Wrap Text
Lace Diamond 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" or "the Company")
LACE DIAMOND 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 development work into Upper K4 (UK4) mining block continues to be on
schedule for commencement of mining operations in H1 2015.
- Members of the Association of Mineworkers and Construction Union (AMCU)
commenced industrial action at the Lace Mine last week, however
development work is continuing in the UK4 block with non-AMCU employees.
- The AMCU strike is in regard to its demand for the appointment of two full-
time salaried shop stewards. However, the Company notes that AMCU
already have five appointed shop stewards at the Lace Mine.
- It is estimated that for every two weeks the strike continues, it will add one
week to the development timetable.
- The strike action has highlighted inefficiencies in work place practices which
will be investigated and addressed when the striking workers return as
development productivity has improved 87% per person per shift since the
strike commenced.
- Mine development costs to date are averaging R39,135 per metre against a
budget of R37,000 per metre.
- Workplace safety remains a priority for the Company, and the Lace project
has been awarded its first 1,000 fatality-free shift trophy by the SA Mine
Health and Safety Council.
- Installation of the underground conveyor belt system is unaffected by the
industrial action and is on schedule to be used for mining of the UK4 block.
- Underground drilling and bulk testing of the UK4 block remains on schedule
for the release of an updated resource statement in Q1 2015.
- Mining of tailings halted during the three months to 30 September 2014 while
the surface earth moving fleet completed the construction of an additional
water storage dam.
- Diamond recoveries from tailings for the nine months ended 30 September
totalled 17,981 carats at a recovered grade of 5.94 carats per hundred tonnes
(cpht) against a budget of 5.00 cpht.
- Diamond sales for the nine months to 30 September 2014 totalled 16,505
carats at an average price of US$65 per carat.
- Beneficiation of the 15.2 carat diamond recovered from the tailings in July has
been completed and the two brilliant cut diamonds (5.33 carats and 2.07
carats) are ready for sale.
Underground Development
During the three months ended 30 September 2014, the Company’s 74%-owned
subsidiary Lace Diamond Mines (Pty) Limited (LDM) commenced implementation of
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 is being financed from
within existing project finance facilities.
Tunnel development costs to date are averaging R39,135/m against a revised budget
of R37,000/m. The over spend continues to be the result of increased operating costs
on the Company’s underground mining fleet. However, cost saving initiatives,
including the introduction of chains to the tyres of the underground loaders and
computerisation of maintenance scheduling, are starting to show a positive impact
which should be reflected in improvements in the cost per metre rate going forward.
The overall mine development expenditure is within budget.
Workplace safety remains a priority for the Company, and the Lace project has been
awarded its first 1,000 fatality-free shift trophy by the SA Mine Health and Safety
Council.
Underground drilling and bulk testing of the UK4 block remains on schedule for the
release of an updated resource statement in Q1 2015.
AMCU strike action
AMCU members employed at Lace commenced strike action on 23 October 2014 as
a consequence of management's refusal to employ two full-time salaried shop
stewards. The Commission for Conciliation, Mediation and Arbitration has granted
AMCU a certificate for the strike, which means it is a legal and protected strike under
the South African Labour Relations Act. However, the 'no work, no pay' rule will
apply. AMCU is the majority union at the Lace mine and already has five appointed
shop stewards in the workforce.
Until such time as the strike ends, development tunnelling in the UK4 mining block
and processing of development kimberlite will continue with non-AMCU members.
The first week of the strike has highlighted certain workplace inefficiencies which will
be investigated and addressed when the striking workers return. Year to date
productivity on development tunnelling prior to the strike action was 1.57 tonnes per
person per shift with three crews. Productivity since the strike commenced is 2.87
tonnes per person per shift with one crew, an improvement of 87% per person.
It is estimated that for every two weeks the strike continues, it will add approximately
one week to the development timetable. Installation of the underground conveyor belt
is unaffected by the strike action and is scheduled to be commissioned in H1 2015 in
time for mining of the UK4 block.
Tailings retreatment
In the three months ended 30 September 2014, a decision was taken to stop tailings
re-treatment processing to allow the surface earth moving fleet to complete the
construction of another 150,000 cubic metre surface process water storage dam in
preparation for earlier than scheduled kimberlite mining. This activity was
successfully completed in the dry winter months ahead of the summer rains. Water
pumped from underground provides around 55% of the Lace processing plant
requirement, with the balance coming from surface rainwater runoff.
All final modifications to the plant have been completed for treatment of development
kimberlite from the UK4 block, which is now being trucked to surface.
Diamond sales for the nine months ended 30 September totalled 16,505 carats for
proceeds of $1,072,212. The average year to date sales price of $65 per carat is 5%
above our forecast for the year.
The 15.2 carat diamond recovered from the dumps in July was sold into the
Company’s Johannesburg beneficiation joint venture at $5,000 per carat. The stone
yielded two brilliant cut diamonds of 5.33 carats and 2.07 carats which are currently
awaiting sale. The Company will receive 50% of the profit from the sales of the
polished gems.
Short-term demand for rough diamonds has softened in response to slower polished
sales and tightening liquidity as a number of banks which finance the cutting and
polishing sector have moved to reduce their exposure to the sector. Longer-term, the
outlook remains strong as world economies continue to recover.
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
30 October 2014
Date: 30/10/2014 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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