In the media

DiamondCorp Lace Diamond Mine accelerating to full production

23 November 2007

Source: Mineweb

Author: Tessa Kruger

DiamondCorp (AIM:DCP) is on track to bring its planned underground Lace Diamond Mine in the Free State of South Africa to full production of 400,000 carats within two years, while the company has the vision to become a producing partner for exploration companies.

DiamondCorp managing director Paul Loudon said today the planned underground mine was a self-financing project as production from surface tailings would generate the company R100m of early cashflow. He told Mineweb that DiamondCorp was not an exploration company, but a diamond producer that could join forces with other juniors.

Diamondiferous tailings remaining from an earlier mine were being mined out over 27 months after a processing plant was commissioned in October this year.

The underground mine required capex investment of only R100m and the company had the huge benefit of underground development that was done by its predecessors.

Loudon said DiamondCorp would soon send a bulk sample of between 60,000 and 80,000t through its plant to get a good idea of what the underground grade is.

The tailings were giving the company a window into the main underground kimberlite pipe and have accelerated underground mining plans. Diamonds recovered from the tailings were small, but 5% were fancy colours, including intense pink and purple stones, which fetched high prices.

However, once mining operations went underground the company had a chance of recovering larger stones. Current indications for underground stones were good as tailings contained 27 carats per 100t - 17c/100t had been recovered by previous miners and DiamondCorp was recovering 10c/100t.

This indicated that 40/60 carat/100t could be mined underground, which rendered it potentially a high cash generative project. According to scoping studies high margins could be made with a rock value of $35/t and mine processing cost of $18/t.

Loudon said the company would start introducing underground material into the plant in the second half of next year. "The quicker we introduce underground material into the plant; the sooner people will start giving us credit for the in-ground value of the pipe."

DiamondCorp believed its market capitalisation of 34m pounds was currently less than 4% of its in-ground value.

The company expects to recover about 370,000 carats in total from its tailings and estimates a 20-year life underground mine.

The Lace project is about 4km from De Beers new Voorspoed mine and the mine will receive second source power supply from a De Beers substation next year.

DiamondCorp will complete a secondary listing on the JSE next year.

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