DCP.L Regulatory News (DCP)

30 January 2014

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 mine Project update

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

Highlights

· Underground development remains close to schedule and under budget.

· The owner-operated mining fleet continues to provide over 90% availability and is operating under budget.

· Steel sets are now being installed in the boxcut ramp to provide tunnel support before the excavation is backfilled.

· The underground conveyor belt system is on schedule and the first leg for installation has been delivered to site.

· Surface piling for the raise boring of the life of mine vent shaft has commenced.

· A 400 tonne per hour (tph) in-pit screening system which has the potential to increase tailings throughput to 150,000 tonnes per month has been installed and is about to be commissioned.

· Drilling of the Bulge area from underground continues to confirm the potential for additional kimberlite between the 260m and 470m levels which is not currently in the mine plan.

· The Company has experienced no labour issues.

· The weakening of the rand is forecast to have a positive impact on operating margins and the Group debt position.

· Diamond sales for 2014 will commence next month with prices reportedly improving by 5-10% since December.

Underground development

The Company's 74%-owned Lace Diamond Mines (Pty) Limited (LDM) continues to ramp up underground development close to schedule and within budget.

At the end of December 2013, underground tunnel development was 15% complete versus a scheduled 16% (1,113m against 1,187m) and is being achieved at 94% of the budgeted cost per metre (R27,470/m against R29,360/m). Hiring of an additional two mining crews is underway and the full underground complement is expected to be reached by the end of March.

The Company has experienced no labour issues and continues to hire the personnel it requires. The labour force in December 2013 totalled 233 and is forecast to grow to approximately 350 by the end of this year.

Safety remains a major priority for the Company, with Lace achieving a 64% improvement in the lost time injury frequency rate (LTIFR) from 0.90 in 2012 to 0.55 in 2013. Management aims for zero harm to its employees and targets a LTIFR of less than 0.5.*

Surface piling for the life of mine vent shaft has commenced and is expected to be completed by the end of February 2014, well ahead of the raise bore contractor mobilising in the second half of the year.

The underground mining fleet continues to provide over 90% availability, with operating costs running at 95% of budget. The mining fleet rebuild costs are also running at 95% of budget. The last two rebuilt 20 tonne low profile dump trucks required to achieve maximum underground development rates have been commissioned on time. The last two underground loaders are currently being assembled and are scheduled for completion next month.

Twin decline development from the base of the boxcut continues downwards to meet the development tunnels coming up from the 92m level. To date, ground conditions in the upper levels are more competent than those experienced in the exploration decline at a similar elevation. Installation of the steel sets for reinforcement of the portal area is complete and double sets are now being installed up the ramp of the boxcut. Once installed, timbered and shotcreted, the boxcut will be partially backfilled and profiled with shallow batter angles.

The design and detail drawings for the underground conveyor belt system are on schedule (85% complete) and under budget. Fabrication of the first leg of the conveyor to be installed has been completed and delivered to site; fabrication of the second leg is 40% complete.

Tailings retreatment

Following adjustments to the bottom screen size cut reported previously, tailings retreatment continued on one shift in October and two shifts in November and December 2013.

During the three month period ended December 31 2013, the plant processed 138,475 tonnes against a budget 140,000 tonnes and recovered 6,522.71 carats at a recovered grade of 4.71 carats per hundred tonnes (cpht) against a budget 5 cpht. Mining during the latter part of the period was in the oldest lower grade section of the dump to clear space for the installation of a 400 tph in-pit high frequency sand screen.

The sand screen was installed in January and commissioning by the manufacturer Osborn is about to commence. The screen has the potential to increase tailings throughput to 150,000 tonne per month. At an expected average grade of 5 cpht, the screen is forecast to increase diamond recoveries from tailings retreatment to 7,500 carats per month and reduce plant operating costs to R22/t on a three shift basis.

Diamond Sales

Diamond sales for 2014 will commence in February, with ten sales scheduled for the year. The Company's diamontaires in Antwerp report that demand for rough diamonds has improved and that prices have increased 5-10% over the prices achieved in December 2013.

The Company is forecasting an average of $63/ct for its tailings goods in 2014, which would give revenue of R35/t at an exchange rate of R11 to the dollar.

The 20% weakening of the rand since the middle of 2013 has resulted in potential tailings retreatment margins increasing by 30% from a forecast R10/t to R13/t. The weaker rand also has a beneficial impact on potential underground operating costs with forecast operating breakeven grade falling from 10 cpht to 9 cpht after adjusting for the negative impact on diesel price inputs. The Lace kimberlite grade ranges from 24 cpht in the upper levels to an estimated 57 cpht in the lower levels of the pipe.

The weaker rand and stronger sterling also has a positive impact on the Group debt position as the majority of the Company's project finance is denominated in rand and reported in sterling. Diamond sales being denominated in US dollars provide a natural hedge against the weakening rand.

Bulge drilling

Drilling of the Bulge area continues from inside the kimberlite. At the end of December 2013, a total of 1,220m of diamond core drilling had been completed. The nine holes drilled to date continue to confirm that the Bulge area has the potential to host significant additional kimberlite between the 260m and 470m levels which is not currently in the mine plan. The drilling will form the basis of a resource upgrade for the Bulge area in the first half of 2014 and thereafter a feasibility study on the economics of mining this area.

Contact details:

DiamondCorp plc

Paul Loudon, Chief Executive

Tel: +27 (0) 56 212 2930

Euan Worthington, Chairman

Tel: +44 (0) 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)Leonard Eiser

Tel: +27 11 809 7738

* 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. Lace had one lost time injury in 2013 and 40,185 lost time injury free shifts during the year to 31 December 2013.