The DiamondCorp Group's primary asset in South Africa is the Lace Diamond Mine, an historic operation located some 200 kilometres south-west of Johannesburg, near the town of Kroonstad in Free State Province. DiamondCorp was awarded a mining right to the Lace property in February 2009.
Lace was first mined between 1901 and 1931, with some 4.5 million tonnes of rock having been extracted down to a level of about 240 metres below surface. Approximately 750,000 carats of diamonds were recovered from Lace during this period, at an average grade of 16 carats per hundred tonnes.
Two main types of kimberlite exist at Lace – an upper level Volcanoclastic Kimberlite (VK at an average grade of 24 carats per hundred tonnes) and the deeper Coherent Kimberlite Facies (CK at an average grade of around 55 carats per hundred tonnes). The Coherent Kimberlite Facies becomes volumetrically dominant at depth which confirms the old records that show higher grades in the deeper workings.
The mine at Lace is serviced by a tarred road to Kroonstad and the north; electricity to the mine is provided through the Eskom grid. In 2008, DiamondCorp built a 1.2 million tonne per annum diamond recovery plant which has the capacity to treat ore for the +25 year expected mine life. There is adequate water supply to operate at this rate.
After completing a bulk-sample test at the 240m level and raisng project finance, undergournd mine development for the 47 Level block cave began in January 2013. In 2014, the discovery of a zone of fresh ore, the UK4 block in the upper levels resulted in mining being focussed on this area while at the same time, the decline continues. At the mine, there are offices, workshops and accommodation for senior staff.
Along with white diamonds of above average quality, historically Lace was known for its fancy pinks and purples, which had become a signature gem from this mine. While historically the bulk of Lace′s value curve has been in the 1 carat to 4 carat range, the pipe has produced a number of large stones, up to 122 carats. More than 80% of the diamonds are of gem quality.
It is intended to mine the UK4 block by long hole open stoping while development of the first block cave on the 50m level continues. Deeper block caves in higher grade kimberlite could ultimately lead to annual output of over 500,000 carats. An underground conveyor system has being installed to bring ore to the surface. Full scale mining is expected to produce ore at a rate of 4,000 tonnes per day.
Work on the underground development began in January 2013 after capital finance had been secured. Following a due diligence review in September 2012, the Industrial Development Corporation of South Africa agreed to lend Lace Diamond Mines R220 million conditioned upon DCP raising another R100 million. This total funding requirement included a 33% contingency on the Company's forecast total capital expenditure. To fill the R100million gap, DCP agreed a US$6million (R54m) Term Loan with a wholy owned subsidiary of Tiffany & CO. in exchange for a life of mine diamond offtake agreement. The Company also issued £4.2million (R59m) of 14% senior secured convertible bonds in South Africa and the UK. In April 2014. In April 2014, the Company issued new shares for 2.1 million to cover corporate overheads. July 2015, a Placing and Open Offer raised 5.7 million and then in December 2015, a further £4 million was raised for underground development at the Lace Mine.