13 Oct 2015 07:00
13 October 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" or "the Company")
CONVEYOR BELT INSTALLATION COMPLETE
COMMISSIONING UNDERWAY
DIAMOND SALES AND VALUATION
Conveyor Belt Installation and Commissioning
DiamondCorp, the Southern African diamond mining, development and exploration company, is pleased to report that installation of the 400 tonne per hour underground conveyor belt system from the first production level at the Lace mine to surface has been successfully completed and commissioning is underway.
DiamondCorp Chief Executive Officer, Paul Loudon, said: "Installation of the conveyor belts ahead of the ramp up in production from the Upper K4 ("UK4") mining block is a significant milestone in the construction of the Lace mine."
By the end of this month commissioning will be completed and all future kimberlite and development waste mined at Lace will be transported to surface via the conveyor rather than the Company's fleet of dump trucks. This will result in a significant reduction in the cost per tonne to load and haul rock. The dump trucks will still be used for transporting the kimberlite from the UK4 production level to the conveyor belt at a planned rate of up to 30,000 tonnes per month. While mining of the UK4 progresses, the conveyor belt will be progressively extended down to the first block cave level. Development waste from the deeper levels will be loaded directly onto the conveyor belt by underground loaders without the use of trucks.
The conveyor belt capacity has been sized at double the current front end capacity of the processing plant so that future opportunities for increasing the underground mining rate are not constrained by an inability to transport ore to surface.
Currently, the ultimate planned mining rate at Lace of 1,200,000 tonnes per annum (200 tonne per hour) is constrained by the availability of processing water. Opportunities to increase the mining rate are therefore aimed at reducing water consumption. These measures include the introduction of a de-grit circuit and x-ray and/or optical waste sorting technology. The latter process has the potential to remove the majority of internal waste from the kimberlite before it reaches the processing plant as all kimberlite facies at Lace contain large amounts of internal waste.
The de-grit circuit has already been installed and commissioned in the plant, with the bottom screen size having been increased from 1.00 mm to 1.25 mm. The removal of this sand fraction has resulted in up to a 50% reduction in water consumption in the processing plant. While the sand fraction contains significant numbers of small diamonds, they are the lowest value stones and their recovery for sale is considered by management to be a break even exercise at best in the foreseeable future.
To confirm this, separate test work on the diamond content of the sand fraction is being undertaken as part of the resource statement upgrade work currently underway. Preliminary results suggest that a reduction in the recovered grade per tonne of diamonds is offset by a proportional increase in the dollar per carat received for the resulting coarser diamond size frequency recovered and that overall the reduced plant processing costs result in a net gain to mine economics.
With respect to the waste sorter, preliminary test work has demonstrated that the majority of the waste has the potential to be removed. Commercial scale test work is now being undertaken in Johannesburg with results expected before the end of this year.
In combination, the de-grit circuit and waste sorting technology have the potential for the Lace deposit to be mined at a significantly faster rate than is currently planned with improved economics.
Diamond sales and valuation
The Company has reviewed its diamond sales strategy in light of the slower than planned development rate at the Lace mine as has been reported previously. Diamond parcels of less than 10,000 carats tend to attract weaker prices than larger volumes and management has decided to wait until more diamonds have been accumulated before commencing sales.
To date, 4,250 carats of diamonds have been recovered from bulk testing and development drives at the Lace mine. This is less than had been planned due to the slower than scheduled development rate in the Upper K4 Block due to difficult ground conditions. While the recoveries to date are less than half of one month's production once commercial production is achieved from the first mining block, they are nonetheless sufficient for an independent valuation of what the diamonds are expected to fetch in commercial volumes. The valuation was undertaken by the Company's independent agent in Antwerp, Natural Diamond Corporation NV. Pleasingly, the valuation predicts diamond sales should average between US$140 and $160 per carat at a 1.00mm bottom screen size cut off and between $160 and $200 per carat at a 1.25mm bottom screen size in the current market. These valuation ranges exclude the occurrence of larger high value stones, the frequency of which is yet to be established.
These valuation figures will be incorporated into the Company's updated resource statement which is being prepared by the Company's independent geological consultants MPH Consulting Limited in Toronto. MPH has requested two additional microdiamond samples and one more 180m underground delineation core drill hole in order to complete its statement. The underground drill hole has commenced and the two 50kg microdiamond samples have been despatched to Johannesburg for caustic fusion and laboratory analysis.
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
SA Corporate Advisor
Qinisele Resources Proprietary Limited
Dennis Tucker/Andrew Brady
Tel: +27 11 883 6358