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DiamondCorp expects revenue from gems next year

14 May 2013


MINE developer DiamondCorp is "going full speed ahead" with its flagship kimberlite mine after fulfilling all its funding obligations by raising R320m, CEO Paul Loudon said on Monday.

"It’s full speed ahead with regard to the development of the block cave at the mine," he said.

Lace Diamond Mine, in Kroonstad in the Free State, is DiamondCorp’s primary operation and Mr Loudon said it was expected that the mine would start generating revenue during the first quarter of next year.

"During the development we will mine about 600 tons of kimberlite, which will generate about R100m in revenue ... which will be credit towards our development costs," he said. The company will also restart the tailings retreatment plant at the mine in June, in which 3-million tons worth of tailings will be retreated.

It intends to test the diamond market from the tailings treated at the plant, with output expected to initially commence at 2,000 carats a months, with the potential to rise to 6,000 a month.

"Our output will depend on the market price for diamonds … we will raise our production according to demand," Mr Loudon said.

On Monday, the London-and JSE-listed company reported that its losses had narrowed to £3.5m for the year to December, from a loss of £4.2m in 2011.

Headline losses improved to 1.22p per share from a loss of 2.43p a year ago.

During the past year, the company completed a financing package for the development of the first block cave at Lace.

This included a R220m loan facility from South African state financier the Industrial Development Corporation.

Mr Loudon said the company managed to raise R65m from local and foreign investors. Previous measures undertaken by the company to raise R100m were undermined by the violence that had erupted in South Africa’s platinum and gold mining sectors last year.

To make up for the shortfall, DiamondCorp also received financing amounting to $6m, in the form of a term loan, from Tiffany & Company subsidiary Laurelton Diamonds.

Mr Loudon said world demand for diamonds appeared to have stabilised, after a period of volatility dampened demand for luxury goods. There were signs of a slight recovery in the US, which accounted for about 45% of the global market for diamond jewellery. "... Once we see a sustained recovery in the US it is then that we can expect great meaningful output from the Lace Diamond Mine," Mr Loudon said.

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