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» DBCM has Voorspoed expansion in sights
» DiamondCorp brings diamond project to JSE


DiamondCorp to raise funds for mine study
Allan Seccombe
Posted: Tue, 04 Mar 2008

[miningmx.com] -- WITH the release of DiamondCorp plc’s audited results on Tuesday, the way is now clear for a secondary listing on the main board of the JSE by the end of March, said CEO Paul Loudon.

The junior AIM-traded diamond producer had been expecting to list in February but South African Reserve Bank’s study of its proposal to list in Johannesburg had taken longer than expected. That has now been completed, Loudon told Miningmx.

DiamondCorp, not be confused with BRC DiamondCore, has the Lace mine near De Beers’ Voorspoed diamond mine some 200km away from Johannesburg in the Free State province. It needs R100m to develop an underground mine, add a crusher and put in power infrastructure.
not great times in capital markets
“I’m flying to Johannesburg tonight and I’ll sit with Investec tomorrow to finalise our listing process. We are on track to list at the end of March,” Loudon said.

“We’re not trying to raise money. Initially we’re just going to list the stock,” he said.

DiamondCorp will fund its project in two tranches of R50m each. It has a market capitalisation of R450m at an exchange rate of R15 to the British pound.

“We are investigating the alternatives to raise money. These are not great times in capital markets. In the next two weeks I’m going to talk to institutions in South Africa through Investec and gauge the level of interest in South African capital markets for investment in our company,” Loudon said.

“The alternatives we are discussing are debt funding, as in a convertible or straight debt funding. The amount of money we need to accelerate production is not huge,” he said, adding the capital would be raised in the first half of 2008.

“My preference is to raise the equity in South Africa,” he said, adding there was a bigger retail market in South Africa whereas on AIM trade in shares tended to be in blocks between institutions making the shares fairly illiquid.

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The second tranche of R50m for 2009should be funded out of DiamondCorp’s cash flow as well as R13m from each of its two empowerment shareholders, who own 26% of the project, once a bankable study into the underground mine is completed at the end of this year.

Part of the bankable study is a bulk sample to generate more than 5,000 carats.

The thinking is to extract up to 50,000 tonnes of kimberlite from the third quarter of 2008. The bulk sample will also be a blend of the upper-level kimberlite, which was mined early in the 1900s and the deeper hypabyssal kimberlite, where grade is estimated to run at a potential 40 to 60 carats per hundred tonnes.

The upper level kimberlite runs at a grade of about 25 carats per hundred tonnes.

“There are a couple of things we don’t know. We don’t know the grade of the hypabyssal to bankable standards. We also don’t know exactly the mix of hypabyssal and upper level kimberlite at the level at which we’re going to start mining,” he said, adding this would be resolved in the bulk sample phase.

The bankable study is needed to call on the empowerment partners to each invest R13m into the project.

By the end of 2008, DiamondCorp will be capable of mining 1,000 tonnes/day, which is 25% of the plant capacity. During 2009, money will flow into completing the refurbishment of the existing vertical shaft and linking the decline to that shaft. By the end of that year, the mine will produce 4,000 tonnes/day.

In the year to end-December 2007, DiamondCorp commissioned a 1.6 million tonnes per annum dense media separation plant and has been treating tailings since the start of October. Power outages and wet summer weather disrupted operations. It treated 320,000 tonnes of tailings and recovered 25,266 carats, with the two largest stones being 17.7 carats and 13.8 carats.

This year, DiamondCorp hit record tailings throughput in February.