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DiamondCorp has come through a financial torrential storm in 2012 but remains afloat with smooth sailing predicted for its journey to production at its Lace diamond mine.

AIM and JSElisted diamond mining and exploration company, DiamondCorp is focused on developing its single asset, the Free-State based Lace diamond mine and has secured everything necessary to take the mine through to production. Today, it is full steam ahead to ensure production start-up remains on schedule for 2015. The current life-of-mine has been based on the block cave mining method, three in total over the next 25 – 30 years. Each block cave has a seven – 10 year lifespan.

“We are very pleased and proud to have completed a financing package for development of the first block cave at the Lace mine. We achieved this success during 2012 in the toughest market conditions that we have experienced in our careers and have done it with minimal dilution for existing shareholders,” says DiamondCorp CEO, Paul Loudon and chairman, Euan Worthington.

The statement follows the announcement of DiamondCorp’s financial results for the full year to December 2013 where the company reported that its net loss has reduced from GBP 4.2 million for 2011 to GBP 3.5 million 2012.

Together with a R220 million loan from the Industrial Development Bank (IDC), representing approximately 77% of the estimated R285 million peak funding requirement for the 47 Level block cave development, the US$6 million (about R54 million) loan from Tiffony & Co subsidiary Laurelton Diamonds, convertible bonds and new equity raised, totalling about R113 million, most has been advanced to Lace to satisfy the initial drawdown condition of the IDC loan.

“We anticipate initial drawdown on the IDC loan will be in the third quarter this year and interest will be calculated semi-annually in arrears thereafter, with a two year moratorium on loan repayments from the first drawdown date.”

In exchange for the Laurelton loan, the company has the right to purchase, on commercial terms related to fair market value, diamond production from Lace. The off-take agreement is subject to any purchases by the South African State Diamond Trader and will be for stones which meet the high quality and colour characteristics required to yield Tiffany-standard polished diamonds.

There is a lot to do at the mine over the next 12 months and development plan includes:

  • Excavation of 66 500 cubic metres of surface material to establish a box cut and new life of mine access ramp and portal into the underground workings
  • Drilling and blasting of a 50 m vent raise to by-pass a blockage in the old vertical shaft and provide sufficient temporary ventilation so that underground development can be undertaken to the 470 m level
  • Drilling and blasting of approximately 3 000 m of underground tunnelling comprising a 4.5 m x 4.5 m men and materials access decline alongside a 5 m x 3 m conveyor belt decline at 12 degrees
  • Approximately 2 000 m of underground core drilling of a “bulge” area on the south-east side of the main pipe to define the extent of additional kimberlite which might be available for mining ahead of the block cave
  • Design, fabrication and installation of approximately 1 000 m of conveyor belting. This conveyor will ultimately extend to the underground crushing chamber below the 47 level block cave and provide kimberlite feed for the plant
  • Refurbishment of the 1.2 Mtpa Lace processing plant, including essential modifications to allow the transition from treating tailings to treating underground kimberlite during 2014
Loudon and Worthington feel that diamond prices appear to have stabilised in the first few months of 2013, “and market indicators look like we are starting to see early signs of recovery in the US which remains the world’s biggest market for diamonds. Diamond prices are expected to remain volatile until such time as a sustained economic recovery is achieved.”

In anticipation of full-scale underground mining, DiamondCorp intends on recommissioning the Lace plant before the middle of 2013 with kimberlite tailings and then test the market in the second half of the year with sales of the diamonds recovered. Depending on the prices achieved, the company will assess if it is worth increasing tailings production ahead of kimberlite being mined from underground in 2014.

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