JOHANNESBURG (miningweekly.com) – London-listed DiamondCorp on Monday unveiled a revised mine development plan for its Lace project in the Free State, which increased the capital cost by 11% and extended the ramp-up period by nine months.

But, the updated mine plan, which proposed a deeper first block cave, more than doubled the initial revenue forecast for the project near Kroonstad.

New mine optimisation studies have recommended 47 Level (470 m depth) for the first block cave, which meant that 12-million tons of kimberlite would be mined in the first block, 84% more than the original forecast of 6.5-million tons.

At 130 m deeper than initially planned, the operating level would also allow access to higher-grade, more valuable kimberlite with average grades estimated at 40 carats per hundred tons, earlier into the mine plan. The contained diamonds in the block would increase by 114% from 1.6-million carats to 3.4-million carats.

While the cave life would increase from five years to nine years under the revised plan, only three caves would be required to mine Lace to the 85 Level, compared with four in the previous mine plan.

However, locating the cave on the 47 Level would increase capital costs to R450-million from R405-million and increase the ramp-up to full production from 24 months to 33 months.

During the extended ramp-up period, about R432-million in revenue was forecast to be generated from diamonds recovered from the undercut, initial caving and tailings retreatment, as well as sale of waste rock – 127% higher than the previous mine plan.

The working capital requirement for the mine development was also about R100-million more than the original Lace mine plan.

However, the report said that owing to the forecast higher diamond grade at the 47 Level, initial diamond production is estimated at more than 400 000 ct/y, resulting in faster payback and operating margins in excess of 65%. At this production rate and current diamond prices of $160/ct, initial revenue would be in excess of $60-million a year.

“The increased depth for the first block cave would result in a far more robust mining project, as higher-grade kimberlite earlier into the mine plan would have a positive impact on cash flow,” CEO Paul Loudon stated.

DiamondCorp also said that underground drilling had confirmed the presence of a bulge in the Lace kimberlite between the 24 Level and the 33 Levels on the soutern side of the pipe. The company would investigate early mining of this kimberlite by rim loading simultaneous with block cave development.

FINANCING

DiamondCorp stated that negotiations with numerous parties interested in providing debt facilities to finance the development of its Lace diamond mine were progressing.

The company was in discussions with traditional banks, trade financiers, government development agencies and other mining companies in a bid to find the finance option that would maximise return and minimise dilution to existing shareholders.

“The long-term metrics for the diamond industry are very strong. Few new long-life kimberlite mines are in the planning, in a market where end-users are scrambling to secure supply. For this reason, we have a significant number of debt providers interested in committing development finance for the Lace mine,” said Loudon.
 

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