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
- The scoping and mine design studies on the Upper K4 (“UK4”) Block have
been completed and confirm the potential for commercial ramp up from
underground kimberlite mining. This can start in H1 2015, six months ahead
of schedule, with steady state production of 30,000 tonnes per month
achievable by H2 2015.
- Drilling of the UK4 block is ongoing and to date a mining block totalling
approximately 1.5 million tonnes of kimberlite has been outlined which can be
mined by bottom up longhole open stoping.
- Ongoing microdiamond analysis continues to confirm the UK4 Block contains
high-grade kimberlite with the potential to yield up to 60 carats per hundred
tonnes (“cpht”) of ore.
- A revised budget and schedule has been adopted to fund development of the
UK4 Block from within existing project finance facilities.
- Overall mine development costs to date are averaging R37,051/m against a
budget of R35,327/m.
- Installation of the underground conveyor belt system has commenced and is
on schedule to be used for mining of the UK4 Block.
- Plans to complete an updated resource statement have been rescheduled so
that results from a bulk test of kimberlite extracted from the UK4 Block can be
incorporated. This is now expected to be issued in Q1 2015.
- Mining of tailings slowed during the quarter as the surface earth moving fleet
was diverted to building an additional surface dam in preparation for early
production of kimberlite from underground.
- Diamond recoveries for the three months ended 30 June 2014 totalled 6,102
carats at a recovered grade of 6.32 cpht.
- This month a 15.2 carat clean white octahedral diamond was recovered from
the tailings, the largest gem diamond the Company has recovered to date.
- The de-grit circuit has been commissioned and is operating efficiently.
- Diamond sales for the six months to 30 June 2104 totalled 14,583 carats at
an average price of US$62 per carat.
Underground Development
As we reported last quarter, 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 block
caving. For these reasons, the UK4 Block is considered a high priority development
target, and the zone where underground production drilling will now concentrate.
During the three months ending 30 June 2014, the Company’s 74%-owned
subsidiary Lace Diamond Mines (Pty) Limited (LDM) adopted a revised underground
development schedule and budget which aims to bring forward the ramp up of
commercial production from underground kimberlite mining by six months into H1
2015. The accelerated mining development will be financed from within existing
project finance facilities.
To achieve mine production from the UK4 block, 1,149m of waste development and
880m of kimberlite development is planned over the next 12 months at a budgeted
cost of R75 million (R37,000 per metre). Development not common to both mining of
the UK4 Block and the 47 level block cave has been rescheduled to occur after
mining of the UK4 Block commences.
Overall mine development costs to date are averaging R37,051/m against a budget
of R35,327/m. The 5% over spend is largely a result of rising operating costs on the
Company’s underground mining fleet. The cost increases are a result of increased
tyre wear in the final uphill sections of the decline development and higher diesel,
repairs and maintenance costs as waste hauling distances increase. The current
winter months are also the peak period of the year for electricity tariffs in South
Africa.
Management considers there is scope to reverse this cost increase and has instituted
operational efficiency projects in mining, maintenance and procurement to improve
productivity and reduce costs. However, until any improvements are achieved, a new
development budget of R37,000/m has been adopted for the UK4 development going
forward which can be accommodated from existing contingencies.
Approximately 55,000 tonnes of kimberlite will be mined as part of the UK4
development which will be processed in batches in a controlled bulk test supervised
by MPH Consulting. The recovered diamonds will be valued and sold as part of the
Company’s established sales cycle. The resulting grade and carat value will allow for
an upgraded SAMREC compliant resource statement to be issued in Q1 2015.
Management considers it more meaningful to delay the updated resource statement
to incorporate the bulk test results than to issue an interim estimate based on
microdiamond analysis alone. Revenue generated from the diamond sales during
development and bulk testing will be credited to development costs.
Underground drilling of the UK4 block continued during the quarter, and
approximately 600 kg of core samples were submitted for microdiamond analysis.
Results received to date continue to confirm that recovered grades of up to 60 cpht
can be expected from the K4 kimberlite.
Scoping and mine design studies have been completed based on approximately 1.5
million tonnes to be mined from the block above the 365m level which is in addition to
the existing geological resource. The studies recommend bottom up longhole open
stoping as the mining method and estimate that steady state production of 30,000
tonnes per month can be achieved by H2 2015, with the potential for this to double
after development and conveyor belts for the 47 level block cave are installed past
the 365m level. Mining and processing costs at the initial production rate are forecast
at R169/t.
The design and detailed drawings for the underground conveyor belt system have
been completed under budget. Installation of the conveyor belt is underway and is
scheduled to be commissioned in H1 2015 in time for accelerated mining of the UK4
block. The Company has experienced no labour issues and continues to hire the
personnel it requires. The labour force at 30 June 2014 totalled 287. Safety remains
a major priority for the Company, with the lost time injury frequency rate for the year
to date standing at zero.
Tailings retreatment
In the three months to 30 June 2014, a decision was taken to reduce tailings re-
treatment processing rates and divert the surface earth moving fleet to building
another 150,000 cubic metre surface process water dam. This activity needs to be
completed in the dry winter months ahead of rains commencing later in the year.
As a consequence, the plant processed 96,490 tonnes of tailings in the period
against a budget of 205,000 tonnes. Pleasingly, diamond recoveries totalled 6,102
carats as recovered grades were 6.32 cpht against a budget of 5 cpht. This month
the Company recovered a 15.2 carat clear white octahedral diamond from the dumps
(photo to be published on website shortly). This is the largest gem diamond
recovered to date from the tailings and demonstrates the plant’s efficiency in
recovering larger diamonds as well as the smaller size fractions.
The reduced production rate in the last quarter allowed for the de-grit circuit to be
installed, which is efficiently removing the fine sand fraction and allowing for
approximately 90% of the tailings diamonds to be recovered from 60% of the tonnes
previously reporting to the dense media separation plant, thereby reducing operating
costs per tonne and improving the stone size average and carat value of the
diamonds recovered.
Diamond sales (+1.5 mm) for six months ended 30 June 2014 totalled 14,583 carats
for proceeds of $909,611, equating to an average sales price of $62 per carat. At the
reduced production rate, the tailings retreatment operation is breaking even and the
plant is now operating in the optimal configuration for processing kimberlite from
development as this ramps up over the next six months.
Demand for good quality rough diamonds remains relatively strong and prices are 5-
10% over the prices achieved in December 2013. 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.
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 number 0374, has reviewed and approved the
technical content of this news release.
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 Sponsor
Sasfin Capital (a division of Sasfin Bank Limited)
Megan Young
Tel: +27 11 445 8068
31 July 2014
Johannesburg
Sponsor
Sasfin Capital (a division of Sasfin Bank Limited)
Date: 31/07/2014 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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