DiamondCorp (LON:DCP, JSE:DMC) said 1,321 carats of diamonds recovered from tailings during plant re-commissioning at the Lace mine in South Africa were sold at tender in Johannesburg this week for US$94 per carat.
This compares with US$55 per carat received in September 2008, the last time the company tendered tailings diamonds prior to the diamond price collapse in October 2008, and US$33 per carat received in May 2009 at the bottom of the market.
The parcel tendered was run-of-mine tailings production, and all diamonds offered for sale were sold. The sale was intended to determine the current market price for Lace tailings diamonds.
DiamondCorp chief executive Paul Loudon said: “The high sales price achieved for tailings diamonds underlines the current strength in the diamond market and provides considerable promise that the company’s base case of US$120 per carat for diamonds from the Lace kimberlite will be comfortably exceeded.”
A rough rule of thumb in the industry is that kimberlite diamonds are valued at 1.5-2 times what tailing diamonds are priced at.
A parcel of diamonds recovered from initial processing of kimberlite from the Lace pipe is scheduled to be tendered in the June quarter.
In the last update three weeks ago DiamondCorp told investors that the Lace mine’s decline development was on track and on budget, and that it was weeks away from accessing the top level of the estimated 33 million tonnes of kimberlite remaining below any of the old working areas at Lace.”
It had also announced the re-commissioning of a 1.2 million tonnes per annum dense media separation plant at the mine, by feeding it from tailings. The sale announced today will alleviate some of the project financing burden until fresh kimberlite is fed into the plant.
The underground mine development project is on schedule to access the main kimberlite pipe at the sub-260 metre level in March.