DiamondCorp plc (DCP) – Activity Update

DiamondCorp plc (DCP), the South African diamond mining company, is pleased to provide the following update on its activities for the 12 months ended 31 December 2008.

Highlights
• Lace tailings re-treatment recovered 50,521 carats of diamonds in the year
• Recoveries averaged 6.28 carats per hundred tonnes (cpht) and approximately 70% of diamonds recovered were gem quality. Recoveries improved to 7.23 cpht in Q4 following re-commissioning of the recrush circuit.
• 31,906 carats of gem diamonds were sold at tender in Johannesburg for R14,129,203 (US$1.707 million) at an average price of US$53.52 per carat.
• Diamond prices suffered a significant drop in the second half, with final tender sales in November achieving 50 per cent of the prices received earlier in the year. As a result tailings re-treatment is no longer economic and this activity has ceased.
• Mining right granted for the Phase Two Lace underground development, and initial mining of kimberlite from the Satellite pipe has commenced.
• Access to potentially high-grade, high-value hypabyssal kimberlite from the Main pipe is being accelerated.
• Kimberlite will be stockpiled until March when a new primary crushing circuit is commissioned.
• £3.55 million of equity capital was raised through two share placements during the year, and a project loan of US$5.0 million was secured, providing all the required debt and equity for the Phase Two.
• In November, the European Islamic Investment Bank became DiamondCorp’s largest shareholder. Mr Robin Henshall, EIIB’s Head of Private Equity, joined the Board of the Company.
• Group cash balances at 31 December totalled R45.2 million (£3.3 million) and long-term debt was US$5.0 million (£3.45 million). The project loan is a 36 month facility with capital repayments of US$0.5 million in April 2010, US$1.0 million in October 2010, US$1.5 million in April 2011 and US$2.0 million in October 2011. The interest rate is fixed at 12%.

Commenting on the period, DiamondCorp CEO Paul Loudon said:
“The decision last year to accelerate development of the Lace underground mine has proven to be timely, with mining of higher value kimberlite now underway and able to take over from tailings re-treatment activities, which have become uneconomic as a result of a fall in diamond prices.
“Importantly, we have also been granted the mining right for the underground, meaning we are not limited in any way in the speed with which we can ramp up to full underground production. As a result we have ceased tailings re-treatment and are able to now focus all our efforts on maximising higher value underground production, including accelerated access to the potentially very high-grade hypabyssal kimberlite in the Main pipe.”