JOHANNESBURG (miningweekly.com) – The shares of DiamondCorp plunged by nearly 50% and 40% on the JSE and LSE respectively on Wednesday after the company reported another delay in the ramp-up to full commercial mine production of its Lace diamond mine.

The 30 000 t/m production target at the Free State-based mine is now expected to be delayed until February 2017 on the back of continued operational setbacks.

The JSE- and Aim-listed diamond mining, development and exploration company is experiencing continued tonnage constraints that mean that output from September to December will be restricted to an average of 14 000 t/m to 15 000 t/m.

This is the third time the group has revised the production ramp-up after experiencing setbacks since July, when a two-week Department of Mineral Resources-ordered shutdown after a fall-of-ground accident in a development tunnel set the full commercial production timeline back a month to August.

However, in August, production from the first mining block on the 310 m level was interrupted by flooding after development drilling for the return air pass from the production level intersected a geological contact with significant water inflow.

Amid the ramp-up challenges encountered, the production forecast for the remainder of 2016 was revised to 20 000 t in September, 25 000 t in October and 30 000 t in November and December.

Now, with large pieces of kimberlite falling into the drawpoint from hanging wall conditions made friable by the presence of old development workings, posing safety and equipment damage risks, the tonnage constraints encountered during September are now likely to continue until at least the end of the current year, with full ramp-up staggered out to February.

DiamondCorp is now drilling trough fans from the production tunnels on the 310 m level rather than the central trough tunnel until the end of December, or until the troughs are safely cleared of the old development workings, for safety reasons and to prevent damage to the drill rig.

“This necessitates three drill rig set-ups for each fan rather than one - almost three times the amount of drilling per fan - and complicated blasting as each hole is only partially charged. As a consequence, the drill rig cannot drill enough metres in a month to generate more than approximately 15 000 t of blasted kimberlite,” the company noted.

This left DiamondCorp with increased pressure on its cash flow, as the slower production ramp-up means that the build-up in diamond inventory will be lower than budget resulting in either smaller diamond sales or a rescheduling of tender sales.

In line with this, the diamond group is seeking to raise an additional £2.5-million to £3-million in equity or debt from one or more parties in the near term to cover the anticipated cash required to fund operations through to commercial production and positive cash flow from operations.

DiamondCorp is already at an advanced stage of finalising a previously arranged convertible debt facility of £500 000 required for immediate financial commitments to continue trading as a going concern in the very near term.

“Positive discussions have also been initiated with the company’s primary lender, the Industrial Development Corporation of South Africa, for restructuring the repayment terms of the company’s main project finance facility such that capital repayments are deferred from the first half of 2017 until such time as significant positive cash flow is achieved from the first 100 000 t/m mined from the block cave on the 500 m level,” DiamondCorp noted.

Discussions with parties outside of the UK and South Africa are also under way to strengthen the group’s balance sheet and bring on board additional diamond mining development and corporate finance expertise in key executive roles.

DiamondCorp’s shares had fallen by as much as 49.49% on the JSE, and by as much as 39.39% on the LSE early on Wednesday.