DiamondCorp (LON:DCP), which is on the verge of reviving the fortunes of the Lace mine in South Africa, said talks with lenders and partners had been ‘positive’ after it announced some teething problems in the ramp up to full production.
Challenging conditions have put back the blasting of what’s called a slot drive that will give it access to the initial diamond-bearing material.
The upshot is a delay to the point Lace becomes cash flow positive.
This has required talks with its main lender, the Industrial Development Corporation, and its black empowerment partner.
The plan is to roll up early interest payments into the loan until DiamondCorp hits that all-important point at which it is generating sufficient funds to service the loan.
“The discussions have been positive and a formal request to continue interest roll-up of the Industrial Development Corporation loan until positive cashflow is achieved has been lodged,” the company said in a statement.
“Management do not expect any issues with respect to being granted this request.”
Much of the remainder of the statement was about progress rather than problems.
It is now into high grade diamond-bearing kimberlite in the Upper K4 block; meanwhile the conveyor belt is full installed and 80% commissioned.
At the same time final drilling and microdiamond work requested by the company's geological consultants to complete the resource statement update is underway. This will provide greater levels of confidence in the resource estimate and will be completed before year end.
Because of the ‘challenges’ DCP has encountered thus far, development costs to date are averaging R49,993 per metre against a budget of R38,280 per metre. But the commissioning of the conveyors will help reduce development costs as trucks will no longer be used in the process.