TIDMDCP
RNS Number : 6518Z
Diamondcorp Plc
20 March 2012
DiamondCorp plc JSE share code: DMC AIM share code: DCP ISIN:
GB00B183ZC46 (Incorporated in England and Wales) (Registration
number 05400982) (SA company registration number 2007/031444/10)
('DiamondCorp' or 'the Company')
LACE MINE INDEPENDENT ENGINEERING AND RESOURCE REPORTS
DiamondCorp plc, the African diamond mine development and
exploration company, is pleased to announce the receipt of an
Independent Engineering Report on the proposed 47 Level Block Cave
development at the Lace mine prepared by SRK Consulting South
Africa ("SRK").
HIGHLIGHTS
SRK's key conclusions are that:
-- The continuous trough block caving method proposed for the 47
level (470m depth) mine development is an appropriate mining method
for the Lace mine to achieve 1.2 million tonnes a year of
kimberlite production.
-- The proposed twin decline access and conveyor system is a
sound approach which will be quicker and cheaper than refurbishing
the collapsed shaft system.
-- The existing mine engineering infrastructure has been
designed, installed and operated to a high standard.
-- Certain modifications will be required to the existing DMS
(dense media separation) processing plant recrush circuit to ensure
200 tph of kimberlite can be treated without the scrubber section
being overloaded. These modifications are budgeted for in the
current capital costs.
-- The capital and operating costs in the Lace financial model
for a 1.2 million tonne per annum mining operation are reasonable
and within industry norms for block caving operations worldwide.
The model forecasts mining costs at R82.65 per tonne, processing
costs at R33.44 per tonne and general & administration at R7.61
per tonne. Total cost of R123.7 per tonne ($16 per tonne).
-- Kimberlite will be accessed first on the anti-socket (or slot
drive) level, 30m above the production level, 12 months after
development commences.
-- The anti-socket level tunnels will be developed across the
entire pipe by month 15 and initially allow final cave footprint
delineation, the geotechnical model and grade distribution to be
finalised. They are later utilised for physical observation of the
blasted slots. The total cost to reach this stage of development is
estimated at R169 million ($22.2 million).
-- The total development cost (including working capital and a
15% contingency on capital and development costs) is estimated in
the Lace financial model at R384 million ($50 million).
-- The peak funding requirement (including working capital) is
estimated to be in month 25 at R286 million ($37.6 million) when
blasting of the slot drive and doming starts to deliver significant
tonnage of kimberlite.
-- The costs of establishing the block cave thereafter are
offset by revenues from the sale of diamonds recovered from
kimberlite mined and processed during the doming level and
production level developments.
-- Approximately 600,000 tonnes of kimberlite will be extracted
and processed during the block cave development. Anticipated
revenue from this kimberlite is R421 million ($54.7 million) during
the 43 months of development before 100,000 tonnes per month of
production is achieved.
-- The peak funding requirement is only moderately sensitive to diamond price and grade.
-- A high level review and sensitivity analysis of the life of
mine plan and financial model provides positive returns under most
scenarios from a project that shows robust cashflows.
-- The project net present value in the agreed LoM financial
model using a 10% discount rate is R1,452 million ($188 million).
(DiamondCorp 74% share $139 million).
Commenting on the report, DiamondCorp CEO, Paul Loudon said:
'Our development plan has now been validated by SRK which paves the
way for discussions with a range of potential project financiers to
progress. The key driver for management in these discussions will
be to find the optimum financing method which is the least dilutive
for existing shareholders.'
A copy of the SRK report will be available for download from the
DiamondCorp website, www.diamondcorp.plc.uk.
In conjunction with the SRK report, a geological resource review
was undertaken by VP3 Geoservices which has updated the Resources
Statement for the Lace Mine in accordance with the SAMREC Code of
Diamond Resource reporting. The review concludes that:
-- The Lace Main Pipe contains 33.121 million tonnes of
kimberlite indicated and inferred to a depth 855m.
-- The Main Pipe contains approximately 13.291 million carats in both resource categories.
LACE MINE RESOURCE STATEMENT
Resource Depth Category Tonnes cpht Carats $/carat
--------- ------- ---------- ------------ ----- ------------- --------
Tailings Dumps ------------ ------------
3 310 000 165 500
Surface Measured ============ 5.00 ============ 80
Main
Pipe
VK* 73-345 Indicated 5 879 000 24.4 1 434 000 160
11 163
345-855 Inferred 000 24.4 2 724 000 160
16 079
CK** 345-855 Inferred 000 56.8 9 133 000 ?
