Name and Location
Lace diamond mine development project, Free State, South Africa.

Client
DiamondCorp.

Project Description
The 1.2-million-tonne-a-year Lace mine is expected to produce more than 500 000 ct/y of diamonds at peak production.

The Main pipe at the Lace mine contains 33.1-million tons of kimberlite, indicated and inferred to a depth of 855 m, containing an estimated 13.4-million carats in both resource categories at an average grade of 40.1 ct per hundred tonnes (cpht).

The resource has an in situ value of more than $2-billion at $160/ct.

The deposit will be mined using block-cave mining, with three caves planned over the 25-year life-of-mine (LoM) on the 47, 67 and 85 levels at depths of 470 m, 670 m and 850 m respectively.

The kimberlite is open at depth, with a significant bulge between 250 m and 360 m. The kimberlite can potentially add additional tonnage and diamonds not currently included in the resource statement.

Value
The total development cost of the project, including working capital and a 15% contingency on capital and development costs, is estimated at R384-million.

The peak funding requirement of R286-million is expected in April 2015, when blasting of the slot drive and doming will start deliver significant tonnages of kimberlite.

The costs of establishing the block cave thereafter are offset by revenues from the sale of diamonds, recovered from kimberlite mined during development.

Duration
The Lace mine is due to start production in the first half of 2015.

Latest Developments
DiamondCorp has reported that the scoping and mine design studies on the Upper K4 (UK4) block have been completed and has confirmed the potential for commercial ramp-up from underground kimberlite mining.  This is expected start in the first half of 2015, six months ahead of schedule, with steady-state production of 30 000 t/m achievable by the second half of 2015.

Drilling of the UK4 block is ongoing and to date a mining block totalling about 1.5-million tonnes of kimberlite has been outlined, which can be mined using bottom-up long-hole open stoping.

Ongoing microdiamond analysis continues to confirm the UK4 Block contains high-grade kimberlite that can potentially yield up to 60 cpht of ore.

A revised budget and schedule have been adopted to fund development of the UK4 Block from existing project finance facilities.

Mine development costs to date are averaging R37 051/m, compared with a budget of R35 327/m.

The installation of the underground conveyor belt system has started and is on schedule to be used for mining the UK4 Block.

Plans to complete an updated resource statement have been rescheduled to incorporate the results from a bulk test of kimberlite, extracted from the UK4 Block. This is expected to be issued in the first quarter of 2015.

Mining of tailings slowed during the quarter ended June 30, as the surface earth-moving fleet was diverted to build an additional surface dam in preparation for early production of kimberlite from underground.

The degrit circuit has been commissioned and is operating efficiently.

Diamond recoveries for the quarter totalled 6 102 ct at a recovered grade of 6.32 cpht.

Further, a 15.2 ct clean white octahedral diamond was recovered in July from the tailings – the largest gem diamond the company has recovered to date.

Diamond sales for the six months to June totalled 14 583 ct at an average price of $62/ct.

Key Contracts and Suppliers
None stated.

On Budget and on Time?
The project remains on track for the commercial production ramp-up from underground kimberlite mining to start in the second half of 2015.

Contact Details for Project Information
DiamondCorp, tel +44 20 3151 0970, fax +44 20 3151 0971 or email info@diamondcorp.plc.uk.