Dineo Faku
Lace Diamond Mines expects to receive R280 million in funding from the Industrial Development Corporation (IDC), which it needs for the construction of its underground operation in the Free State.
UK-based DiamondCorp, which owns 74 percent of the mine, said yesterday that it had entered into a loan funding term sheet with the IDC, which was subject to the conclusion of a due diligence and approval by the IDC board.
The loan was expected to be paid over seven years, said the firm, which is listed on the JSE and the London Stock Exchange Alternative Investment Market. Its partners in the mine are Shanduka Resources and Sphere Investments.
Should the proposal meet the requirements, a 1.2 million ton-a-year block cave development will be constructed 470m below the surface.
DiamondCorp chief executive Paul Loudon said: “This is a significant milestone in DiamondCorp’s transition from developer to producer and we welcome the support of the IDC.”
Construction of the development is expected to start in the second half of the year. The company will need two years to develop a positive cash flow, and another two years for the mine to reach full production.
The mine was expected to have a 25-year life and would produce 500 000 carats of diamonds a year, Loudon added.
Kieron Hodgson of Charles Stanley Securities in the UK said the loan had come at a time when diamond demand fundamentals were strong compared with those of other commodities.
“This is an opportunity for small producers like Lace Diamond Mines to establish itself in the global diamond market.”
DiamondCorp shares were untraded at 65c yesterday.