DiamondCorp’s Lace project to cost 15% more

[miningmx.com] — DIAMONDCORP said on Wednesday its Lace project in the Free State will cost 15% more than expected due to the weakening of the rand.

The diamond miner initially estimated that the project would cost up to R126m but its latest operational update suggests that project costs are now sitting at closer to R143m.

SA’s currency plunged to close on R8.50 against the dollar in September – its lowest level in more than two years.

At the time the year-to-date depreciation of the local currency against the greenback stood at 18% while the rand was 19% weaker against a trade-weighted basket of currencies.

By Monday this week the rand had recovered slightly to around R8 to the dollar but remains highly volatile and biased for weakness.

DiamondCorp, whose management has recommended that the board proceeds with the capital investment for full-scale underground mine development, said recent bulk sampling work confirmed the economic viability of the mine.

The company said in a statement to the JSE that extended test work had confirmed the grade as 26 carats per tonne.

“More than 80% of the diamonds by weight are gem quality and 37% are larger than one-third of a carat. The largest gem diamond recovered is 20.58 carats. A 1.01 carat pink diamond was also recovered,” the company said.

Diamond quality is better than anticipated and the first 1,500 carats run of mine recovered from the bulk test have been valued in the current market by the SA Diamond Exchange at $160 per carat.

The mine’s life is expected to be more than 25 years, a period during which it will generate cash flow of about R6bn.

“The better development option is now considered to be a block cave on the 34 level in virgin higher grade kimberlite, 10m below any old development tunnels,” the company said.

Ramp up to full-scale production is estimated to take place within about 19 months.