DiamondCorp Halts Process of Selling Lace Mine, Prospects Improving

Mining and Exploration
07/11/2016 12:26

Following several tumultuous weeks in which DiamondCorp announced it was considering selling off its Lace Mine or entering into a merger, and then restructured its management as part of a financing facility agreement, the company has now decided to terminate the "formal sale process" with immediate effect on account of offers that are, "opportunistic in nature and significantly undervalue the Company", according to a statement to the Johannesburg Stock Exchange. They note that, "the Lace asset, irrespective of start up delays, still contains an estimated 9.39 million carats of diamonds with an in-ground value in excess of $1.5 billion assuming an estimated average price of $164/ct as contained in the independent resource statement announced in March 2016.

DiamondCorp further notes that, "the various interested parties with underground mining experience who have reviewed the Company's technical data and visited the Lace mine all recognised the Company's technical strength as evident from the Lace mine underground mine development and surface recovery plant." Despite cancellation of the sale process, the company says it wil, "continue to examine alternative means of enhancing shareholder value." On October 20 it announced it had agreed an $870,000 (£700,000) loan with its shareholder and lender Rasmala as well as management changes in which its chairman, Euan Worthington, would be replaced by Chris Ellis, an independent non-executive director of DiamondCorp. It said today that it would consider the additional appointment of an independent non-executive director with “specific financial and operational mining experience”. The company further states that it expects Lace to reach commercial production in the early part of 2017 (previously February was the new target date). Mining in October had operated “close to plan” and ground conditions on the 310 metre level were improved. It hopes to sell in excess of 5,000 carats of diamonds by the end of November.