In the media

DiamondCorp assessing finance proposals – CEO

30 September 2009

Source: Miningweekly

Author: Chanel Pringle

JOHANNESBURG (miningweekly.com) – The management of emerging diamond-miner DiamondCorp is assessing a number of finance proposals, which it will require to meet its future financial commitments, CEO Paul Loudon said on Wednesday.

The deterioration in diamond prices in the last part of 2008 had prompted the Aim- and JSE-listed company to stop tailings retreatment operations at its Lace mine, in South Africa’s Free State province, which negatively impacted on its cash flow.

Bulk testing had demonstrated that the development of the decline and vertical shaft to the -330-m level at the mine would be required before positive cash flow would be reached.

This meant that the diamond-miner would have to raise finance to ensure the ongoing development of the underground mine.

“The company has received a number of finance proposals ranging from debt and convertible debt to equity. Management are currently assessing these proposals and will progress the best alternative for maximising shareholder value,” Loudon said.

He added that DiamondCorp would not have the funds to meet an interest payment, which was due on October 14, unless one of the proposals was accepted and final agreements signed.

“However, the board is confident that one of the financing proposals will be agreed in the near future,” he said.

Meanwhile, the company reported that VP3 Geoservices had completed a bankable feasibility study (BFS) on the underground development at the Lace mine, in which DiamondCorp held a 74% stake. The BFS had demonstrated that the mine would generate a “robust” internal rate of return (IRR) and net present value (NPV) over a 25-year life-of-mine, it said.

A conceptual mine design for the initial sub-level caving operation, which was completed by Snowden mining consultants, were used by VP3 to determine an operating and capital cost of R100-million a year, with production estimated at 1,2-million tons a year.

The BFS also included an upgraded resource statement for the Lace mine, which added a further 1,5-million carats to DiamondCorp’s resource statement.

The 1,2-million tons a year processing plant at the mine, as well as all mine development, remained on care-and-maintenance.

Meanwhile, DiamondCorp reported that it had narrowed its net loss to £974 476 in the six months ended June 30, 2009, compared with a net loss of £1,3-million the year before.

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