JOHANNESBURG (miningweekly.com) – Aim-listed mid-tier diamond producer Pangea Diamondfields has completed the expansion of its Cassanguidi project in Angola, and expects it to reach full capacity by the end of the year, it reported on Tuesday.

The Cassanguidi mine would be generating sufficient revenues to cover its operational costs by October, the company said in a statement.

However, it warned that should the scale-up at the Angola project be delayed in any way, and should the company be unable to source additional bridging funding, a ‘material uncertainty’ existed around its ability to continue as a going concern.

The production of diamonds from pilot pining activities at Cassanguidi had been significantly reduced for the first six months of 2009, compared with the same period last year, owing to the focus of the team being on  construction and commissioning of  the expansion project, rather than on bulk sampling and resource generation.

The diamond company also plans to expand operations at its Bakerville project in South Africa, but it has placed the operation on care-and-maintenance earlier this month, as it awaits a mining licence.

The mining right application, to allow full scale exploitation of the deposit, had been submitted to the relevant governmental authority in South Africa.

The final project scope at full production reflected a nominal capacity of 90 000 m2/m, producing around 2 250 ct/m at a cost of around $4,50/m2.

The total estimated capital cost to develop the project to the revised scale of operations was $8-million, however, Pangea anticipated that a substantial amount of the equipment required could be acquired on financing terms.

The company stated that it continued to monitor recent trends in the movement of rough diamond prices, following the substantial price reductions late in 2008.

Pangea said that recent trends reflected an upward movement in rough prices, but that it was still waiting for signs of sustainability in these trends before changing its strategy of focusing on the development of near-production assets and the conservation of cash.

“While the diamond market has shown signs of recovery during the first half of 2009, the company is positioning itself to operate even in the current diamond price environment with the expansion of the Cassanguidi project to a cash flow-generative commercial scale operation as well as the ongoing application to expand the Bakerville project,” said Pangea CEO Brett Thompson.

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