Wrap Text
Lace Diamond Mine Project update
DiamondCorp plc
(Incorporated in England and Wales)
(Registration number 05400982)
(SA company registration number 2007/031444/10)
AIM share code: DCP JSE share code: DMC
ISIN: GB00B183ZC46
("DiamondCorp" or “the Company”)
LACE DIAMOND MINE PROJECT UPDATE
DiamondCorp, the Southern African diamond mine 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 Free State province of South Africa.
Highlights
- Development work in the Upper K4 (UK4) block is now on schedule for
commencement of mining operations in H2 2015. This will be four months ahead of
the original plan but delayed a few weeks from H1 2015 due to the impact of
industrial action in Q4 2014.
- Development productivity has improved 15% compared to the period before the strike
as a result of changes to workplace practices implemented after the industrial action
ended.
- The underground conveyor system is 80% fabricated and on site, 30% installed and
remains on schedule for commissioning in H1 2015.
- The Company has taken delivery of the new Sandvik 421 drill rig required for
longhole drilling on the production levels in the UK4 and 47 Level block cave.
- Underground core drilling of the UK4 block continues to delineate significant volumes
of K4 (high grade) kimberlite above the 365m level. Bulk testing and an updated
resource statement will be completed in early Q2 2015.
- Mine development costs to date are averaging R40,764 per metre against a budget of
R37,000 per metre.
- The additional water storage dam and surface drains installed last year means that
sufficient water has been collected for 2015 processing requirements despite the third
year of below average rainfall.
- Diamond recoveries from tailings for the year ended 31 December 2014 totalled
18,354 carats at a recovered grade of 5.96 carats per hundred tonnes (cpht) against
a budget of 5.00 cpht.
- Diamond sales for the year ended 31 December 2014 totalled 21,700 carats at an
average price of US$63 per carat, slightly higher than expected.
Underground Development
During the three months ended 31 December 2014, the Company’s 74%-owned subsidiary
Lace Diamond Mines (Pty) Limited (LDM) continued with the implementation of a revised
underground development schedule and budget which aimed to bring forward the ramp-up of
commercial production from underground kimberlite mining by six months into late H1 2015.
As a consequence of the six week industrial action by members of the Association of
Mineworkers and Construction Union (AMCU) in October and November, production will now
commence in H2 which will still be four months ahead of the original plan.
During the strike, a number of underground workplace inefficiencies were identified which
were addressed when the workforce returned to work. As a consequence of these changes, a
15% improvement in development productivity has so far been achieved.
Tunnel development costs to date are averaging R40,764/m against a revised budget of
R37,000/m. The overspend continues to be the result of increased operating costs on the
Company’s underground mining fleet and delays resulting from the AMCU strike. The benefits
of maintenance and repair cost saving initiatives reported previously are currently being offset
by cost increases on spare parts resulting from the weaker South African rand. As yet, the
impact of international oil price falls has not been reflected in diesel costs in rand terms. The
mine has not been affected by Eskom power load shedding. The Company notes a growing
delay in VAT refunds from the South African Revenue Service but the overall mine
development expenditure remains close to budget.
The Company is pleased to have taken delivery of its new Sandvik 421 drill rig. This rig has
the capacity to drill longholes up to to 54m in length and 127 mm in diameter and will be used
to complete all the longhole drilling on the production levels in the UK4 and 47L block cave.
Operator and artisan training is now underway, and the rig will shortly go underground, where
it will be tested and commissioned ahead of drilling the slot drive and troughs for the first
stope in the UK4 block.
Workplace safety remains a priority for the Company. The Lost Time Injury Frequency Rate
(LTIFR) for 2014 was 0.72, slightly up on 0.63 in 2013, but still significantly below the average
for mining operations in South Africa. Lace had two lost time injuries and 61,303 lost time
injury free shifts during 2014. Management aims for zero harm to its employees and targets a
LTIFR of less than 0.5.*
Underground core drilling of the UK4 block continues to delineate significant volumes of K4
(high grade) kimberlite above the 365m level. The drilling, bulk testing and release of an
updated resource statement will now be completed in early Q2, rather than Q1 as previously
planned.
Tailings retreatment
In the year ended 31 December 2014, the Company processed 308,047 tonnes of tailings
and recovered 18,534 carats of diamonds at an average recovered grade of 5.96 cpht,
compared with a budget recovered grade of 5 cpht.
Tailings re-treatment processing stopped in September as the surface earth moving fleet
relocated to construct 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. The construction of the new
dam, plus additional surface drains has allowed the mine to capture all of the water required
for 2015 kimberlite processing.
An additional large surface dam is planned for construction in 2015 which will store sufficient
water for full production requirements during low rainfall years. The timing of the re-
commencement of tailings retreatment this year will be determined by the dam building
schedule.
Diamond sales and market
Diamond sales for the year ended 31 December 2014 totalled 21,700 carats for proceeds of
US$1,361,778. The average sales price was $63 per carat, slightly ahead of forecast for the
year. Profit share on two diamonds which were beneficiated from a 15.2 carat stone
recovered from tailings and the sale of fine diamonds added a further $58,544 to income for
the year.
Short-term demand for rough diamonds continues to be soft in response to slower polished
sales and tightening liquidity as a number of banks which finance the cutting and polishing
sector reduce their exposure to the sector. Longer-term, the outlook remains positive as world
economic growth recovers and demand for diamonds outstrips supply.
The Company has not factored diamond price increases into its Lace project model since the
250m level bulk test diamonds were valued in 2012 at $160 per carat. Nonetheless, in light of
the current market weakness, the Company is currently modelling the Lace project at $150
per carat. At the current rand/dollar exchange rate, this gives cash operating margins of 81%
on the UK4 Block and 71% on the deposit overall.
* 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. PwC
in their 2014 SA Mine Review show LTIFR in South African gold mines averaged 4.2,
platinum 2.1, coal 1.2 and other commodities, including diamonds, 1.1.
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)
Sharon Owens
Tel: +27 11 809 7500
29 January 2015
Date: 29/01/2015 09:00:00 Produced by the JSE SENS Department. The SENS service is an information dissemination service administered by the JSE Limited ('JSE').
The JSE does not, whether expressly, tacitly or implicitly, represent, warrant or in any way guarantee the truth, accuracy or completeness of
the information published on SENS. The JSE, their officers, employees and agents accept no liability for (or in respect of) any direct,
indirect, incidental or consequential loss or damage of any kind or nature, howsoever arising, from the use of SENS or the use of, or reliance on,
information disseminated through SENS.
Sharenet Sites 
