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Lace diamond mine project and financial 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 & FINANCIAL UPDATE
DiamondCorp, the Southern African diamond mining, development and exploration company,
provides the following update on production from the Lace diamond mine in the Free State
province of South Africa.
The revised production ramp up announced in August has been further revised in light of
tonnage constraints encountered during September which are now likely to continue until at
least the end of the current year.
Mining of trough tonnage from draw points on the 310m production level in an around the
initial slot breaking point are currently constrained in two ways – firstly by large pieces of
kimberlite falling into the drawpoint from hanging wall conditions made friable by the presence
of old development workings, and secondly by the safety concerns for injury to workers or
damage to the Company’s longhole drill rig from such falls of ground.
In order to avoid injury to the workforce and/or damage to the drill rig, the drilling of trough
fans - which when blasted provide the mineable tonnage - will have to be drilled from a
position of safety in the production tunnels on the 310m level rather than the central trough
tunnel until the end of December when the troughs are safely clear of the old development
workings.
This necessitates three drill rig set ups for each fan rather than one, almost three times the
amount of drilling per fan and complicated blasting as each hole is only partially charged. As a
consequence, the drill rig cannot drill enough metres in a month to generate more than
approximately 15,000 tonnes of blasted kimberlite. On a positive note, the drill rig which is
capable of drilling 86 mm diameter holes to a length of 45m, is performing to name plate
capacity.
As a consequence, the tonnage for the months of September to December will be restricted
to an average of 14-15,000 tonnes per month and commencement of full commercial mine
production of 30,000 tonnes per month is now expected to be delayed until c. February 2017.
Importantly, grade which (as previously announced) was negatively impacted in July and
August with the presence of low grade K8 and K6 kimberlite, recovered during September
with only a small amount of low grade kimberlite ingressing into the run of mine feed.
Diamond recoveries averaged 25 cpht for the month against a budget of 29 cpht.
Stones recovered have been up to 19.4 carats in size, with a pleasing number of gems larger
than 8 cts, including a 10.6 ct clear gem. Management is confident that achieved diamond
values will continue to be in line with its estimated $164/ct base case.
The slower production ramp up means that the build up in diamond inventory will be lower
than budget resulting in either smaller diamond sales or a rescheduling of tender sales, either
way increasing pressure on group cashflow.
The Company is at an advanced stage of finalising a convertible debt facility of c.£500,000
required for immediate financial commitments in order to continue trading as a going concern
in the very near term.
In addition, the Company is looking to raise additional equity and/or debt from one or more
parties of c.£2.5 – £3.0 million in the near term to cover the anticipated cash required to fund
operations through to commercial production and positive cashflow from operations.
Positive discussions have also been initiated with the Company’s primary lender the Industrial
Development Corporation of South Africa for restructuring the repayment terms of the
Company’s main project finance facility such that capital repayments are deferred from the
first half of 2017 until such time as significant positive cashflow is achieved from the first
100,000 tonnes per month mined from the block cave on the 500m level. In the meantime,
only interest would payable.
Management is also engaged in discussions with parties outside of the UK and South Africa
with a view to significantly strengthening the group balance sheet and bringing on board
additional diamond mining development and corporate finance expertise in key executive
roles. However, no assurances can be given at this stage in this respect and the Company
will update shareholders accordingly.
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 Sonsor
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
The information communicated in this announcement is inside information for the purposes of
Article 7 of Market Abuse Regulation 596/2014 ("MAR")
12 October 2016
United Kingdom
Date: 12/10/2016 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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