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

Client
Lace Diamond Mines (LDM), a 74% subsidiary of 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 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.

Net Present Value/Internal Rate of Return
Not stated.

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.

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

Latest Developments
DiamondCorp has estimated the total resource tonnage in the main pipe at its Lace mine to be 38.48-million tonnes to the 920 m level, an increase of 16% on the 33.12-million tonnes estimated in March 2012 to the 855 m level.

This follows an updated technical report that has been undertaken by Toronto-based MPH Consulting.

The new resource and reserve statements confirm that the potential for high operating margins increase with depth, which is one of the factors that attracted the miner to the project from the outset.

“The forecast grade numbers are in line with what we are seeing from the UK4 mining ramp-up, and the actual carat value achieved will be known when we commence diamond sales in Antwerp in the last week of March,” the company has added.

The estimated recovered grade for all facies has also now been aligned with the Lace production plant using 1.25 mm slotted bottom screens, compared with 1 mm screens in the original design configuration.

While the increase in bottom screen sizes means that recoveries will be significantly lower in terms of grade, the carat value of the diamonds recovered will be higher, as the smallest diamonds that will no longer be recovered are also the lowest-value diamonds, lowering economic impact, the company has said.

The change in screen size is also expected to result in considerable operational efficiencies and up to a 50% reduction in water consumption in the processing plant, allowing for the resource to be mined at greater than the current planned rate of 1.2-million tonnes a year, once block caving starts.

The recoverable diamonds from this resource at the increased bottom screen size is now estimated at 9.39-million carats, up from the March 2012 figures of 13.39-million carats, at 1 mm screen size.

The average value of the Lace diamonds from the stone size frequency distribution achieved with the 1.25 mm bottom screen size has been forecast at $164/ct, using the average grade and carat value equating to revenue of R600/t, compared with forecast mining and processing costs of R238/t for the UK4 Block and R145/t for block caving. This represents robust operating margins of 60% and 76% respectively.

The whole block could be mined for five years at a rate of 35 000 t/m and generate a positive net present value of R133.3-million, with a robust internal rate of return of 59%.

Key Contracts and Suppliers
None stated.

On Budget and on Time?
The mine’s ramp-up is expected to start six months ahead of the original schedule.

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