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DIAMONDCORP PLC - Resource Statement

Release Date: 02/03/2016 09:00
Code(s): DMC     PDF:  
Wrap Text
Resource Statement

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")

RESOURCE STATEMENT

DiamondCorp, the Southern African diamond mining, development and exploration company,
is pleased to report that a new Technical Report and Resource Statement has been prepared
for the Company?s 74%-owned Lace mine, in the Free State Province of South Africa.

Highlights

MPH Consulting Limited of Toronto has delivered the technical report and resource/reserve
statement update, including detailed microdiamond analysis, grade and carat value modelling
completed by Dr Johan Ferreira.

The report concludes that the updated resource/reserve statement is a conservative base
case with compelling evidence that considerable grade and value per carat upside is likely
which will be defined with additional production and evaluation data.

When comparing to the previous mineral resource estimate prepared for the Lace mine in
March 2012, it is important to note that the estimated recovered grade for all facies has now
been aligned with the Lace production plant utilizing 1.25 mm slotted bottom screens,
compared to 1.00 mm screens in its original design configuration.

While the increase in bottom screen sizes means that recoveries will be significantly lower in
terms of grade, the carat value of those diamonds recovered will be higher as the smallest
diamonds no longer being recovered are also the lowest value diamonds. So while the impact
on recovered grade resulting from the change can be perceived as significant, the economic
impact is minimal.

1.25 mm has been determined as the optimum bottom cut-off screen size for the project
based on trade off studies undertaken by the Company. The change in screen size is
expected to result in considerable operational efficiencies and (in conjunction with optical and
x-ray waste sorting) up to a 50% reduction in water consumption in the processing plant,
allowing for mining of the resource at greater than the current planned rate of 1.2 million
tonnes per annum once block caving commences.

The total resource tonnage in the main Lace pipe has been estimated at 38.48 million tonnes
to the 920m level, an increase of 16% from 33.12 million tonnes estimated in March 2012 to
the 855m level. The resource remains open at depth.

The recoverable diamonds from this resource at the increased bottom screen size of 1.25 mm
is estimated at 9.39 million carats (March 2012: 13.39 million carats, at 1.00 mm screen size).

The average value of the Lace diamonds from the stone size frequency distribution achieved
with the 1.25 mm bottom screen size has been forecast to be $164 per carat in the current
market (March 2012: $160 per carat). Importantly, this price does not include any values
achieved from the recovery of special stones, for which Lace was known during its previous
production period pre-Great Depression, including diamonds up to 122 carats in size.
The K4 kimberlite, which comprises 60% of the Lace resource by tonnage and 87% of the
resource by diamond content has an estimated average recoverable grade of 40 carats per
hundred tonnes (cpht) at 1.25 mm bottom screen size (58 cpht previously at 1.00 mm bottom
screen size).

The base case average recoverable grade from all tonnage is estimated at 24.4 cpht at 1.25
mm bottom screen size (40 cpht at 1.00 mm previously), equating to an average of US$40
revenue per tonne.

At an exchange rate of 15.0000 South African rands to the US dollar, the average grade and
carat value equate to revenue of R600 per tonne compared with forecast mining and
processing costs of R238 per tonne for the UK4 Block and R145 per tonne for block caving.
This represents robust operating margins of 60% and 76% respectively.

Within the 38.69 million tonnes of resources, 2.21 million tonnes of the UK4 Block has been
classified as a mineral reserve between the 230 and 370m levels. This reserve comprises
1.43 million tonnes of K4 in the probable category grading 36.2 cpht and 0.78 million tonnes
of low grade K6 kimberlite in the probable category at a grade of 9.0 cpht.

The whole block could be mined for 60 months at a rate of 35,000 tonnes per month and
generate a positive NPV of R133.3 million (US$8.9 million) and a robust IRR of 59%. It is the
Company?s intention to concentrate on mining the high-grade K4 kimberlite within this reserve
first while the first block cave is established on the 500m level (being outside of the current
mineral reserve estimate). There may well be opportunities to optimize the mine plan as more
K4 is found to be present as the mine progresses. When block caving progresses, any
unmined portions of this reserve would then be extracted in subsequent caves.

The small Satellite pipe which was incorporated into the previous resource statement is not
included in the new resource statement as it is not considered a feasible mining proposition at
this stage.

The grade model for the UK4 Block reserve has been found to show high precision in
predicting recovered diluted grades achieved in the bulk sampling on -250m, -290m and -
310m levels.

