26th May 2015 09:06
LONDON (Alliance News) - DiamondCorp PLC Tuesday said its pretax loss widened in 2014 but the development of the upper K4 block at the Lace diamond mine in South Africa, which the company plans to begin mining in the second half of 2015, remains ahead of schedule.
The diamond miner reported a pretax loss of GBP3.3 million in 2014, widening from the GBP2.6 million loss in 2013, after it booked a GBP1.7 million loss on fair-value adjustments compared to a GBP619,042 such loss a year earlier. That was partially offset by operating and administrative expenses being reduced to GBP1.6 million from GBP2.2 million.
DiamondCorp said its administrative expenses have fallen for three years in a row as a result of "careful attention to cost control".
Diamond recoveries from the company's tailings, the by-products left over from mining and extracting resources, totalled 18,354 carats at an average grade of 5.96 carats per hundred tonnes, ahead of the company's target grade of 5.0 carats per hundred tonnes, whilst diamond sales came in at 21,700 carats at an average price of USD63 per carat.
However, revenue for the year only totalled GBP39,097 as income from the diamonds sold has been credited to mine development as this is "incidental to the development and testing of the processing plant", it said. In 2013, it generated GBP13,983 in revenue.
The company's sole project is the Lace diamond and although it has been recovering diamonds from tailings at the project, it is working toward mining operations starting in the second-half of 2015, "several months ahead of schedule", as it develops the upper K4 mining block.
DiamondCorp is expecting to secure a final resource statement for the upper K4 block before the end of the second quarter of 2015.
"Short-term demand for rough diamonds continues to be soft in response to slower polished sales and tightening liquidity as a number of banks which finance the cutting and polishing sector continue to reduce their exposure to the sector. Longer-term, the outlook remains strong as world economies continue to recover," said DiamondCorp.
The company said it has not factored diamond price increases into its Lace project model since test diamonds were valued in 2012 at USD160 per carat, but said Tuesday it has now modelled the Lace project at USD150 per carat "in light of the current market weakness".
At the end of 2014, the company had a cash balance of GBP2.5 million, which is slightly higher than the GBP2.2 million it had at the end of 2013.
"In the next annual report, I look forward to reporting on the ramp up in production from the underground operations at Lace and the commencement of regular sales of diamonds recovered from kimberlite. As we move forward into positive cashflow, we will look to see how we can best maximise returns to our shareholders demonstrate the intrinsic value in the Lace operation," said Chief Executive Paul Loudon.
DiamondCorp shares were down 4.3% to 10.65 pence per share on Tuesday morning.
By Joshua Warner; [email protected]; @JoshAlliance
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