14 Jun 2016 07:00
14 June 2016
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
diamond sales and Project update
DiamondCorp, the Southern African diamond mining, development and exploration company, is pleased to advise that two run of mine parcels of diamonds which would have formed part of a larger diamond tender in Antwerp scheduled to commence at the end of this month have been sold to South African diamantaires when the Company's reserve prices were exceeded during the South African export process.
The two parcels comprised 1,838 carats of run-of-mine kimberlite diamonds and 1,679 carats of tailings diamonds, and were sold for an average of $189/ct and $53/ct respectively. Total proceeds received from the sale is $436,597 (R6,505,295).
Commenting on the sales, DiamondCorp CEO Paul Loudon said: 'The Company undertakes regular diamond exports from South Africa in order that its diamonds are sorted and prepared for tender sale in Antwerp. Every tender comprises several export shipments, the process of which each time involves a four-day window when South African licenced diamantaires may bid for the production. If the reserve prices placed by DiamondCorp on the parcels are exceeded during this four-day period, then the Company is obliged to sell the diamonds to the highest bids rather than exported. The Company's reserve prices must be market-related.'
'Pleasingly, the latest selling price is the highest achieved to date for run of mine Lace kimberlite diamonds and underlines the conservative nature of the $164/ct base case in the Company's resource statement and financial models. The higher price is a reflection both of the increase in the plant bottom screen size from 1.00 mm to 1.25 mm and the recovery of a higher than forecast frequency of diamonds greater than 4 carats in size.'
Management will now monitor the rate of rough diamond accumulation from the first month of full production from the UK4 Block during July and determine the best date to re-schedule the next Antwerp tender to maintain regular cashflow until steady state monthly tender sales is achieved. It is currently expected that two further tenders will take place before regular monthly sales commence at the end of September and the Company remains on track to produce more than 75,000 carats of diamonds from kimberlite in 2016.
With respect to operations, the Company is pleased to report that two of the three underground dump trucks acquired in April which required refurbishment are on schedule to be fully operational by the end of this month. These two dump trucks combined with an additional near-new dump truck acquired at the same time, will give the Company the load and haul capacity to deliver to the conveyor belt 30,000 tonnes per month of kimberlite from the UK4 mining block from July onwards. The last remaining project on the critical path to achieving the 30,000 tonnes per month rate is completion of the 1,500 tonne underground ore silo and tipping arrangement onto the conveyor belt which remains on target for hand over from the contractor by the end of June.
In addition to the unplanned capital expenditure on the mining fleet reported previously, the Company has continued to incur high breakdown and repair costs on the existing fleet while the newly acquired machines are being refurbished. As a consequence, operational cashflow remains tight until full production has been achieved. The early cash received from the aforementioned diamond sales will assist in this regard.
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
Adam James/Atholl Tweedie
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