DiamondCorp's (LON:DCP) proposed underground development at its Lace mine in South Africa has been validated by an independent consultant.
An engineering report for the 47 Level Block Cave scheme (470m depth) complied by consultant SRK found it was an "appropriate" method of mining for 1.2 million tonnes of kimberlite per year.
The report was required to progress negotiations with potential project financiers of the development, designed to produce up to 500,000 carats of diamonds a year.
Chief executive Paul Loudon said: "Our development plan has now been validated by SRK which paves the way for discussions with a range of potential project financiers to progress.
"The key driver for management in these discussions will be to find the optimum financing method which is the least dilutive for existing shareholders."
The model forecasts total mining costs of US$16 per tonne and the total development cost, including working capital and a 15 per cent contingency on capital and development costs, is estimated in the Lace financial model at $50 million.
Around 600,000 tonnes of kimberlite will be extracted and processed during the cave development.
Expected revenue from this kimberlite during the 43 months of development is estimated at $54.7 million before 100,000 tonnes per month of production is achieved.
SRK calculates that the project's net present value in the agreed LoM (life of mine) financial model is $188 million using a 10 per cent discount rate, with DiamondCorp's 74 per cent share worth $139 million.