24th Jun 2009 16:30
DiamondCorp Plc
JSE share code: DMC & AIM share code: DCP
ISIN: GB00B183ZC46
(Incorporated in England and Wales)
(Registration number 05400982)
(SA company registration number 2007/031444/10)
("DiamondCorp" or "the Company")
LACE MINE UPDATE AND CAUTIONARY ANNOUNCEMENT
BOTSWANA EXPLORATION JOINT VENTURE
DiamondCorp plc, the South African diamond mining company provides the following update on activities at the Lace diamond mine in South Africa and announces details of a new exploration joint venture signed in Botswana.
LACE MINE UPDATE
PRIMARY CRUSHING CIRCUIT
Commissioning of the new primary crushing circuit at the Lace diamond mine in South Africa has been successfully completed and kimberlite dump material processed during the commissioning process yielded 1,533.95 carats of gem diamonds, including a 14.74 carat clear white stone.
The diamonds were tendered in Johannesburg in May and sold for R963,541, representing a price of US$79 per carat. The US dollar per carat exceeded management's revised forecast, but was slightly lower than forecast on a rand per carat basis due to the strengthening of the rand.
In addition, 292.61 carats of non- or near-gem diamonds were recovered, meaning approximately 85 per cent of the diamonds recovered from the kimberlite were gem quality, which is in line with management estimates. The non-gem diamonds were tendered and sold at US$3.74 per carat. A further 2,367.51 carats of gem diamonds recovered earlier in the year from tailings re-crush were also tendered and sold for R890,368, representing US$47 per carat.
Commenting on the tender price, DiamondCorp managing director and CEO Paul Loudon said: 'Demand for the Lace diamonds in May was strong as cutters and polishers sought to fill holes in inventories.
'We expect prices to remain around these levels for the remainder of 2009, but no significant price appreciation is anticipated until the second half of 2010.'
UNDERGROUND MINING PLAN
Management's mine planning for access to the remaining kimberlite at Lace has been assisted by the location last month in a Government archive in Pretoria of all the level plans from mining operations which took place between 1901 and 1931. Management has been searching for the plans for four years, and had previously been advised by the Department of Minerals and Energy that they suspected the plans had been destroyed in a fire in Welkom some years ago.
The plans reveal that more kimberlite has been extracted above the -240m level than was previously estimated in independent competent persons' reports (CPR). The CPRs do not incorporate kimberlite above the -240m level in resource estimates but concluded that a significant volume of Main Pipe and Satellite Pipe kimberlite existed between -100m and -240m. As a consequence of the level plan data, it is apparent that until the 4m x 4m access decline reaches the -240m level in the second half of 2010, DiamondCorp's mining will be limited to 1,000 tonnes per day. The reduced mining rate until the -240m level is reached will have a negative impact on cashflow from operations, the full extent of which will be determined when grade and carat value from the current sampling programme is completed by the end of July.
Accordingly shareholders are advised to exercise caution when dealing in their shares until details of the sampling programme are announced, which is expected on or about 31 July 2009.
On the positive side, the plans reveal more than 9,000m of development is in place between the -240m and -330m levels. Once the -240m level is reached it is anticipated that mining will be able to increase to 4,000 tonnes per day through the existing vertical shaft on the current schedule in the second half of 2010. In addition, the Directors expect that the plan data will have a positive impact on the Company's resource statement as the estimated 6.57 million tonnes of kimberlite between the 240m and the 345m levels, which has previously not been included in resource estimates, is now expected to be upgraded to an indicated resource under the SAMREC code. Between the -345m level and the -855m level there is an inferred resource of 24.24 million tonnes of kimberlite at an estimated grade of 42 carats per hundred tonnes, containing 11.91 million carats of diamonds.
Processing of bulk samples of kimberlite from the Satellite Pipe and from the CK Pillar of the Main Pipe at Lace is now underway. The results from these samples are anticipated by the end of July. The Satellite Pipe is predominantly volcaniclastic kimberlite (VK)* and was historically reported to be a lower grade than the Main Pipe. While not integral to the proposed mining plan, the Satellite Pipe grade results will be incorporated into a review of the Company's resource statement now underway as well as provide important information with respect to diamond quality, value and stone size distribution. The CK Pillar, which is adjacent to DiamondCorp's spiral decline progressing to the -240m level and surrounds the original Lace mine prospect shaft, is anticipated to contain a proportion of potentially high-grade coherent kimberlite (CK)** as well as remnant VK facies and is integral to the proposed mine plan until the end of 2010.
BOTSWANA EXPLORATION JOINT VENTURE
DiamondCorp has reached agreement with a Botswana exploration company Geoperspectives (Pty) Limited to earn a 77.5% interest in three diamond exploration licences in Botswana. The licences total 109.2 sq km and contain nine known kimberlites. DiamondCorp can earn its interest in the joint venture by completing a definitive feasibility study within five years on developing a new diamond mine in the project area.
The primary exploration target is kimberlite J-01 within Licence PL071/2007, which is approximately 8km southeast of De Beers Jwaneng Mine. Previous limited exploration indicates J-01 has a possible size of 9.9ha and a potential grade of 35 carats per hundred tonnes.
An initial work programme for the Botswana joint venture areas is now being prepared.
NOTES
* VK - Volcaniclastic Kimberlite. Kimberlite which has been diluted with non-diamond bearing country rock due to fragmentation processes at the time of emplacement. Previously referred to as TKB, tuffisitic kimberlite breccia.
** CK - Coherent Kimberlite. Kimberlite which, because it was emplaced without fragmentation processes, has not been diluted with non-diamond bearing country rock. Previously referred to as hypabyssal kimberlite.
Information in this announcement relating to exploration results in Botswana is based on data reviewed by Mr Paul Zweistra B.Sc.(Hons) Pr.Sci.Nat., a director of VP3 GeoServices (Pty) Limited, who is registered as a Professional Natural Scientist with the South African Council for Natural Scientific Professions in the field of geological science, and has more than 27 years relevant experience in mineral exploration and is a Qualified Person under AIM rules. Mr Zweistra consents to the inclusion of the information in the form and context in which it appears.
24 June 2009
London
Sponsor:
Investec Bank Limited
For further information, please contact:
Paul Loudon
DiamondCorp plc
+44 20 7256 2651
Joe Nally/Yvonne Cantu/Liz Bowman
Cenkos Securities plc
+44 20 7397 8900
Robert Smith/Tanis Crosby
Investec Bank Limited
+27 11 286 7662
Charmane Russell
Russell & Associates
+27 11 880 3924
Related Shares:
DCP.L