Clock ticking for DiamondCorp

Ines Schumacher | Wed, 30 Sep 2009 15:35
[miningmx.com] -- JUNIOR miner DiamondCorp is looking at various loan facilities to finance the R100m underground development of its Lace diamond mine as well as to afford a R2.2m interest payment due mid-October.

The company reported a R5.7m cash balance at 30 June 2009, but this has since dropped below the required level to pay back the interest due 14 October.

“The current cash balance is not sufficient to meet the company’s interest payment,” DiamondCorp said in its interim results for the period ended 30 June.

DiamondCorp reported a loss for the financial period of ₤974,476 compared to a loss of ₤1.3m for the comparable period.

DiamondCorp chief executive Paul Loudon told Miningmx that the company has a number of financing proposals to choose from. “We will choose one that will give maximum value to our shareholders,” Loudon said.

He said DiamondCorp will make an announcement regarding the financing of the company within the next few days.

“This will be a total solution for the company,” Loudon said.

DiamondCorp placed its Lace processing plant into care and maintenance at the end of July as a result of the completion of a sampling programme which indicated the grade at its satellite pipe is sub-economic at the 75m level.

Operations at Lace will only continue once the company has accessed the kimberlite between the 240m and the 330m levels in order to establish a 1.2 million tonne per annum production level.

DiamondCorp said on Wednesday that the recent feasibility study shows a mine design at R100m capital cost which will allow Lace to operate profitably at diamond prices 20% below the prices achieved by DiamondCorp at its last tender in July 2009.

The tender netted a total of R446,000 amounting to a sales price of $108 per carat. This is 36% higher than the $79 DiamondCorp received for its diamonds in a May tender.

DiamondCorp has called on its black economic empowerment partner Shanduka Resources – which owns 26% of Lace – to contribute R26m to the development. DiamondCorp holds the balance of the ownership.

“The future is looking bright, I just have to pull it all together,” Loudon said.