In the media

Lace could be ‘significantly higher cash generator’ than initially thought – DiamondCorp

02 August 2011

Author: Brindaveni Naidoo

Aim-listed DiamondCorp’s Lace operation, in South Africa, has the potential to be a “significantly higher cash generator” than initially envisaged, with the operation’s lowest-grade sections recovering good-quality diamonds, CEO Paul Loudon said on Tuesday.

The increase in the carat value has the potential to lower the development and exploration company’s forecast break-even grade from 13 cpht to 8 cpht.

From the total kimberlite processed to date, 759 ct of diamonds have been extracted, with the biggest stone being a 16.08 ct nongem diamond.

Of the 759 ct, the first 561 ct have been valued by the South Africa Diamond Exchange at an average of $205/ct, 71% higher than the company's base case of $120/ct, and 28% higher than the company's upper case of $160/ct.

To date the largest diamond in the parcel is a sawable gem of 5.52 ct valued at $1 500/ct. The bulk of the value in the parcel lies in gemstones of between 1 ct and 4 ct, and more than 80% of the diamonds recovered to date are gem quality. “This is an exceptionally high proportion for run-of-mine kimberlite,” the company said.

A total of 5 514 t of volcaniclastic kimberlite has been sampled to date, from between the 25 and 26 levels on the southern margin of the main Lace pipe. The kimberlite in this contact zone of the pipe is heavily diluted with up to 75% country rock (waste) inclusions.

An additional 1 500 t of kimberlite from the south-west side of the pipe has been hauled to surface in readiness for processing and mining continues in a northeast direction across the pipe.

The tons processed to date represent less than 20% of the total tons from the planned bulk test of 30 000 t and less than 20% of the total area of the pipe to be sampled.

Loudon said the company could not extract the bulk sample at a faster rate, owing to safety reasons. Opening up old workings, which have been under water for more than 75 years, has resulted in certain challenges.

“As a result, we are reporting on what we expect to be the lowest-grade sections of the pipe at this level, as this area has been sampled first. Nonetheless, we are absolutely delighted with the quality of the diamonds we are recovering,” he added.

The Lace processing plant is operating efficiently and no damage to any diamonds recovered to date has been identified, DiamondCorp said.

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