30th Oct 2014 09:38
LONDON (Alliance News) - DiamondCorp PLC Thursday said it is bringing the Lace diamond mine in South Africa into production six months earlier than planned despite ongoing strike action.
During the quarter ended September 30, the company has began implementing a new underground development schedule and budget for the mine, aimed at bringing the mine into commercial production in the first half of 2015, six months before originally planned.
It says the review of the budget will see tunnel development costs rise to ZAR39,135 per metre compared to its budget of ZAR37,000 per metre. The overspend is due to high operating costs, but the company is starting to see the impact of cost saving initiatives it has put in place at the mine, it said in a statement.
The overall expenditure for the mine is on budget and it plans to begin underground drilling and bulk testing to provide an updated resource statement for the mine in the first quarter of 2015, it added.
During the third quarter, DiamondCorp has decided to stop the re-treatment of tailings at the site to allow the construction of a 150,000 cubic metre water storage dam in preparation for the earlier-than-scheduled mining.
On October 23, a number of employees at the Lace mine took strike action due to the company's refusal to employ two full-time salaried shop stewards. The development of the mine continues, and the company has said that it will be reviewing workplace inefficiencies once the strike is finished.
Before the strike, the average productivity of tunnelling staff was 1.57 tonnes per worker, per shift. Since the strike, productivity has increased to 2.87 tonnes per person, per shift. It is estimated that for every two weeks the strike continues, it will add approximately one week to the development timetable, it said in a statement.
Diamond sales for the nine months ended September 30, totalled 16,505 carats for proceeds of USD1.1 million. The average year-to-date sales price of USD65 per carat is 5% above the company's forecast for the year. It is also awaiting to receive its 50% share of the 15.2 carat diamond recovered from the tailings plant in July, it added.
"Short-term demand for rough diamonds has softened in response to slower polished sales and tightening liquidity as a number of banks which finance the cutting and polishing sector have moved to reduce their exposure to the sector. Longer-term, the outlook remains strong as world economies continue to recover," it said in a statement.
Diamondcorp shares were down 3.6% to 6.75 pence per share Thursday morning.
By Joshua Warner; [email protected]; @JoshAlliance
Copyright 2014 Alliance News Limited. All Rights Reserved.
Related Shares:
DCP.L