Diamondcorp (DCP) said a 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.
"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 about February 2017," the company said.
"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."
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.
Diamondcorp added that it is at an advanced stage of finalising a convertible debt facility of about £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 about £2.5m to £3.0m 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."
At 9:07am: (LON:DCP) Diamondcorp PLC share price was -1.38p at 2.75p