[miningmx.com] — UNDERGROUND mining operations to recover a 30,000 tonne bulk kimberlite sample have started at DiamondCorp’s Lace diamond mine near Kroonstad in the Free State.
This follows the intersection of the diamond-bearing kimberlite pipe at a depth of 260m by the new decline shaft sunk by DiamondCorp to get at the pipe below the previous working levels in the mine which was closed in 1931.
DiamondCorp CEO Paul Loudon said the mine had been dewatered to a depth of 280m and the extraction of the initial 30,000t bulk sample should be completed during June.
This ore will be treated through the re-commissioned dense media separation (DMS) plant at the mine to calculate an indicative mining grade for the operation as well as the value of the diamonds.
Loudon said: “The combination of grade and carat value will determine the economics of mining the Lace kimberlite”.
He told Miningmx the results from the bulk sample would also determine the amount of money DiamondCorp would need to raise to complete development of the mine and bring it into production by the end of 2012.
This is because the anticipated revenues earned from the diamonds mined during the development stages would be “netted off’ against the forecast total capital cost.
In December 2010, Loudon indicated that DiamondCorp would be looking to raise around ₤8.5m to complete the mine, pay off debt and fund exploration work in Botswana.
He said on Tuesday: “The amount to be raised will probably be closer to ₤10m.’
DiamondCorp raised ₤2.95m in December through a placing at 8.5 pence per share. The share price subsequently nearly doubled to around 16p by March, but has since drifted back down to current levels around 12p.
Loudon said: “The entire UK stock market is a bit jittery at present. It’s dangerous to predict share price movements but, if the results of the bulk sample confirm that we have a long life mine capable of generating $25m to $30m a year, then one would assume that our share price should react favourably.’
The DMS plant at Lace was re-commissioned using material taken from surface tailings dumps created by the previous mining operations.
About 1,321 carats recovered in this way were sold at tender in Johannesburg during February and realised $94/carat.
“This compares with $55 per carat received in September 2008 – the last time the company tendered diamonds prior to the price collapse which began the following month – and $33 per carat received in May 2009 at the bottom of the market.
“This strong price for Lace tailings diamonds leads the directors to believe that DiamondCorp’s base case of $120 per carat for diamonds from the Lace pipe is conservative in the current market,’ Loudon said.
The remaining resource at Lace below the old workings is estimated at 14 million carats of diamonds down to the 855m level.
Following a review of the life-of-mine plan, the initial mining operations from 260m down to 360m will use sub-level stoping while ore below 360m will be recovered through sub-level caving.
DiamondCorp has now employed former De Beers executive Bob Harverson as its consulting mining engineer. Harverson was previously mine manager at the Kimberley mine and project manager at Finsch before becoming an independent adviser to De Beers on block caving and underground mining across all the group’s operations.
Loudon added a decision had also been taken to use conveyor belts to transport ore from underground all the way to surface, rather than refurbish the existing vertical shaft at the mine.
He said: “The vertical shaft instead will be used for upcast ventilation, eliminating the need for raise boring a new ventilation shaft. This change has no impact on mine development time and is anticipated to have a positive impact on life of mine operating costs. “
John Meyer, analyst for UK institution Fairfax, has put a target price of 23p on DiamondCorp shares.
He said: “DiamondCorp is one of the most interesting companies around for short-term potential gain. Historical documents and expert reports suggest that the bulk sample could reveal better grades and diamond values than we have modelled before.
“It’s a better-than-even wager that we should be surprised on the upside.’
