Name of the Project
Lace diamond mine development project.

Location
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 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 of between 250 m and 360 m. The kimberlite can potentially add additional tonnage and diamonds not currently included in the resource statement.

The Upper K4 (UK4) block is being mined using long-hole open stoping while development of the first block cave on the 50 m level continues.

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 production ramp-up from the Upper K4 (UK4) block started in December 2015.

Latest Developments
DiamondCorp has filed notice of its intention to appoint Stephen Cork and Jo Milner of Cork Gully as joint administrators, after the board identified that the company is no longer able to continue trading as a going concern.

The company has explored all options available regarding the ongoing business rescue process for LDM and the solvency of the company and all its subsidiaries.

DiamondCorp, in November 2016, appointed Daniel Terblance of Deloitte & Touche, and subsequently Lebogang Mpakati of Independent Advisory, as business rescue practitioners for LDM.

Although progress has been made in terms of formal and nonbinding agreements with several of DiamondCorp’s creditors, including the Industrial Development Corporation of South Africa and Laurelton Diamonds, an agreement has not been reached with South African bondholders.

Insufficient progress has also been made in relation to the significant restructuring of debt and securing additional equity funding to allow for LDM’s successful exit from business rescue.

In addition, protracted discussions with the Association of Mineworkers and Construction Union, which were terminated in early April without agreement, have “obstructed the vital care and maintenance and remediation programme” at the Lace mine, resulting in all employees having to be retrenched.

DiamondCorp has stated that this is the primary cause for the failure of the £1-million equity fundraise first announced in January. That, in turn, has led to significant liquidity issues for DiamondCorp.

Notwithstanding the notice to appoint administrators to DiamondCorp, business rescue proceedings for LDM will continue while options regarding DiamondCorp subsidiary DiamondCorp Holdings will be explored to try to preserve any remaining stakeholder value.

Key Contracts and Suppliers
None stated.

On Budget and on Time?
The project is on time.

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