DiamondCorp walks away from its Botswana kimberlite project

DiamondCorp (LON:DCP), the African diamond mine development and exploration company, will not proceed with further exploration in Botswana due to the recovery of low grades in the area, announced the company today.

The London-based miner said that planned to return the rights to the tenement holder, Geoperspectives, following the recovery of low grades at both J-01 and J-05.

“Despite being located near to the richest diamond mine in the world and the encouraging mineral chemistry displayed by these kimberlites, mini bulk tests suggest they do not contain macrodiamond grades sufficient to support a large-scale commercial diamond mine,” DiamondCorp’s managing director Paul Loudon said.

DiamondCorp also said that the current group cash balance is approximately US$ 3 million (£2m) with no debt, allowing project-financing negotiations to be undertaken. Despite the positive announcement, the company’s shares were down almost 12 per cent this morning, compared to the beginning of the week.

At the Lace mine the company says that SA Diamond Exchange has undertaken a revaluation of the 2,168 carats recovered from the bulk test at the mine last year and estimated a price of $172 per carat in the current market. This represents a 7.5% increase from the $160 per carat valuation of the first 1,850 carats from the bulk test announced last October.

The increase in value is a reflection of slightly better overall diamond quality in the final 318 carats, as well as a moderate firming of prices for Lace diamonds since the market correction last September.

In light of the prices for Lace diamonds, tailings retreatment has begun again on an initial single shift basis. This will be monitored over the next 60 days to confirm that an increase to two shifts will generate a positive contribution to cash flow.

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