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DiamondCorp (LON:DCP) says studies confirmed that the ramp up of commercial production from underground mining at the Lace project could be brought forward by six months.
It could start from what's called the Upper K4 (UK4) Block in the first half of 2015 with steady state production of 30,000 tonnes per month achievable by the second quarter, according to scoping and mine design work.
Ongoing analysis in South Africa continues to confirm that the UK4 Block contains high-grade kimberlite with the potential to yield up to 60 carats per hundred tonnes (cpht) of ore, the firm said in a Lace project update on Thursday.
Plans for an updated resource statement have been rescheduled to Q1 2015 so that results from a bulk test of kimberlite extracted from the UK4 Block can be incorporated, the firm said.
Previously the firm reported that drilling out the Bulge area provisionally shows lower grades that at UK4.
Mining of the UK4 Block has the potential to provide significant additional cash flow which would allow the Bulge to be bulk tested and (if warranted) financed from internally generated cash flow, whereas mining of the Bulge alone would require additional project finance, the firm said.
Further, the UK4 Block has the potential to provide high grade ore while the 47 Level Block cave is developed and matures and smoothes out the potential lumpiness in tonnage which can occur in the early stages of block caving.
To achieve mine production from the UK4 block, 1,149 metres of waste development and 880 metres of kimberlite development is planned over the next 12 months at a budgeted cost of ZAR75 million, the firm told investors.
Broker Sanlam, which rates the shares a 'buy', said: "DiamondCorp is approaching underground production and the wait is now much shorter thanks to the discovery of UK4.
"Earlier cash flows from UK4 will ensure debt and interest payments are comfortably covered and improve the value of the overall project.
"Although a bulk sample has not yet been taken, UK4’s grade could be as high as 60 cpht which would add 0.9m carats to the early years of the mine plan," said analyst Charles Long.
Elsewhere, in the months to 30 June 2014, tailings re-treatment processing rates were reduced as an earth-moving fleet was used to construct a dam in the dry months.
Therefore, the plant processed 96,490 tonnes of tailings in the period against a budget of 205,000 tonnes; however, diamond recoveries totalled 6,102 carats as recovered grades were 6.32 cpht against a budget of 5 cpht.
Also, the firm recovered a 15.2 carat clear white octahedral diamond from the dumps - the largest gem diamond recovered to date from the tailings.
Diamond sales for the six months to end June totalled 14,583 carats at an average price of US$62 per carat.
Shares eased on Thursday 4.84% to 7.375p.
Sanlam has a target of 15p a share.