JOHANNESBURG (miningweekly.com) – JSE-listed DiamondCorp subsidiary Lace Diamond Mines (LDM) has signed a diamond beneficiation joint venture (JV) agreement with Johannesburg cutting and polishing factory Distinctive Choice.

Under the terms of the JV, LDM had the option of processing some of the larger, high-quality diamonds that fell outside the offtake agreement with Tiffany & Co subsidiary Laurelton Diamonds.

“Of those diamonds that are selected for beneficiation, profits over and above the reserve price of the rough diamond are to be shared equally between the two parties,” DiamondCorp said in a statement on Thursday.

The Southern Africa-focused company, in January, agreed to a term loan of $6-million with Laurelton in exchange for an offtake agreement for diamond production from its flagship Lace mine, in the Free State.

The company reported that the first stone manufactured under the JV was an 8.36 ct white diamond, which was recovered from the dumps prior to the Laurelton agreement.

“From this diamond, three brilliant cut diamonds are being manufactured and the colour has improved during polishing. The largest stone is a 2.02 ct internally flawless diamond with no fluorescence, which has been sold for $68 000,” chairperson Euan Worthington commented.

LDM’s profit share on this stone alone had increased the return to 185% of the reserve price.

The company held that, over the life of the mine, the beneficiation JV had the potential to provide LDM with significant additional income, providing critical insight into the performance of Lace diamonds during polishing and assisting with beneficiation targets under the country's Mining Charter.

The company further reported on Thursday that the ramp-up at Lace was on schedule and within budget, with underground tunnel development currently 11% complete.

Until now, underground development had been limited to two crews operating three shifts, while blasting of the temporary vent raise, which bypassed the blockage in the vertical shaft, was completed.

“With the completion of this vent raise and installation of surface exhaust fans this week, multiblast conditions now exist underground and the rate of development can increase to more than double the current rate of 200 m a month,” Worthington said.

The underground mining fleet continued to provide over 90% availability, with operating costs running at 87% of budget.

The mining fleet rebuild costs were running at 95% of budget, with the last of the dump trucks and underground loaders (LHDs) required to achieve maximum underground development rates currently being assembled in the workshop and scheduled to be commissioned by year-end.

Worthington noted that, with the completion of these two 20 t dump trucks and two LHDs, the full development and production fleet of five trucks, five LHDs and four face drilling rigs would be in place.

“In addition, an order had been placed with Sandvik for a new long hole drilling rig required for drilling the undercut levels of the block cave. This drilling rig is scheduled for delivery in the second half of next year and the rand/euro exchange rate has been fixed,” he said.

Meanwhile, the new life-of-mine boxcut was completed in September and development of the twin declines from the base of the ramp had started.

Steel sets for reinforcement of the portal area were now being installed, with the design and detailed drawings for the underground conveyor belts system on schedule and within budget.

Fabrication of the first leg of the conveyor belt to be installed was 95% complete and installation was about to begin. Procurement and exchange rate protection on all long lead time and imported items was 100% complete.

In addition, the 1.2-million-tonne-a-year dense media separation plant at Lace was successfully recommissioned during August with material from the three-million tonnes of tailings remaining from mining activities which took place between 1902 and 1931.

The refurbished plant would now allow “seamless” transition from tailings retreatment to the processing of kimberlite from underground development. 

Further, as a result of an increase in the bottom screen cut of the plant, the diamonds now being recovered were coarser in size distribution and were, therefore, expected to fetch a higher average price per carat than the diamonds previously recovered from tailings.

“To confirm these figures, the company has postponed the first sale of tailings diamonds until after November.

“While the sales revenue generated from these first parcels is not material to the overall Lace development budget, it will give management confidence that the tailings optimisation has the potential to significantly improve operating margins on this activity, which was previously expected to operate at only a small profit margin,” Worthington noted.

Plans were also in place to increase tailings throughput to more than 150 000 t a month in the first half of 2014 by introducing in-pit screening.

“If recoveries are in the order of five carats per hundred tons, the in-pit screening has the potential to increase production to 7 500 ct a month, which will allow a significant proportion of the tailings to be retreated prior to the underground achieving full production,” he said.

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