KDC Kimberley Dia

    ASX/AIM Release 13 February 2007

                      ELLENDALE DIAMOND SALES, PRODUCTION                      
                             AND EXPANSION UPDATE                              

  * Strong results from new year diamond sales, with the first tender sale of
    2007 achieving prices 6% above Kimberley's valuation and significantly
    higher for premium goods.
   
  * A$9 million in tender and direct sales completed to date in 2007, with 
    March 2007 quarter sales budgeted at A$25 million.
   
  * Strong production and inventory build-up continuing, with Ellendale 4
    achieving or exceeding production of 12,000 tonnes per day.
   
  * Record diamond weights achieved at Ellendale 4 with a 12.4 carat diamond
    and 9 stones above 6 carats recovered during January 2007.
   
  * Kimberley takes full control of final stages of Ellendale 9 East Plant
    commissioning to rectify delays experienced in completing ramp-up to
    450tph.
   
  * Studies underway on plant optimisation initiatives to further increase
    Ellendale 4 production to 700-800tph and Ellendale 9 to 600tph.
   
Kimberley Diamond Company NL (ASX: KIM, AIM: KDC - "Kimberley") is pleased to
announce an update on its New Year diamond sales, recent production results and
plans to further expand production throughput and recoveries at both the
Ellendale 9 and Ellendale 4 operations.

Strong Results from New Diamond Sales

Kimberley advises that it has received strong results from the two diamond
sales completed since the beginning of the year. On average, these sales were
concluded at prices in excess of valuation, with the first tender sale of the
year achieving average prices 6% above Kimberley's book price, indicating a
positive upward trend in the international diamond market. Significantly, the
prices paid for premium quality diamonds, including several large Kimberley
Yellow stones, materially exceeded the price book.

A total of A$9 million in sales have been concluded since the beginning of the
year, including a direct sale and a large tender sale in Antwerp, Belgium,
which was conducted through Kimberley's sales subsidiary, Kimberley Diamonds
Australia BVBA.

The new sales were concluded as part of the deferred sales and marketing
strategy announced by Kimberley late last year to take advantage of firmer new
year conditions in the global diamond market. As part of this strategy,
Kimberley has budgeted A$25 million of sales of Ellendale goods during the 2007
March quarter.

A recent independent report commissioned by Kimberley concludes that the
short-term outlook for the diamond market is positive, with retail demand
increasing steadily and a decrease in supply expected to underpin price
increases in 2007 for both rough and polished goods. The report also points to
a strong longer-term outlook for the market over the next 5-7 years with retail
demand growth expected to outstrip supply.

The upper end of the market, which tended to be insulated against last year's
market fluctuations, continues to perform particularly strongly with record
demand for better quality larger and specialty diamonds. This is strategically
important for Kimberley, given that Ellendale produces a significant proportion
of the world's fancy yellow stones.

Ellendale 4 Production & Further Expansion

The newly commissioned 4.4mtpa Ellendale 4 South Plant has completed its
ramp-up to steady-state production of 12,000 tonnes per day, with the plant
recently achieving a record throughput of up to 14,000 tonnes. The plant's
mechanical reliability has exceeded expectations and is handling the wet season
conditions much better than expected. Significantly, recovered plant grades for
the Ellendale 4 operation have exceeded the resource grade for the Ellendale 4
deposit of 6.6cpht. With mining focusing on the higher value and grade areas in
the E4 South East Lobe, the average recovered plant grade since start-up has
been 9.6cpht with highlight grades in excess of 15cpht in recent production
blocks.

Another positive trend has been the recovery of larger stones with record
weights achieved, including the recovery of a 12.4 carat diamond and nine
stones larger than 6 carats during January 2007. The recovery of these larger
gems, which included some signature fancy yellow stones, was not anticipated
from historical sampling and data for Ellendale 4. The average recovered stone
size increased to 0.21 carats per stone in January 2007 against an estimated
range of 0.14-0.16 carats per stone from the 2003 Bauer drilling program.

As a result of the strong performance of the Ellendale 4 Operation, the Project
has continued a strong build-up in its diamond inventories as carat production
increases. This strong production performance is contributing to a positive
downward trend in unit operating costs.

