In the media

DiamondCorp forges ahead with developing new mine

24 January 2013


DiamondCorp will begin testing the market for small rough diamonds in the second half of the year to help it decide whether to begin 24-hour processing of its tailings dump as it forges ahead on developing an underground mine.

DiamondCorp is developing a 100,000-ton-per-month underground mine called Lace. The kimberlitic mine is near is near the Free State town of Kroonstad and close to the Voorspoed mine owned by De Beers.

DiamondCorp has secured R220m from the Industrial Development Corporation and the balance from convertible bonds and funding from Laurelton Diamonds, a wholly owned subsidiary of US luxury goods group, Tiffany & Co.

The mine will begin producing diamonds from the third quarter of 2014 as development work starts in the kimberlite to build a block cave mine, DiamondCorp CEO Paul Loudon said on Thursday.

Block caving is the best way to extract a kimberlite, which is almost a carrot-shaped plug of ancient lava, but it requires a lot of upfront capital and development.

Development on the twin declines has begun. The first block cave will be 470m below surface.

Until that point, DiamondCorp will treat tailings through its 1.2-million tons a year processing plant. It will start with a single shift of eight hours to add diamonds to its stockpile of 5,000 carats.

DiamondCorp will begin selling rough diamonds during the second half of the year, a time when demand picks up as cutting and polishing companies restock their inventories ahead of Christmas, Mr Loudon said.

Much depends on the health of the US economy, which accounts for about 40% of global diamond demand. Any weakness there and diamond prices, particularly for the smaller stones, would remain subdued, he said.

If the market showed signs of improvement in prices and demand, DiamondCorp could move its tailings treatment to a 24-hour operation, but the revenue was not significant, he said.

On a 24-hour cycle, the tailings treatment project would deliver between 6,000 and 7,000 carats a month. Work on the plant to cope with hard kimberlitic ore has been completed.

Tiffany has an agreement with DiamondCorp that gives it first right of refusal on diamonds that meet its criteria. This will be once the State Diamond Trader has bought up to 10% of the diamonds to supply the domestic cutting and polishing industry.

DiamondCorp spent 18 months raising funds to develop Lace and the last year, with the labour unrest that knocked billions of rands in revenue out of platinum and gold companies late last year, made the process very difficult, Mr Loudon said.

"Raising the R320m was difficult. First the world economy was against us then we had to contend with local issues, but we have managed to keep our core team together and motivated and they are simply raring to get going," he said.

There is no need to raise further capital for the project, he said.

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