In the media

DiamondCorp’s Lace on track

26 September 2008

Source: Businessday

Author: Charlotte Mathews

DIAMONDCORP, the owner of Lace Diamond Mine near Kroonstad, has resolved initial operational problems and is on track to produce diamonds from the satellite pipe only two weeks later than expected.

The company extracts diamonds from tailings dumps at Lace – a result of past mining by previous owners Crown Mines and Sonop – but it had difficulties with an inappropriate re–crush cone crusher at the processing plant. This meant diamonds had to be stockpiled until another crusher was installed.

DiamondCorp MD Paul Loudon said yesterday the new equipment had been installed and was working well.

Although DiamondCorp said in July it was considering legal action against the plant process designers, who had supplied the crusher as part of a turnkey solution, Loudon said it had been decided not to pursue the matter.

DiamondCorp is sinking a decline shaft to deeper and richer kimberlite pipe areas not mined before.

Initial expectations were of progress at a rate of 120m a month, but unstable ground conditions made initial progress slower than expected .

Loudon said the more stable basalt rock had been reached and progress would accelerate.

The decline shaft will also access the adjacent satellite pipe, known to contain lower grades of diamonds than the main pipe, and was not included in DiamondCorp’s resource estimate.

The main kimberlite pipe is expected to produce diamonds worth an average of $125/carat – higher quality than Petra Diamonds’ Cullinan mine, but lower than Petra’s Koffiefontein mine.

Loudon said prices of smaller diamonds below two carats in size were likely to soften within 12 months if the US moved into recession and as terms to diamond cutters and polishers in the US were tightened, since they depended on credit to finance their business .

It could hinder emerging diamond producers with tight margins but DiamondCorp wa s a higher–margin operator, with about $35/ton rock values and $16–$17/ton operating costs.

DiamondCorp reports interim results to June on Monday.

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