DiamondCorp in good shape as its progresses underground Lace mine and Botswana kimberlites

In its final results statement, DiamondCorp (LON:DCP, JSE:DMC) said it has emerged from the global financial collapse in better shape than it would have expected only a year ago, when the company started underground mine development at the Lace mine in South Africa, following the cessation of surface mining activities.

In November 2009, DiamondCorp raised £600,000 through a placing and later, in the current financial year, raised £7.1m through placement and subscription, to advance the underground development.

Over the course of 2009, the company made considerable progress with its new focus on the underground operation, with the completion of a feasibility study on the Lace kimberlite in September, along with an upgraded resource statement.

The feasibility study envisages a life-of-mine in excess of 25 years, with the potential of producing more than 400,000 carats of diamonds per annum at peak production in 2016.

The upgraded resource statement, carried out by VP3 Geoservices Pty Ltd, outlined 33Mt (million tonnes) of kimberlite at an average grade of 40cphr (carats per hundred tonnes), containing more than 13 million carats worth approximately US$1.5 billion at current prices.

DiamondCorp was also granted a mining right over the Lace mine by South Africa’s Department of Mineral Resources, which provides all the required permits for a long-life underground mining operation.

“Activities at Lace during 2010 will concentrate on completing the decline.  Then in 2011, the 30,000 tonne bulk sample will be extracted for determination of grade at the initial mining level.  We will then need to raise additional capital to establish full-scale production from underground at a rate of 1.2 million tonnes per annum during 2011,” DiamondCorp said.

The decline is budgeted to cost £4 million, and is scheduled to be completed in the first quarter of 2011. Initially the decline will be used for the initial haulage of kimberlite from below the sub-240m level.

Aside from the Lace mine in South Africa, DiamondCorp has been seeking opportunities throughout 2009 to grow the business beyond a single asset company, and through a joint venture signed in June 2009, the company added kimberlite pipes in Botswana to its asset base.

The main exploration project in Botswana is the PL/71 prospect, immediately southeast of the De Beers Jwaneng mine - which is regarded as the richest diamond mine in the world. DiamondCorp highlighted that the prospect comprises five geophysical targets, three of them being priority targets for geophysical survey and drill testing. 

Two diamond boreholes were completed in November at one of the targets J-01, and both intersected kimberlite from 20m down-hole to the end of the borehole. According to DiamondCorp, the results indicate the presence of a 10 hectare kimberlite body. 

“Encouragingly for any future mine development, the sand cover in the Jwaneng area is only 20m.  Our analysis of 350kg of samples has indicated that the J-01 kimberlite is diamondiferous.  Large diameter drilling will now need to be completed in order to recover a large enough sample of kimberlite for grade estimation.”

The company said it was currently re-processing the geophysical data, to better define the target ahead of a programme of initial diamond drill holes, which will enable the planning of future large diameter drilling and mini bulk testing priorities.

“We now have both a near term mine at Lace and outstanding, advanced exploration targets near Jwaneng. We will continue to use our skill base to evaluate opportunities in the diamond sector.  However, we can assure you that our sights remain high and any acquisition must be able to bring financial gains to our shareholders.”