Diamond mining firm DiamondCorp suffered three blows in as many days at its Lace Diamond mine in the Free State last week.JSE and AIM-listed DiamondCorp reported a further delay in the ramp up to full commercial mine production of 30 000 tpm on Wednesday, with full production at Lace mine only expected to be reached in February next year as a result of several operational setbacks, most recently tonnage constraints.
On Thursday DiamondCorp was issued with a Section 54 shut down notice on underground operations by the Department of Mineral Resources (DMR) relating to a fire incident on a dump truck which was extinguished without injury just inside the portal to the decline.
The company’s share price on the JSE resultantly plummeted by 31%, while its share price on the JSE dropped to 42c on Thursday from a high of 62c on the back of the news.
By Friday, the result of these announcements prompted the third party with whom DiamondCorp has been in advanced discussions for the provision of a convertible debt facility to withdraw from such discussions owing to the adverse movement in the company's share price.
DiamondCorp said that despite this, it is in accelerated discussions with certain of its shareholders and other third parties with a view to securing the necessary additional funding of about £500 000 to satisfy immediate financial commitments.
However, in the absence of a successful resolution to these discussions, it is likely that the group will be unable to continue trading as a going concern in the very near term.
In a release to its shareholders, DiamondCorp warned that it could give no assurances at this stage that the provision of the required immediate term funding will be entered into either in time or at all.
“Additionally, in the event that DiamondCorp secures the required immediate term funding, there can be no certainty that it will subsequently secure the necessary funding solutions to meet its longer term financial requirements as previously announced,” the company noted.
A series of unfortunate events
This is not the first time the diamond miner has had to revise its production ramp up timetable.
In August - the first official month of commercial production and processing of kimberlite at Lace - production from the first mining block on the 310 m level was impacted by flooding.
Development drilling for the return air pass from the production level intersected a geological contact with significant water inflow, which saw the mine lose nine days of production in the first half of the month.
Moreover, DiamondCorp’s production was impacted by a two-week Section 54 DMR-issued shutdown of operations in July due to a fall of ground accident in a development tunnel.