Kimberley has commenced a cost-benefit analysis and obtained an independent
engineering review on a planned series of initiatives to further increase the
capacity of the Ellendale 4 Plant to 700-800tph. Preliminary indications are
that this can be achieved with minimal additional capital expenditure (mainly
installation of extra secondary and tertiary crushing capacity) given that all
the existing major components of the plant can already accommodate the extra
throughput being in excess of design capacity. The Company intends to complete
these studies during the current Quarter, with the objective of rapidly
implementing the initiatives to achieve the increased throughput during the
second half of 2007. The objective is to increase the processing capacity of
the Ellendale 4 operation by 25% to 5.5mtpa which would result in further
reductions in unit operating costs.

Ellendale 9 East Plant

Following the previously reported delays in completing the production ramp-up
of the new Ellendale 9 East Plant to its design specification of 3.3mtpa
(450tph), Kimberley has now assumed full control of the commissioning process
and terminated its contract with the plant construction contractor, Pacer
Engineering.

A recently completed independent engineering review of the East Plant upgrade
by a leading international engineering group specialising in diamond production
and metallurgy has confirmed that the operational difficulties with the plant
can be rectified relatively quickly by re-introducing the scrubbers and minor
re-engineering.

This process has commenced, under supervision of Kimberley's Production
Manager, Ron Edwards, who has been seconded to the Company from Mine Plant
Constructions (MPC), the contractor responsible for the successful Ellendale 4
development. The capital cost estimate associated with these changes is $2
million, with the improvements expected to take approximately 8-10 weeks to
implement.

As part of this process, Kimberley is conducting a cost-benefit analysis on
implementing further initiatives to increase the processing capacity of the
Ellendale 9 East Plant to 600tph during the second half of 2007. This would
increase total processing capacity at Ellendale 9 to approximately 4.4mtpa.

Notwithstanding the delays in consistently achieving design throughputs at
Ellendale 9, the plant is currently operating at throughput levels of around
300tph and higher for brief periods. There has also been a positive improving
trend in diamond size frequency distributions and an increase in recovered
grade compared with feasibility estimates.

Summary

Kimberley's focus is on attaining steady state production levels at both the
Ellendale 4 and 9 production centres.

Recent independent engineering reviews have indicated the potential to
implement targeted initiatives at both plants which, with minimal capital
expenditure, would increase total processing capacity at the Ellendale complex
to around 10mtpa in the second half of 2007. This would have a further
significant positive impact on operating costs and has the potential to
increase carat production above the base case targeted level of 650,000 carats
per annum.

Commenting on the recent developments, Kimberley's Executive Chairman, Miles
Kennedy, said: "The Ellendale Project is clearly now beginning to hit its
straps, with very encouraging trends in throughput, carat production and
operating costs and a rapid build-up in diamond inventories. We have moved
quickly and decisively to address the delays in bringing the new Ellendale 9
East Plant up to full capacity and we anticipate resolving outstanding issues
here within the next two months."

"More importantly, we are examining simple and cost effective strategies to
optimise both plants with the potential to add more than 2mtpa of additional
processing capacity to the complex," Mr Kennedy added. "Our production profile
is being substantially upgraded at an opportune time in the international
diamond market, with signs emerging of a sustained increase in prices,
particularly for our high-quality fancy yellow goods. These developments bode
extremely well for the future."

                                   - ENDS -                                    
Released by:                                                      On behalf of:
Nicholas Read                                          Miles Kennedy - Chairman
Jan Hope & Partners                                Kimberley Diamond Company NL
Telephone: (+61-8) 9388 1474                             Telephone: (+61-8) 9321 5887

12 WALKER AVENUE WEST PERTH 6005 WESTERN AUSTRALIA PO BOX 806 WEST PERTH
WESTERN AUSTRALIA 6872
TEL (+61-8) 9321 5887 FAX (+61-8) 9321 5884 EMAIL general@kimres.com.au WWW
www.kimberleydiamondco.com.au


END

Kimberley Dia (LSE:KDC)
Historical Stock Chart
From Jun 2024 to Jul 2024

Kimberley Dia (LSE:KDC)
Historical Stock Chart
From Jul 2023 to Jul 2024