TIDMDCP
RNS Number : 8001Y
Diamondcorp Plc
30 January 2014
30 January 2014
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 mine Project update
DiamondCorp, the Southern African diamond development and
exploration company, is pleased to provide the following update on
the underground development and tailings re-treatment activities at
the Lace diamond mine in the Free State province of South
Africa.
Highlights
-- Underground development remains close to schedule and under budget.
-- The owner-operated mining fleet continues to provide over 90%
availability and is operating under budget.
-- Steel sets are now being installed in the boxcut ramp to
provide tunnel support before the excavation is backfilled.
-- The underground conveyor belt system is on schedule and the
first leg for installation has been delivered to site.
-- Surface piling for the raise boring of the life of mine vent shaft has commenced.
-- A 400 tonne per hour (tph) in-pit screening system which has
the potential to increase tailings throughput to 150,000 tonnes per
month has been installed and is about to be commissioned.
-- Drilling of the Bulge area from underground continues to
confirm the potential for additional kimberlite between the 260m
and 470m levels which is not currently in the mine plan.
-- The Company has experienced no labour issues.
-- The weakening of the rand is forecast to have a positive
impact on operating margins and the Group debt position.
-- Diamond sales for 2014 will commence next month with prices
reportedly improving by 5-10% since December.
Underground development
The Company's 74%-owned Lace Diamond Mines (Pty) Limited (LDM)
continues to ramp up underground development close to schedule and
within budget.
At the end of December 2013, underground tunnel development was
15% complete versus a scheduled 16% (1,113m against 1,187m) and is
being achieved at 94% of the budgeted cost per metre (R27,470/m
against R29,360/m). Hiring of an additional two mining crews is
underway and the full underground complement is expected to be
reached by the end of March.
The Company has experienced no labour issues and continues to
hire the personnel it requires. The labour force in December 2013
totalled 233 and is forecast to grow to approximately 350 by the
end of this year.
Safety remains a major priority for the Company, with Lace
achieving a 64% improvement in the lost time injury frequency rate
(LTIFR) from 0.90 in 2012 to 0.55 in 2013. Management aims for zero
harm to its employees and targets a LTIFR of less than 0.5.*
Surface piling for the life of mine vent shaft has commenced and
is expected to be completed by the end of February 2014, well ahead
of the raise bore contractor mobilising in the second half of the
year.
The underground mining fleet continues to provide over 90%
availability, with operating costs running at 95% of budget. The
mining fleet rebuild costs are also running at 95% of budget. The
last two rebuilt 20 tonne low profile dump trucks required to
achieve maximum underground development rates have been
commissioned on time. The last two underground loaders are
currently being assembled and are scheduled for completion next
month.
Twin decline development from the base of the boxcut continues
downwards to meet the development tunnels coming up from the 92m
level. To date, ground conditions in the upper levels are more
competent than those experienced in the exploration decline at a
similar elevation. Installation of the steel sets for reinforcement
of the portal area is complete and double sets are now being
installed up the ramp of the boxcut. Once installed, timbered and
shotcreted, the boxcut will be partially backfilled and profiled
with shallow batter angles.
The design and detail drawings for the underground conveyor belt
system are on schedule (85% complete) and under budget. Fabrication
of the first leg of the conveyor to be installed has been completed
and delivered to site; fabrication of the second leg is 40%
complete.
Tailings retreatment
Following adjustments to the bottom screen size cut reported
previously, tailings retreatment continued on one shift in October
and two shifts in November and December 2013.
During the three month period ended December 31 2013, the plant
processed 138,475 tonnes against a budget 140,000 tonnes and
recovered 6,522.71 carats at a recovered grade of 4.71 carats per
hundred tonnes (cpht) against a budget 5 cpht. Mining during the
latter part of the period was in the oldest lower grade section of
the dump to clear space for the installation of a 400 tph in-pit
high frequency sand screen.
The sand screen was installed in January and commissioning by
the manufacturer Osborn is about to commence. The screen has the
potential to increase tailings throughput to 150,000 tonne per
month. At an expected average grade of 5 cpht, the screen is
forecast to increase diamond recoveries from tailings retreatment
to 7,500 carats per month and reduce plant operating costs to R22/t
on a three shift basis.
Diamond Sales
Diamond sales for 2014 will commence in February, with ten sales
scheduled for the year. The Company's diamontaires in Antwerp
report that demand for rough diamonds has improved and that prices
have increased 5-10% over the prices achieved in December 2013.
The Company is forecasting an average of $63/ct for its tailings
goods in 2014, which would give revenue of R35/t at an exchange
rate of R11 to the dollar.
The 20% weakening of the rand since the middle of 2013 has
resulted in potential tailings retreatment margins increasing by
30% from a forecast R10/t to R13/t. The weaker rand also has a
beneficial impact on potential underground operating costs with
forecast operating breakeven grade falling from 10 cpht to 9 cpht
after adjusting for the negative impact on diesel price inputs. The
Lace kimberlite grade ranges from 24 cpht in the upper levels to an
estimated 57 cpht in the lower levels of the pipe.
The weaker rand and stronger sterling also has a positive impact
on the Group debt position as the majority of the Company's project
finance is denominated in rand and reported in sterling. Diamond
sales being denominated in US dollars provide a natural hedge
against the weakening rand.
Bulge drilling
Drilling of the Bulge area continues from inside the kimberlite.
At the end of December 2013, a total of 1,220m of diamond core
drilling had been completed. The nine holes drilled to date
continue to confirm that the Bulge area has the potential to host
significant additional kimberlite between the 260m and 470m levels
which is not currently in the mine plan. The drilling will form the
basis of a resource upgrade for the Bulge area in the first half of
2014 and thereafter a feasibility study on the economics of mining
this area.
Contact details:
DiamondCorp plc
Paul Loudon, Chief Executive
Tel: +27 (0) 56 212 2930
Euan Worthington, Chairman
Tel: +44 (0) 7753 862 097
UK Broker & Nomad
Panmure Gordon (UK) Limited
Dominic Morley/Adam James
Tel: +44 20 7886 2500
JSE Designated Advisor
Sasfin Capital (a division of Sasfin Bank Limited)
Leonard Eiser
Tel: +27 11 809 7738
* LTIFR is an industry standard calculation based on the number
of lost time injuries multiplied by 200,000, divided by the number
of lost time injuries multiplied by 9. Lace had one lost time
injury in 2013 and 40,185 lost time injury free shifts during the
year to 31 December 2013.
This information is provided by RNS
The company news service from the London Stock Exchange
END
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