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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 under budget.
- The owner-operated mining fleet continues to provide over 90% availability and is
operating under budget.
- Steel sets are now being installed in the boxcut ramp to provide tunnel support before
the excavation is backfilled.
- The underground conveyor belt system is on schedule and the first leg for installation
has been delivered to site.
- Surface piling for the raise boring of the life of mine vent shaft has commenced.
- A 400 tonne per hour (tph) in-pit screening system which has the potential to increase
tailings throughput to 150,000 tonnes per month has been installed and is about to be
commissioned.
- Drilling of the Bulge area from underground continues to confirm the potential for
additional kimberlite between the 260m and 470m levels which is not currently in the
mine plan.
- The Company has experienced no labour issues.
- The weakening of the rand is forecast to have a positive impact on operating margins
and the Group debt position.
- Diamond sales for 2014 will commence next month with prices reportedly improving
by 5-10% since December.
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.
At the end of December 2013, underground tunnel development was 15% complete versus a
scheduled 16% (1,113m against 1,187m) and is being achieved at 94% of the budgeted cost
per metre (R27,470/m against R29,360/m). Hiring of an additional two mining crews is
underway and the full underground complement is expected to be reached by the end of
March.
The Company has experienced no labour issues and continues to hire the personnel it
requires. The labour force in December 2013 totalled 233 and is forecast to grow to
approximately 350 by the end of this year.
Safety remains a major priority for the Company, with Lace achieving a 64% improvement in
the lost time injury frequency rate (LTIFR) from 0.90 in 2012 to 0.55 in 2013. Management
aims for zero harm to its employees and targets a LTIFR of less than 0.5.*
Surface piling for the life of mine vent shaft has commenced and is expected to be completed
by the end of February 2014, well ahead of the raise bore contractor mobilising in the second
half of the year.
The underground mining fleet continues to provide over 90% availability, with operating costs
running at 95% of budget. The mining fleet rebuild costs are also running at 95% of budget.
The last two rebuilt 20 tonne low profile dump trucks required to achieve maximum
underground development rates have been commissioned on time. The last two underground
loaders are currently being assembled and are scheduled for completion next month.
Twin decline development from the base of the boxcut continues downwards to meet the
development tunnels coming up from the 92m level. To date, ground conditions in the upper
levels are more competent than those experienced in the exploration decline at a similar
elevation. Installation of the steel sets for reinforcement of the portal area is complete and
double sets are now being installed up the ramp of the boxcut. Once installed, timbered and
shotcreted, the boxcut will be partially backfilled and profiled with shallow batter angles.
The design and detail drawings for the underground conveyor belt system are on schedule
(85% complete) and under budget. Fabrication of the first leg of the conveyor to be installed
has been completed and delivered to site; fabrication of the second leg is 40% complete.
Tailings retreatment
Following adjustments to the bottom screen size cut reported previously, tailings retreatment
continued on one shift in October and two shifts in November and December 2013.
During the three month period ended December 31 2013, the plant processed 138,475
tonnes against a budget 140,000 tonnes and recovered 6,522.71 carats at a recovered grade
of 4.71 carats per hundred tonnes (cpht) against a budget 5 cpht. Mining during the latter part
of the period was in the oldest lower grade section of the dump to clear space for the
installation of a 400 tph in-pit high frequency sand screen.
The sand screen was installed in January and commissioning by the manufacturer Osborn is
about to commence. The screen has the potential to increase tailings throughput to 150,000
tonne per month. At an expected average grade of 5 cpht, the screen is forecast to increase
diamond recoveries from tailings retreatment to 7,500 carats per month and reduce plant
operating costs to R22/t on a three shift basis.
Diamond Sales
Diamond sales for 2014 will commence in February, with ten sales scheduled for the year.
The Company’s diamontaires in Antwerp report that demand for rough diamonds has
improved and that prices have increased 5-10% over the prices achieved in December 2013.
The Company is forecasting an average of $63/ct for its tailings goods in 2014, which would
give revenue of R35/t at an exchange rate of R11 to the dollar.
The 20% weakening of the rand since the middle of 2013 has resulted in potential tailings
retreatment margins increasing by 30% from a forecast R10/t to R13/t. The weaker rand also
has a beneficial impact on potential underground operating costs with forecast operating
breakeven grade falling from 10 cpht to 9 cpht after adjusting for the negative impact on
diesel price inputs. The Lace kimberlite grade ranges from 24 cpht in the upper levels to an
estimated 57 cpht in the lower levels of the pipe.
The weaker rand and stronger sterling also has a positive impact on the Group debt position
as the majority of the Company’s project finance is denominated in rand and reported in
sterling. Diamond sales being denominated in US dollars provide a natural hedge against the
weakening rand.
Bulge drilling
Drilling of the Bulge area continues from inside the kimberlite. At the end of December 2013,
a total of 1,220m of diamond core drilling had been completed. The nine holes drilled to date
continue to confirm 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 in the first half of 2014 and
thereafter a feasibility study on the economics of mining this area.
Contact details:
DiamondCorp plc
Paul Loudon, Chief Executive
Tel: +27 (0) 56 212 2930
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)
Leonard Eiser
Tel: +27 11 809 7738
* LTIFR is an industry standard calculation based on the number of lost time injuries
multiplied by 200,000, divided by the number of lost time injuries multiplied by 9. Lace had
one lost time injury in 2013 and 40,185 lost time injury free shifts during the year to 31
December 2013.
30 January 2014
Johannesburg
Sponsor
Sasfin Capital (a division of Sasfin Bank Limited)
Date: 30/01/2014 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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