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DiamondCorp (LON:DCP) said underground development of its Lace Mine in South Africa is on schedule and within budget as it drew down the first £1.9mln tranche of the £14mln project finance facility provided by the country’s Industrial Development Corporation.
The news was part of a wider update, which revealed the first 5,000 carat parcel of diamonds recovered from tailings is being prepared for marketing and sale in October.
The group also told investors its finance function is being re-located from London to the Lace Mine. With this comes the appointment of Sanette de Wet as chief financial officer, replacing London-based John Forrest.
In addition to operational efficiencies, the relocation will result in significant cost savings, DiamondCorp told investors.
The group also confirmed the Panmure Gordon will act as sole broker to the company as well as its nominated advisor.
Once up and running fully, Lace is expected to produce 500,000 carats per year, with first revenues anticipated in the second half of 2014.
American jewellery firm Tiffany and the IDC are funding the development work. Debt facilities total £21.3 mln.
The shares, up 20% in the last three months, rose a further 2% in early trade to 5.25 pence. However, Panmure Gordon reckons there is still plenty in the tank and values the stock at 19 pence.
"Our buy recommendation for DiamondCorp remains in place as we see the company advance its development of the Lace Mine on schedule and within budget," said analyst Alison Turner.
"We expect the sale of the first diamonds from the tailing re-treatment in October to be the next potential catalyst for a re-rating towards our target price."
Sanlam's Charlie Long seems equally bullish.
"DiamondCorp is a success story based on having a viable mine and being fully funded," he added.
"There are of course various risks associated with the underground development phase, but DiamondCorp has got further than most junior miners. It is looking to add to its portfolio of projects, potentially diversifying outside of South Africa; the story has only just started."