Name and Location
Lace diamond mine development project, Free State, South Africa.

Client
DiamondCorp.

Project Description
The 1.2-million-tonne-a-year Lace mine is expected to produce more than 500 000 ct/y of diamonds at peak production.

The Main pipe at the Lace mine contains 33.1-million tons of kimberlite, indicated and inferred to a depth of 855 m, containing an estimated 13.4-million carats in both resource categories at an average grade of 40.1 ct per hundred tonnes (cpht).

The resource has an in situ value of more than $2-billion at $160/ct.
The deposit will be mined through block-cave mining, with three caves planned over the 25-year life-of-mine (LoM) on the 47, 67 and 85 levels, at depths of 470 m, 670 m and 850 m respectively.

The kimberlite is open at depth, with a significant bulge between 250 m and 360 m, and can potentially add additional tonnage and diamonds not currently included in the resource statement.

Value
The total development cost of the project, including working capital and a 15% contingency on capital and development costs, is estimated at R384-million.

The peak funding requirement of R286-million is expected in April 2015, when blasting of the slot drive and doming start to deliver significant tonnages of kimberlite.

The costs of establishing the block cave thereafter are offset by revenues from the sale of diamonds, recovered from kimberlite mined during development.

Duration
The Lace mine is due to start production in the first half of 2015.

Latest Developments
Underground development at DiamondCorp’s Lace mine project remains on schedule and within budget.

At the end of the quarter ended March 31, underground tunnel development was 21% complete, compared with a scheduled 24%, and was achieved at 95% of the project budgeted cost per metre (R33 616/m, compared with R35 327/m). Development rates were impacted on during the period, owing to mechanical breakdowns on face drilling rigs and heavy seasonal rains, which caused slippery roadway conditions on the boxcut ramp. The rains have now ceased, and the rigs are again providing good availability.

Surface piling for the LoM vent shaft was completed in the March quarter, well ahead of mobilising the raisebore expected in the second half of the year.

DiamondCorp reports that the underground mining fleet is providing 88% availability. The last underground loader required for full production is being assembled and is scheduled for completion within the current quarter. Operating costs are within budget for the company’s rebuilt trucks and loaders.

The design and detailed drawings for the underground conveyor belt system are on schedule and 95% complete and within budget.

Fabrication of the first two legs of the conveyor belt to be installed is 100% complete and have been delivered to site.

Fabrication of the third leg has begun. There are eight legs to the conveyor system, which will be progressively commissioned between the fourth quarter of this year and the first half of next year.

The company has experienced no labour issues and continues to hire the personnel it requires.

Meanwhile, tailings retreatment continued on two shifts in January and February, and three shifts in March.

In the March quarter, the plant processed 149 957 t of tailings, compared with a target of 140 000 t. Diamond recoveries totalled 6 953 ct at a recovered grade of 4.64 cpht, compared with a target
5.00 cpht. Production in January and February was from the oldest and lowest-grade section of the dumps. The recovered grade for March was 5.81 cpht and 5.77 cpht for April to date.

The 400 t/h sand screen commissioned in February did not achieve the required performance and has been demobilised from site. In accordance with the supplier contract, the company paid only for mobilisation and demobilisation costs.

The company is now installing a conventional degrit circuit, which has the potential to increase tailings throughput to 120 000 t/m. This is expected to be commissioned in May. Sales of diamonds from tailings recovery for 2014 started in February, with ten sales scheduled for the year. Sales for the year to date, including carry-over of year-end stock, totalled 7 505 ct for proceeds of $471 160.

The average sales price of $63/ct is in line with DiamondCorp’s forecast for the year.

At current exchange rates, and the cur-rent budget grade and sales price, and operating costs after the installation of the degrit circuit, the tailings retreatment is forecast to generate a positive cash flow
of R9/t.

Underground core drilling designed to better define the rim of the Main pipe for the finalised cave layout and definition of the ‘Bulge’ area has intersected significantly more high-grade kimberlite on the eastern side of the pipe above the 345 m level than was projected in the original Lace geological model.

This Upper K4 block has the potential to add at least one-million tonnes of additional kimberlite to the Lace mine plan, which could be mined, without the requirement for additional project finance, while the 47 Level block cave development progresses.

Key Contracts and Suppliers
None stated.

On Budget and on Time?
The project remains on track for the commercial production ramp-up from underground kimberlite mining to start in the second half of 2015.

Contact Details for Project Information
DiamondCorp, tel +44 20 3151 0970, fax +44 20 3151 0971 or email info@diamondcorp.plc.uk.