---ADDS BROKER COMMENT AND SHARE PRICE---
DiamondCorp (LON:DCP) gave a reassuring update, with preparations for underground mining on track.
The group also revealed it is readying for a second round of sales from its tailings retreatment operation next month.
And it gave some hint as to the potential further value of the Lace Mine in South Africa’s Free State as it said drilling of the bulge area continued to confirm the potential for additional kimberlite.
This is between the 260 and 470 metres levels and is not currently in the mine plan.
The AIM listed miner owns a 74% stake in the historic Lace underground mine, which it is re-opening.
So far its owner-operated mining fleet has provided over 90% availability and is operating under budget, the company told investors in its comprehensive update.
Meanwhile, steel sets are now being installed in the box-cut ramp to provide tunnel support before the excavation is back-filled.
The underground conveyor belt system is on schedule and the first leg has been delivered to site.
On the surface, piling for the raise boring of the vent shaft has commenced and a 400 tonne per hour screening system has been installed and commissioned. The latter has the potential to increase tailings throughput to 150,000 tonnes per month.
The report also looked at the potential impact of the weakening rand, which is forecast to have a “positive impact” on operating margins and DCP’s debt position.
Diamond sales for 2014 will begin next month, with prices reportedly improving by 5-10% since December.
The company is forecasting an average of US$63 carats per tonne from its tailings in 2014.
This would give revenue of 35 rand per tonne, or US$3.18 at an exchange rate of 11 rand to the dollar.
Broker Sanlam said Thursday's update "read very positively".
"DiamondCorp is hosting a mine visit after around Indaba and on this morning’s evidence attending analysts will be impressed by what they see at Lace mine.
"Coupled with the weakening Rand and strengthening diamond prices, the DiamondCorp story appears robust for investors comfortable with South African country risk."
Shares rose 6.82% to stand at 5.875p.