, the plant recovered 1,264 carats from 22,740
tonnes run of mine (ROM) but only 9,288 tonnes were delivered to the DMS. This recovery
represents a recovered grade of 5.6 carats per hundred tonnes (cpht) ROM, which is 12%
higher than the original estimate. However, with between 50-60% of the material being
screened out ahead of the DMS, management forecast operating costs can be reduced from
R32 per tonne to R22 per tonne, once three shifts are operating.
Further, the diamonds now being recovered are coarser in size distribution and are therefore
expected to fetch a higher average price per carat than the diamonds previously recovered
from tailings. In order to confirm these figures, the Company has postponed the first sale of
tailings diamonds until after the Indian Diwali holidays in November. While the sales revenue
generated from these first parcels is not material to the overall Lace development budget, it
will give management confidence that the tailings optimisation has the potential to significantly
improve operating margins on this activity which was previously expected to operate at only a
small profit margin.
The plant is on schedule to process at full capacity) from one shift in November (34,000
tonnes of tailings per month), with a second shift scheduled to start in December and a third
shift by January. Plans are in place to increase tailings throughput to more than 150,000
tonnes per month in the first half of 2014 by introducing in-pit screening. If recoveries are in
the order of 5 cpht, the in-pit screening has the potential to increase production to 7,500
carats per month which will allow a significant proportion of the tailings to be re-treated prior
to the underground achieving full production.
Diamond Beneficiation Joint Venture
LDM has signed a diamond beneficiation joint venture agreement with Distinctive Choice
1235 cc, a small Johannesburg cutting and polishing factory which specialises in the
manufacturing of large, high quality diamonds. Under the terms of the joint venture, LDM has
the option of processing some of the larger, high quality diamonds which fall outside the
Offtake Agreement signed in January with Tiffany & Co. subsidiary, Laurelton Diamonds, Inc
(Laurelton Agreement). On those diamonds which are selected for beneficiation, profits over
and above the reserve price of the rough diamond are to be shared equally between the two
parties.
The first stone manufactured under the joint venture was an 8.36 carat stone E/F colour white
diamond recovered from the dumps prior to the Laurelton Agreement which had a reserve
price of $3,100 per carat. From this diamond, three brilliant cut diamonds are being
manufactured and the colour has improved during polishing. The largest stone is a 2.02 carat
internally flawless D coloured diamond with no fluorescence, which has been sold for
$68,000. LDM’s profit share on this stone alone has increased the return to 185% of the
reserve price. Over the life of the mine, the beneficiation joint venture has the potential to
provide LDM with significant additional income, give important insight into how the Lace
diamonds perform during polishing and assist with beneficiation targets under the Mining
Charter.
Bulge drilling
Drilling of the Bulge area continues from inside the kimberlite, with 2,000m of core drilling
planned to be drilled by the end of the year. The drilling rig is a new LM-30 drill rig purchased
from Boart Longyear. Completion of the first holes has confirmed that the Bulge area has the
potential to host significant additional kimberlite between the 260m and 470m levels which is
not currently in the mine plan. The drilling will form the basis of a resource upgrade for the
Bulge area during the first half of 2014 and thereafter a feasibility study on the economics of
mining this area.
31 October 2013
Contact details:
DiamondCorp plc
Euan Worthington, Chairman
Tel: +44 (0) 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)
Angela Teeling-Smith
Tel: +27 118097794
Date: 31/10/2013 09:00:00 Produced by the JSE SENS Department. The SENS service is an information dissemination service administered by the JSE Limited ('JSE').
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