LACE DIAMOND MINE PROJECT UPDATE

29 January 2015

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 DIAMOND mine Project update

DiamondCorp, the Southern African diamond mine 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 Free State province of South Africa.

Highlights

· Development work in the Upper K4 (UK4) block is now on schedule for commencement of mining operations in H2 2015. This will be four months ahead of the original plan but delayed a few weeks from H1 2015 due to the impact of industrial action in Q4 2014.

· Development productivity has improved 15% compared to the period before the strike as a result of changes to workplace practices implemented after the industrial action ended.

· The underground conveyor system is 80% fabricated and on site, 30% installed and remains on schedule for commissioning in H1 2015.

· The Company has taken delivery of the new Sandvik 421 drill rig required for longhole drilling on the production levels in the UK4 and 47 Level block cave.

· Underground core drilling of the UK4 block continues to delineate significant volumes of K4 (high grade) kimberlite above the 365m level. Bulk testing and an updated resource statement will be completed in early Q2 2015.

· Mine development costs to date are averaging R40,764 per metre against a budget of R37,000 per metre.

· The additional water storage dam and surface drains installed last year means that sufficient water has been collected for 2015 processing requirements despite the third year of below average rainfall.

· Diamond recoveries from tailings for the year ended 31 December 2014 totalled 18,354 carats at a recovered grade of 5.96 carats per hundred tonnes (cpht) against a budget of 5.00 cpht.

· Diamond sales for the year ended 31 December 2014 totalled 21,700 carats at an average price of US$63 per carat, slightly higher than expected.

Underground Development

During the three months ended 31 December 2014, the Company's 74%-owned subsidiary Lace Diamond Mines (Pty) Limited (LDM) continued with the implementation of a revised underground development schedule and budget which aimed to bring forward the ramp-up of commercial production from underground kimberlite mining by six months into late H1 2015. As a consequence of the six week industrial action by members of the Association of Mineworkers and Construction Union (AMCU) in October and November, production will now commence in H2 which will still be four months ahead of the original plan.

During the strike, a number of underground workplace inefficiencies were identified which were addressed when the workforce returned to work. As a consequence of these changes, a 15% improvement in development productivity has so far been achieved.

Tunnel development costs to date are averaging R40,764/m against a revised budget of R37,000/m. The overspend continues to be the result of increased operating costs on the Company's underground mining fleet and delays resulting from the AMCU strike. The benefits of maintenance and repair cost saving initiatives reported previously are currently being offset by cost increases on spare parts resulting from the weaker South African rand. As yet, the impact of international oil price falls has not been reflected in diesel costs in rand terms. The mine has not been affected by Eskom power load shedding. The Company notes a growing delay in VAT refunds from the South African Revenue Service but the overall mine development expenditure remains close to budget.

The Company is pleased to have taken delivery of its new Sandvik 421 drill rig. This rig has the capacity to drill longholes up to to 54m in length and 127 mm in diameter and will be used to complete all the longhole drilling on the production levels in the UK4 and 47L block cave. Operator and artisan training is now underway, and the rig will shortly go underground, where it will be tested and commissioned ahead of drilling the slot drive and troughs for the first stope in the UK4 block.

Workplace safety remains a priority for the Company. The Lost Time Injury Frequency Rate (LTIFR) for 2014 was 0.72, slightly up on 0.63 in 2013, but still significantly below the average for mining operations in South Africa. Lace had two lost time injuries and 61,303 lost time injury free shifts during 2014. Management aims for zero harm to its employees and targets a LTIFR of less than 0.5.*

Underground core drilling of the UK4 block continues to delineate significant volumes of K4 (high grade) kimberlite above the 365m level. The drilling, bulk testing and release of an updated resource statement will now be completed in early Q2, rather than Q1 as previously planned.

Tailings retreatment

In the year ended 31 December 2014, the Company processed 308,047 tonnes of tailings and recovered 18,534 carats of diamonds at an average recovered grade of 5.96 cpht, compared with a budget recovered grade of 5 cpht.

Tailings re-treatment processing stopped in September as the surface earth moving fleet relocated to construct another 150,000 cubic metre surface process water storage dam in preparation for earlier than scheduled kimberlite mining. This activity was successfully completed in the dry winter months ahead of the summer rains. The construction of the new dam, plus additional surface drains has allowed the mine to capture all of the water required for 2015 kimberlite processing.

An additional large surface dam is planned for construction in 2015 which will store sufficient water for full production requirements during low rainfall years. The timing of the re-commencement of tailings retreatment this year will be determined by the dam building schedule.

Diamond sales and market

Diamond sales for the year ended 31 December 2014 totalled 21,700 carats for proceeds of US$1,361,778. The average sales price was $63 per carat, slightly ahead of forecast for the year. Profit share on two diamonds which were beneficiated from a 15.2 carat stone recovered from tailings and the sale of fine diamonds added a further $58,544 to income for the year.

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 reduce their exposure to the sector. Longer-term, the outlook remains positive as world economic growth recovers and demand for diamonds outstrips supply.

The Company has not factored diamond price increases into its Lace project model since the 250m level bulk test diamonds were valued in 2012 at $160 per carat. Nonetheless, in light of the current market weakness, the Company is currently modelling the Lace project at $150 per carat. At the current rand/dollar exchange rate, this gives cash operating margins of 81% on the UK4 Block and 71% on the deposit overall.

* 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. PwC in their 2014 SA Mine Review show LTIFR in South African gold mines averaged 4.2, platinum 2.1, coal 1.2 and other commodities, including diamonds, 1.1.

Contact details:

DiamondCorp plc

Paul Loudon, Chief Executive

Tel: +27 56 216 1300

Euan Worthington, Chairman

Tel: +44 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)Megan Young

Tel: +27 11 445 8068