DiamondCorp (LON:DCP) is looking forward to beginning underground development at its Lace mine in South Africa, it said, reporting half year results.
Having secured the majority of the project finance required for the underground work, it is looking forward to finalising the balance and beginning work as soon as possible.
Earlier this month, it struck a deal that will meet more than three-quarters of the costs.
The Industrial Development Corporation has agreed to lend DCP U$26.7 million, which will be used to develop a 1.2 million tonne a year block cave mining operation at the company’s 74 per cent owned Lace mine.
DiamondCorp has agreed to raise a further US$12.1 million prior to the initial drawdown of the new Lace facility.
To complete the total financing, it is considering a “number of options” and it has appointed Rand Merchant Bank and PSG Capital as advisers and arrangers in South Africa to raise up to US$18.1 million via the issue of convertible bonds.
It came after consultants SRK in March endorsed the firm's plans for Lace.
From March 15 this year until the end of May the company treated 55,391 tonnes of tailings for a recovery of 4060.97 carats, it said.
The weakening of diamond prices in the July-August period due to macroeconomic challenges in Europe and the US meant the firm shut down the Lace processing plant to complete the required upgrades, while diamond prices were weak.
Full scale production of diamonds from tailings retreatment will not begin again until the first quarter of 2013, it said.
DiamondCorp added that 5,312 carats of diamonds recovered from tailings retreatment before the plant shut-down are currently held in inventory.
The planned sale of these in September has been postponed due to market conditions and will be sold when management see a recovery in diamond prices.
DiamondCorp also holds 2,168 carats of diamonds recovered from underground bulk sampling, which management will retain for evaluation by potential off-take partners, it said.
The net loss in the period to June 30 was £1,556,701 (loss for 2011: £1,168,179).