DiamondCorp plc, the South African diamond mining company, is pleased to announce that all documentation granting the mining right for the Lace diamond mine was executed with the Department of Minerals and Energy in the Free State Province today.

Commenting on the grant, DiamondCorp’s managing director and CEO Paul Loudon, said: ‘This is an important milestone in the development of the Company, providing the legal tenure and operating framework required for more than 20 years of mining at our flagship Lace mine.

‘The grant follows long negotiations with the DME in finalising mining, environmental management and social and labour plans which provide for industry best practice in underground mining, with an emphasis on operational safety, skills development and upliftment for historically disadvantaged South Africans.

‘While we are starting this mine in a period of challenging market conditions for the diamond industry, we are confident that if we can demonstrate profitability in the current climate, Lace will grow to be a long-life producer of high-quality gem diamonds as the long-term fundamentals for the diamond market remain strong.’

The Lace mine, located 200km south of Johannesburg, last operated in 1930 and has been redeveloped by DiamondCorp (74%) in conjunction with its two Black Economic Empowerment partners, Shanduka Resources (Pty) Limited and Sphere Investments (Pty) Limited (13% each).

Initial underground mining has commenced at a rate of 1,000 tonnes per day from the Satellite pipe, and will access the potentially high-grade hypabyssal zone of the Main pipe in the second half of 2009. Production will increase to 3,000 tonnes per day by mid-year, and reach full production of 4,000 tonnes per day when the vertical shaft is refurbished in 2010. Lace currently has 130 employees and contractors increasing to 220 when full production is reached. The mine will produce more than 500,000 carats of diamonds per annum at peak production.
Approximately 35 million tonnes of kimberlite have been outlined in the main Lace pipe between the 240m and the 855m level, containing an estimated 13.8 million carats of diamonds at an average grade of 42 carats per hundred tonnes. These diamonds have an in-ground value of around R10 billion (£715 million) at current prices.

As reported in the Market Update on 27 January, the underground development at Lace is fully funded from existing cash and project loans.

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