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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", “the Group” or "the Company")
LACE DIAMOND MINE PROJECT UPDATE
DiamondCorp, the Southern African diamond mining, development and exploration company,
is pleased to provide the following update on the underground development at the Lace
diamond mine in the Free State province of South Africa.
Highlights
- Development work in the Upper K4 (UK4) block remains close to schedule for
commencement of mining operations in the coming months. For safety reasons,
underground tunnel development is proceeding slower than planned in fractured
ground close to old workings.
- Processing of K6 kimberlite recovered from the production level drives continues and
processing of higher-grade K4 kimberlite has commenced. Controlled bulk test
sample work of the K4 unit continues with encouraging initial results.
- Blasting of the final near surface leg of the conveyer belt tunnel system has been
successfully completed to join up with the surface boxcut, providing clear tunnel
access for the conveyor belt installation from the production level to surface.
- The conveyor belt system has been 99% fabricated, on site, and 75% installed. Final
installation and commissioning has been delayed due to a Department of Mineral
Resources requirement to fit additional safety protection systems. This is not
expected to impact the critical path ahead of the mining ramp-up.
- The slower than planned development rate means mine development costs to date
are averaging R44,193 per metre against a budget of R37,000 per metre due to the
impact of fixed labour and electricity costs.
- Detailed studies progressed on options for introducing waste sorting systems in the
processing plant to optimise mining of the Lace kimberlites in the longer-term.
- The Company raised gross proceeds of £5.27 million from the issue of new shares
which provides sufficient working capital to fund commencement of commercial
mining operations at Lace as well as certain additional capital expenditure to enhance
mine economics.
Underground Development
During the three months ended 30 June 2015, the Company’s 74%-owned subsidiary Lace
Diamond Mines (Pty) Limited (LDM) continued with the implementation of the revised
development schedule and budget for the ramp up of commercial production from
underground kimberlite mining in the coming months.
Tunnel development was slower than planned during the period due to the need to drain
water from old workings in fractured ground near the kimberlite contact, the requirement for
additional support to be installed and cover drilling for safety on the 290m level doming tunnel
as the mining proceeded near old workings. Ground conditions around old workings pose no
problem for future mining and actually have the potential to enhance fragmentation but
require extra support during development to ensure long term hanging wall stability.
Kimberlite development was also delayed while dust suppression systems were installed. The
combination of these factors has resulted in approximately a four week delay on the
development plan. While the delay is frustrating, management’s prime concern is the strict
adherence to safe underground working practices and it is imperative that safety is not
compromised. There is limited scope for making up the lost time but management is
investigating options for accelerating blasting of the slot drive to keep the tonnage ramp-up
closer to schedule.
Slower tunnel development had a consequential impact on development costs as labour and
electricity costs are fixed irrespective of metres drilled and blasted. Development costs
averaged R44,193/m against a budget of R37,000/m. Pleasingly, operating costs on the
underground mining fleet improved during the period as a consequence of the significant
expenditure in the previous quarter on OEM exchange-rebuild engines and torque converters.
A concerted effort at underground roadway maintenance has also resulted in a reduction in
tyre wear.
During the period, the upper leg of the conveyor belt tunnel was successfully joined up with
the tunnel proceeding downwards from the surface boxcut, providing clear tunnel access for
the conveyor belt installation from the production level to surface. Excavation of the
underground loading chamber and raise boring of the ore pass to allow UK4 Block kimberlite
to be tipped onto the conveyor belt was also completed on time and within budget.
The conveyor belt is 99% fabricated, on site, and 75% installed. Final installation and
commissioning has been delayed as a result of instructions from the Department of Mineral
Resources to install additional anti-roll back idlers in sections of the conveyor belt over and
above systems already in place. The additional anti-roll back idlers have been ordered and
are scheduled for delivery in the next four weeks. Following installation of the conveyor belt
system, load and haul costs are expected to be reduced by over a half, as previously
disclosed.
K6 and K4 kimberlite processing
Processing of K6 kimberlite from development tunnels in the UK4 Block continued during the
period and processing of higher grade K4 kimberlite from production level drives commenced.
The delays in kimberlite development outlined above means insufficient K4 kimberlite has yet
been processed to complete the requirements of the controlled bulk test being monitored by
the Company’s independent geological consultants. This test will continue during the current
period until such time as the recovered diamonds are valued and sold, thereby providing the
required grade and diamond value data for the completion of an upgraded resource
statement.
During the period, the Company reported the first recovery of a Type IIa white diamond, which
has potential value implications for the entire Lace resource. Management is pleased to report
that so far, diamond recoveries from the development K4 kimberlite processed are exceeding
expectations with respect to overall quality and the Company is confident that the UK4
operating margins will exceed 70% as previously predicted from microdiamond analysis.
Plant and resource optimisation
The Company’s 220 tonnes per hour (tph) dense media separation plant operated efficiently
on a batch basis during the period, processing 1000 tonne K6 and K4 kimberlite bulk samples
extracted from the development tunnels.
Detailed studies with respect to the Company’s options for installing high volume optical
and/or x-ray waste sorting ahead of the dense media separation plant continued during the
period. The studies are expected to be completed before the end of the year and, if positive,
the preferred capital investment recommendation put forward to management. Waste sorting
has the potential to significantly reduce plant water and electricity consumption and could also
allow kimberlite to be processed faster than the current planned 220 tph. If the test work is
successful, a unit could be installed before the mining ramp-up for the first block cave.
During the period, management studied its options with respect to tailings re-treatment and
concluded that tailings reprocessing will only recommence when mining of the kimberlite
reaches commercial volumes. Then, a small amount of tailings (approximately 1000 tonnes
per week) will be blended into the kimberlite run of mine, thereby minimising water
consumption and the need for changing screen panels. The dilution impact of this small
amount of tailings blending will be minimal and the remaining tailings resource will be treated
over the 25+ year life of the underground mine.
Corporate finance
During the period, the Company completed an institutional placing of shares and an over-
subscribed Open Offer to all eligible shareholders which raised gross proceeds of £5.27
million. These funds provide for the acquisition of two additional dump trucks and sufficient
working capital for the commencement of commercial mining operations at Lace as well as
certain additional capital expenditure to enhance mine economics as discussed above.
The Company’s 74%-owned subsidiary Lace Diamond Mines (Pty) Limited (“LDM”) did not
proceed with its proposed royalty agreement with Acrux Resources (Pty) Limited.
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 # 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 Designated Advisor
Sasfin Capital (a division of Sasfin Bank Limited)
Megan Young
Tel: +27 11 445 8068
31 July 2015
Date: 31/07/2015 08:10:00 Produced by the JSE SENS Department. The SENS service is an information dissemination service administered by the JSE Limited ('JSE').
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