Source - RNS
RNS Number : 2807M
Diamondcorp Plc
12 October 2016


12 October 2016



DiamondCorp plc


AIM share code: DCP & JSE share code: DMC

ISIN: GB00B183ZC46

(Incorporated in England and Wales)

(Registration number 05400982)

(SA company registration number 2007/031444/10)


("DiamondCorp", "the Group" or "the Company")


Lace DIAMOND mine



DiamondCorp, the Southern African diamond mining, development and exploration company, provides the following update on production from the Lace diamond mine in the Free State province of South Africa.


·      The revised production ramp up announced in August has been further revised in light of tonnage constraints encountered during September which are now likely to continue until at least the end of the current year.

·      Mining of trough tonnage from draw points on the 310m production level in an around the initial slot breaking point are currently constrained in two ways - firstly by large pieces of kimberlite falling into the drawpoint from hanging wall conditions made friable by the presence of old development workings, and secondly by the safety concerns for injury to workers or damage to the Company's longhole drill rig from such falls of ground.

·      In order to avoid injury to the workforce and/or damage to the drill rig, the drilling of trough fans - which when blasted provide the mineable tonnage - will have to be drilled from a position of safety in the production tunnels on the 310m level rather than the central trough tunnel until the end of December when the troughs are safely clear of the old development workings.

·      This necessitates three drill rig set ups for each fan rather than one, almost three times the amount of drilling per fan and complicated blasting as each hole is only partially charged. As a consequence, the drill rig cannot drill enough metres in a month to generate more than approximately 15,000 tonnes of blasted kimberlite. On a positive note, the drill rig which is capable of drilling 86 mm diameter holes to a length of 45m, is performing to name plate capacity.

·      As a consequence, the tonnage for the months of September to December will be restricted to an average of 14-15,000 tonnes per month and commencement of full commercial mine production of 30,000 tonnes per month is now expected to  be delayed until c. February 2017. 

·      Importantly, grade which (as previously announced) was negatively impacted in July and August with the presence of low grade K8 and K6 kimberlite, recovered during September with only a small amount of low grade kimberlite ingressing into the run of mine feed. Diamond recoveries averaged 25 cpht for the month against a budget of 29 cpht.

·      Stones recovered have been up to 19.4 carats in size, with a pleasing number of gems larger than 8 cts, including a 10.6 ct clear gem. Management is confident that achieved diamond values will continue to be in line with its estimated $164/ct base case.

·      The slower production ramp up means that the build up in diamond inventory will be lower than budget resulting in either smaller diamond sales or a rescheduling of tender sales, either way increasing pressure on group cashflow.

·      The Company is at an advanced stage of finalising a convertible debt facility of c.£500,000 required for immediate financial commitments in order to continue trading as a going concern in the very near term.

·      In addition, the Company is looking to raise additional equity and/or debt from one or more parties of c.£2.5 - £3.0 million in the near term to cover the anticipated cash required to fund operations through to commercial production and positive cashflow from operations.

·      Positive discussions have also been initiated with the Company's primary lender the Industrial Development Corporation of South Africa for restructuring the repayment terms of the Company's main project finance facility such that capital repayments are deferred from the first half of 2017 until such time as significant positive cashflow is achieved from the first 100,000 tonnes per month mined from the block cave on the 500m level. In the meantime, only interest would payable.

·      Management is also engaged in discussions with parties outside of the UK and South Africa with a view to significantly strengthening the group balance sheet and bringing on board additional diamond mining development and corporate finance expertise in key executive roles. However, no assurances can be given at this stage in this respect and the Company will update shareholders accordingly.





Contact details:


DiamondCorp plc

Paul Loudon, Chief Executive

Tel: +27 56 216 1300

Euan Worthington, Chairman

Tel: +44 7753 862 097


UK Broker & Nomad

Panmure Gordon (UK) Limited

Adam James/Atholl Tweedie

Tel: +44 20 7886 2500


JSE Designated Advisor

Sasfin Capital (a division of Sasfin Bank Limited)
Megan Young

Tel: +27 11 445 8068


SA Corporate Advisor

Qinisele Resources Proprietary Limited

Dennis Tucker/Andrew Brady

Tel: +27 11 883 6358



The information communicated in this announcement is inside information for the purposes of Article 7 of Market Abuse Regulation 596/2014 ("MAR")

This information is provided by RNS
The company news service from the London Stock Exchange