The broker Charles Stanley has restated its ‘buy’ recommendation and 11.9p a share price target on DiamondCorp (LON:DCP) after what it described as a “reassuring” update on progress at the Lace Mine in South Africa.
On Thursday, DCP said preparations for underground mining are on track, while it confirmed plans for a second round of diamond sales from its tailings retreatment operation next month.
It also 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 in Free State, which it is re-opening. Those efforts are currently on time and on budget.
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.
Charles Stanley analyst Kieron Hodgson said: “Lace remains close to schedule, under budget and now, due to the recent weakness in the South African Rand, will see operational margins improve with an additional benefit to the group’s debt position.”
At 10.20am, the shares were up 4% at 6.1p, which values the business at £17mln. In the last six months the stock has advanced 56%.