Lace has been demonstrated as a reliable microdiamond producer allowing for high-
confidence grade estimates, and the valuation data from 4,982 carats recovered during bulk
sampling similarly gives confidence to the valuation model.

There is compelling geological evidence that K4 and K6 grade will improve within the block
cave mining depths (and Lift 2 of the UK4 Mine), however more evaluation work is needed to
verify these trends.

The CRB (country rock breccia) unit which comprises 9% of the current resource model has
been assigned zero grade at this time, although it is known to be significantly diamondiferous.
The CRB will be bulk and microdiamond sampled in coming months and will be incorporated
into updated grade estimations as these data become available, such that carat content at
Lace is highly likely to improve on the current estimates.

Kimberlite volumes and tonnages will also change as more delineation work is completed.

The full technical report and resource/reserve statement will be shortly available on the
Company?s website at www.diamondcorp.plc.uk.

Resource Statement
Mining   Resource          Kimberlite     Volume                              % of    Recovered
                                                       Density   Tonnes                             Carats      USD/ct
Block    Classification    Facies       (m3 x 1000)                          Total    Grade (cpt)
Upper    Indicated         K4              1,065.486    2.585    2,754,281    36.9%     0.365       1,005,313   $164.00
K4       Indicated         K6              1,834.957    2.563    4,702,995    63.1%     0.090         422,329   $164.00
mine     Total Indicated                   2,900.443             7,457,276   100.0%     0.191       1,427,642   $164.00
230-     Inferred          K8                144.722    2.641      382,211    16.3%     0.160          61,154   $164.00
370m        Inferred              CRB                  723.803      2.709       1,960,782       83.7%            0.000                   -     $164.00
levels      Total
                                                       868.525                  2,342,993      100.0%            0.026              61,154     $164.00
            Inferred
            Inferred              K4               1,626.754        2.59        4,213,293       48.4%            0.400        1,685,317        $164.00
Block
            Inferred              K6               1,262.561        2.56        3,232,157       37.1%            0.100          323,216        $164.00
Cave 1
            Inferred              K8                  13.713        2.64           36,203        0.4%            0.160            5,793        $164.00
370m–
510m        Inferred              CRB                451.786        2.71        1,224,339       14.1%            0.000                -        $164.00
levels                            Total            3,354.815                    8,705,993      100.0%            0.231        2,014,326        $164.00
            Inferred              K4               2,225.776        2.59        5,764,760       59.0%            0.400        2,305,904        $164.00
Block       Inferred              K6               1,484.048        2.56        3,799,164       38.9%            0.100          379,916        $164.00
Cave 2
            Inferred              K8                   0.000        2.64                -        0.0%            0.160                -        $164.00
510m–
700m        Inferred              CRB                 74.018        2.71          200,589        2.1%            0.000                -        $164.00
levels                            Total            3,783.842                    9,764,513      100.0%            0.275        2,685,820        $164.00
            Inferred              K4               2,800.965        2.59        7,254,499       71.0%            0.400        2,901,799        $164.00
Block       Inferred              K6               1,153.812        2.56        2,953,759       28.9%            0.100          295,376        $164.00
Cave 3
            Inferred              K8                   0.000        2.64                -        0.0%            0.160                -        $164.00
700m–
920m        Inferred              CRB                  3.577        2.71            9,694        0.1%            0.000                -        $164.00
levels                            Total            3,958.354                   10,217,952      100.0%            0.313        3,197,175        $164.00

Lace        Indicated                              2,900.443        2.57        7,457,276       19.4%            0.191        1,427,642        $164.00
Mine
Totals      Inferred                               11,965.54        2.59       31,031,451       80.6%            0.256        7,958,475        $164.00

                                  Total           14,865.979        2.59       38,688,458      100.0%            0.244        9,386,117        $164.00


All figures are gross. DiamondCorp owns a 74% equity interest in the project
Based on a recoverable grade model for the current Lace plant configuration (+1.25mm bottom cut-off screen size)
Diamond price based on bulk sample parcels and January 2016 price book
Effective date 1 February 2016.


