JOHANNESBURG (miningweekly.com) –  South African diamond asset developer DiamondCorp continues to advance development at the Lace diamond mine, in the Free State, with work on the Upper K4 (UK4) block focused on preparing the 310 m production level for production ramp-up by the end of the year.

The company said in an update on Tuesday that tunnelling activities had advanced in September from heavily diluted low-grade K6 kimberlite on the southern side of the kimberlite pipe into a transitional zone of higher-grade K4 kimberlite in the centre of the pipe.

As a consequence, ground conditions improved and kimberlite development rates exceeded the monthly call in October.

Challenging ground conditions reported previously on the 290 m doming level had been overcome with the installation of steel arched sets, which DiamondCorp believed provided a canopy to protect employees and equipment from potential falls-of-ground.

“The void above the canopy is now being back-filled to cushion any potential falls-of-ground.

“However, the time taken to install the sets and make the area safe has resulted in a delay to the blasting of the slot drive, from which the initial tonnage ramp-up starts,” it noted.

This delay was expected to result in cash flow pressure on the company’s 74%-owned operating subsidiary Lace Diamond Mines in the first quarter of 2016, when debt repayments would be due.

As a result, the company had held detailed discussions with its primary lenders and black economic-empowerment partners regarding options to alleviate cash flow pressures.

“The discussions have been positive and a formal request to continue [the] interest roll-up of the Industrial Development Corporation loan until positive cash flow is achieved has been lodged.

“Management does not expect any issues with respect to this request being granted,” DiamondCorp stated.

The conveyor belt system had, meanwhile, been fully installed and 80% commissioned, while final electrical connections were under way and the belt was scheduled to be fully commissioned by the end of this week.

Processing of K6 and K4 kimberlite recovered from the production level drives and bulk test sites continued, with further “encouraging” results.

The final drilling and microdiamond work requested by the company’s geological consultants to complete the resource statement update was under way, with the additional work requested expected to provide greater levels of confidence in the resource estimate and likely to be completed before year-end.

Development costs, to date, were averaging R49 993/m against a budget of R38 280/m as a result of the challenges encountered, including a weaker-than-expected rand exchange rate.

“The commissioning of the conveyors will now have a positive impact on reducing development costs, as trucks will no longer be used in decline development to the block cave level.

“Positive test results have been received from initial bulk tests undertaken on an optical/X-ray waste sorting system for the processing plant to optimise processing of the Lace kimberlites,” the company concluded.