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DiamondCorp’s Lace Mine could become one of world’s most significant diamond projects, say broker

24 January 2013


DiamondCorp’s (LON:DCP) Lace Project in South Africa is poised to become one of the world’s most significant diamond mines, according to City firm Northland.

Analyst Dr Ryan Long’s comments were gleaned from one of a handful positive broker notes on DCP this morning after it was announced work had finally commenced work on the 47 Level block cave at Lace.

The site in Free State Province has the potential to generate operating profits of US$50mln. Production from the tailings is expected to get underway in the second quarter, and once at full capacity Lace is expected to produce 500,000 carats a year.

“The Lace Mine is now poised to become one of the world’s most significant diamond projects,” Long said.

The deposit is to be exploited by block cave mining, with three caves planned over Lace’s 25-year life on the 47, 67 and 85 levels.

Chief executive Paul Loudon told investors he was delighted to be finally underway.

“Diamond production from tailings re-treatment will recommence during the second quarter, initially on one shift while the upgraded processing plant is re-commissioned,” he added.

“We will then have the capacity to ramp up to three shifts in the second half of the year if diamond prices strengthen for small goods.”

At 11.30 the share price was up 11% at 5.15 pence and it has advanced around 40% in the last three months as DCP put the funding place to get Lace up and running.

However Long and his colleagues reckon the stock has further to run. Northland places an 11 pence price target on DiamondCorp shares, while WH Ireland values them at 16.3 pence.

“The beginning of construction marks a milestone in the history of DiamondCorp and we maintain our buy,” said analyst Paul Smith.

John Meyer, of broker SP Angel, is even more bullish. “We continue to see significant value in this company and the current share price remains a strong buying opportunity,” he said, repeating his 22 pence price target.

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