Reserve Statement

The UK4 Mining block constitutes a portion of the above Indicated Resource, with reserves
estimated as per the following table:
Mining           Resource                 Kimberlite                          Recovered Grade
                                                                 Tonnes                                 Carats           USD/carat           USD/tonne
Block            Classification           Facies                                   (cpt)
Upper K4         Probable                 K4                      1,427,841        0.362                 516,575          $164.00             $59.33
mine 230-        Probable                 K6                        782,244        0.090                  70,296          $164.00             $14.74
370m levels      Total Probable                                   2,210,086        0.266                 586,870          $164.00             $43.55

All figures are gross. DiamondCorp owns a 74% equity interest in the project
Based on a recoverable grade model for the current Lace plant configuration (+1.25mm bottom cut-off screen size)
Diamond price based on bulk sample parcels and January 2016 price book
Rounding has been applied
Plant recovery 100% of recoverable grade, mining recovery 100%
Effective date 1 February 2016.


Commenting on the report, DiamondCorp CEO Paul Loudon said: „The new resource and
reserve statements provide a much higher level of confidence in the estimated grade and
carat value of the Lace deposit. This confirms the potential for high operating margins
increasing with depth which was one of the factors which attracted us to the project from the
outset. The forecast grade numbers are in line with what we are seeing from the UK4 mining
ramp up and the actual carat value achieved will be known when we commence diamond
sales in Antwerp in the last week of March.?

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
Adam James/Atholl Tweedie
Tel: +44 20 7886 2500

JSE Sponsor
Sasfin Capital (a division of Sasfin Bank Limited)
Megan Young
Tel: +27 11 445 8068

SA Corporate Advisor
Qinisele Resources Proprietary Limited
Dennis Tucker/Andrew Brady
Tel: +27 11 883 6358


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.

The resource/reserve statement has been prepared in accordance with the South African
Code for Reporting of Mineral Resources and Mineral Reserves (SAMREC)

Glossary of Technical Terms

“cpht”                        Carats per hundred tonnes
“diamond resource”            A concentration or occurrence of diamonds of economic
                              interest in or on the earth?s crust in such form, quantity
                              (volume/tonnage), grade and value that there is reasonable and
                              realistic prospects for eventual economic extraction. The
                              location, quantity, grade, value, continuity and other geological
                              characteristics of a Diamond Resource are known, or estimated
                              from specific geological evidence, sampling and knowledge
                              interpreted from an appropriately constrained geological model
“grade”                       The relative mass of diamonds in a mass of rock
“indicated mineral            That part of a diamond resource for which tonnage, densities,
resource”                     shape, physical characteristics, grade and diamond value can
                              be estimated with a reasonable level of confidence. It is based
                              on exploration, sampling and testing information gathered
                              through appropriate techniques from locations such as
                              outcrops, trenches, pits, workings and drill holes. The data
                              must be of sufficient confidence to allow the application of
                              modifying factors in sufficient detail to support mine planning
                              and evaluation of the economic viability of the deposit. locations
                              are too widely or inappropriately spaced to confirm geological
                              and/or grade continuity but are spaced closely enough for
                              continuity to be assumed, and sufficient diamonds have been
                              recovered to allow a reasonable estimate of average diamond
                              value.
“inferred mineral resource”   That part of a diamond resource for which tonnage, grade and
                              diamond value can be estimated with a low level of confidence.
                              Geological evidence is sufficient to imply but not verify
                              geological and grade continuity. It is based on information
                              gathered through appropriate techniques from locations such
                              as outcrops, trenches, pits, workings and drill holes which may
                              be of limited or uncertain quality and reliability.
“kimberlite”                  An uneven grained, ultramafic, intrusive rock in which the
                              visible minerals may include olivine, phlogopite, pyrope garnet,
                              picroilmenite and chrome-diopside cemented by a groundmass,
                              which may include serpentine, calcite and chromate. Kimberlite
                              may be diamondiferous and, along with olivine lamproites, are
                              the only known primary source of diamonds
“measured mineral             That part of a mineral resource for which tonnage, densities,
resource”                     shape, physical characteristics, grade and mineral content can
                              be estimated with a high level of confidence. The data must be
                               of sufficient confidence to allow the application of modifying
                               factors in sufficient detail to support detailed mine planning and
                               final evaluation of the economic viability of the deposit. It is
                               based on detailed and reliable exploration, sampling and
                               testing information gathered through appropriate techniques
                               from locations such as outcrops, trenches, pits, workings and
                               drill holes. The locations are spaced closely enough to confirm
                               geological and grade continuity
“microdiamond”                 Diamonds that are less than 0.5mm in all axial dimensions
“probable mineral reserve”     The economically mineable part of an Indicated, or in some
                               circumstances, a Measured Mineral Resource.

A full list of technical terms is incorporated in the technical report available on the Company?s
website.

Johannesburg
2 March 2016

Sponsor
Sasfin Capital (a division of Sasfin Bank Limited)

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