------------ -------------
33 121 13 291
000 000
============ =============
Satellite Pipe
VK 73-345 Indicated 1 375 000 7.1 98 000 160
VK &
CK 345-600 Inferred 1 091 000 ? ? ?
------------
2 466 000
============
* VK = massive volcaniclastic kimberlite, previously referred to
as TKB or tuffisitic kimberlite breccia.
** CK = coherent kimberlite, previously referred to as
hypabyssal kimberlite.
? $/carat on inferred CK and grade on inferred satellite pipe
kimberlite cannot be determined until underground mine development
intersects these facies and a bulk test is extracted.
BACKGROUND - LACE MINE, FREE STATE PROVENCE, SOUTH AFRICA
The Lace diamond mine is located 25km northwest of the town of
Kroonstad within the Free State Province of South Africa. The mine
operated from 1896 to 1931, and according to mine records produced
approximately 700,000 carats of diamonds from 4.5 million tonnes of
kimberlite at a recovered grade of 16 cpht. The production was
reported to be high quality, white diamonds, with the biggest
stones recorded historically being 122 and 86 carats. The
kimberlite was mined by open pit to approximately 100m depth, then
by underground methods to 240m depth. In 1920s, higher grade
kimberlite was encountered as the workings went deeper, and a
decision was taken to develop a 6.5m x 2.5m vertical shaft to the
36 level (360m) and pre-develop the kimberlite between the 24 level
and the 33 level with 2m x 2m development drives.
The vertical shaft and development drives were completed in
1930, a year before the mine closed when diamond prices collapsed
in the Great Depression. The mine was then kept dewatered until
1939, when it was acquired by De Beers Consolidated Mines Limited.
De Beers never operated the mine, but instead let it flood, thereby
sterilising the resource as part of their control of the supply
side of the diamond industry. Following progressive changes to the
mining law in South Africa, DiamondCorp acquired the property from
the Christiaan Potgieter Trust in 2006 in conjunction with Black
Economic Empowerment partners Shanduka Resources and Sphere
Investments.
In 2007, DiamondCorp constructed a 1.2 million tonne per annum
dense medium separation plant at Lace and commenced treatment of
approximately 3.4 million tonnes of kimberlite tailings from the
mining activities which took place between 1896 and 1931.
Approximately 1.1 million tonnes of tailings were treated at a
recovered grade of 8 cpht. At the same time, a 4.5m x 4.5m decline
was commenced to access and bulk test the kimberlite below the
previous mining levels. Decline development and tailings
re-treatment ceased at the end of 2008 when diamond prices fell by
50 per cent during the credit crisis. Decline development resumed
in May 2009 and reached the kimberlite sampling level 25 in May
2010.
London
20 March 2012
The Competent Person with overall responsibility for the
Independent Engineering Report is Mr M.L. Wertz (Pr Eng,
Engineering Council of SA Registration Number 20010025), who is a
partner with SRK Consulting and a mining engineer with more than 20
years experience who has carried out numerous due-diligence reviews
in South Africa and internationally during the past 10 years. Mr
Wertz and SRK have reviewed the information contained herein and
approved the contents of the news release.
The Competent Person responsible for the resource statement
contained in this announcement is Mr Paul Zweistra (Pr. Sci. Nat.,
Registration number 400016/93) a full-time employee of VP3
Geoservices (Pty) Ltd. VP3 and Mr Zweistra have revieved the
information contained herein and approved the contents of this news
release.
AIM Nomad: Fairfax I.S. plc
AIM Brokers: Fairfax I.S. plc, Ocean Equities Ltd JSE Sponsor:
PSG Capital (Pty) Limited DiamondCorp plc, Paul Loudon +44 20 3151
0970/+27 56 212 2308 Ewan Leggat, Fairfax I.S. plc +44 207 598 5368
Guy Wilkes, Ocean Equities Limited +44 207 786 4370 John-Paul
Dicks, PSG Capital (Pty) Limited +27 21 887 9602 Charmane
Russell/Marion Brower, Russell & Associates +27 11 880 3924
This information is provided by RNS
The company news service from the London Stock Exchange
END
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