Johannesburg - DiamondCorp on Thursday said the Department of Mineral Resources (DMR) had issued it with a Section 54 shutdown notice on underground operations at its Lace Diamond Mine in the Free State.
The move by DMR deals a blow to the diamond miner as it announced that it required additional funding in the very near-term for immediate financial commitments to continue trading as a going concern, in addition to its longer term financial requirements.
DiamondCorp said it was in discussion with a third party for the provision of a convertible debt facility to satisfy this requirement, but no assurances could be given at this stage that the provision of such finance will be entered into either in time or at all.
The miner said it was engaged in “positive discussions” with its primary lender, the Industrial Development Corporation of South Africa, for restructuring the repayment terms of its main project finance facility, as well as with parties outside of the United Kingdom and South Africa.
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In the absence of such a facility, DiamondCorp said it was likely that it would be unable to continue trading as a going concern.
The shutdown notice at Lace Diamond Mine is related to a fire incident on a dump truck extinguished without injury - just inside the portal to the decline. The mine is operated by DiamondCorp, which also holds 74 percent of it.
The instructions issued by the DMR included a request for an “external ventilation audit team to inspect the mine for smoke and other gases”.
“Mine management is struggling to find logic in the instruction and is considering its options, including legal means of redress,” the mining company said in a statement. The company expects that underground mining operations will remain suspended for at least one week.”
DiamondCorp has also seen declining figures in its production due to fall of large pieces of rocks and safety concerns for injury to workers or damage to the company's machinery.
“The revised production ramp up announced in August has been further revised in light of tonnage constraints encountered during September which are now likely to continue until at least the end of the current year,” DiamondCorp said.
DMR was not immediately available for comment.
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