Diamondcorp Share Discussion Threads

[tiger60] 12/5/2015 18:51

Buys at 9.35 today so strange close. We have just a few fallow weeks before the fun begins.

[wisecat2] 11/5/2015 20:42

Good Post 2vdm

[tiger60] 11/5/2015 20:01

It's mining I get it. A month or two makes no difference in the long run but credibility and meeting self imposed deadlines, without contradicting previous rns releases, gives the company a track record which is a good indicator as to our reliance on future guidance on timelines.

Look i am a big holder and been in and out for years. I believe in the asset but underground mining, power supply, political and econmic risk do not need to be compounded by vague mgmt guidance. I like PL, not so sure about EW, and having stayed on site for a number of years no one can deny he is fully engaged in this project but with Cahill at Norseman gold who had a similar, if not better record, things can change quickly. If the cash projections of gbp 22.5 per annum at full prod are met, or even exceeded with luck, then 40-50p is in reach. The problem being it is very rare to invest in an early stage miner that mirrors its pre feasibility numbers.

Anyway good luck. Got a feeling the resource statement will be good but the conveyor belt still at 51% still gives concern. Finish that by July and i will be happy. But good to see some posts whatever peoples point of view.

[iicb] 11/5/2015 19:17

thanks tiger

[smarm] 11/5/2015 19:04

We've waited years...who gives a stuff about a month or two.

S

[darcon] 11/5/2015 18:48

What I think they are trying to convey by such language is that they have built-in spare capacity of up to four months in their project planning so that if any delays were to crop-up for unforeseen reasons (common in mining) it should not be viewed by investors too negatively.

[tiger60] 11/5/2015 17:22

So four months ahead of schedule means Q3, what is all this H2? You cant say we are going to be 6 months early then retract it and say but we are still going to be 4 months ahead of the original schedule, you are now 2 months late from the latest RNS at the time. Say it how it is.

However, better to under promise and over deliver but they are being a bit inventive with the time table.

[2vdm] 08/5/2015 13:50

A good update at Proacative Investor today re cash. Apologies, but I had trouble posting the link so here's the whole thing.

“We’ll be cash flow positive by the end of the year,” reveals Diamondcorp (LON:DCP) chief executive Paul Loudon.

He’s speaking on the phone from the company’s flagship asset, the Lace diamond mine in the South Africa’s Free State, where he’s lived for several years now, overseeing a project that has gradually revitalised one of the country’s oldest diamond mines.

Lace was first mined back in 1901 and, in the following 30 years, some 4.5mln tonnes of rock was extracted, containing around 750,000 carats of diamonds.

Not bad going for an old-time operation, but as the effects of the Great Depression reverberated around the world in the early 1930s it was felt that the mine no longer had anything else to give.

It was shut in 1931 and lay dormant until interest revived in the boom of the last decade and Loudon and his black economic empowerment partners moved in with new finance.

Their efforts are at last coming to fruition and, having overcome geological and labour issues, not to mention hostile equity markets, mining is now all set to commence.

“We start our ramp-up of mining from the first block in the second half of this year”, says Loudon.

Those with one eye on a calendar will note that as May rolls into June it could well be that he’s talking in weeks rather than months.

After all, this is a plan that is already running four months ahead of schedule, and which will mine material that wasn’t even in the original calculations. Diamondcorp, it seems, has been pretty nimble in responding to favourable developments underground.

“The original plan was to go straight to the block cave,” says Loudon.

“The mine plan was based on below the 345-metre level because that’s all that was known from the old days.

“But when we de-watered and got underground we discovered that at the higher levels, where we’d assumed that there was less than 600,000 tonnes, there was actually 2.6 million tonnes. It became apparent that there was a lot more in the upper levels. This material would have fallen into the cave five years down the track, but there was an opportunity to go in now.”

So, while the first block cave is being developed, higher up in the system a conventional long-hole stoping operation will start churning out ore.

The economics of this material are certainly compelling. It grades a healthy 60 carats per hundred tonnes, with each carat valued at around US$150. All told, that makes it US$90 rock, which Diamondcorp reckons it will be able to mine and process for just US$20 per tonne.

That gives chunky margins right off the bat, and, with general and administrative costs set to come down for a third year in a row, a great deal of it should reach the bottom line.

That’s because Loudon has never been one to pile on the costs. His move to Lace took place some years ago and the company’s chief operating officer also lives there.

“We maintain a small office in London,” Loudon says, but apart from that everything is run out of South Africa where it’s cheaper.

That’s why losses in the most recent financial year were cut by around £900,000 to £2.6mln having fallen in the previous year too.

At City broker Panmure Gordon, where analyst Alison Turner takes a healthy interest in Diamondcorp’s progress, the thinking is that this year’s production will generate earnings of around £3mln, rising next year to £10.9mln and then to £22.5mln the year after, as the longer-term block caving operation begins to build momentum.

Following a recent US$7mln royalty deal the company has more than enough cash in the bank to see it into production. After that the emphasis will turn to shareholder returns.

And while Panmure isn’t yet modelling for a dividend, it is something that’s very much at the forefront of Loudon’s mind.

“This will be a return of capital model,” he says.

“The key is to get cash back into shareholder’s pockets from 2017.”

And how much cash will come back? In part that depends on the diamond market.

It’s worth noting that back in September of last year, De Beers, the greatest force in global diamond mining flagged up a likely decline in production right across the industry.

"Unless major new discoveries are made in the coming years, supply can be expected to decline gradually from 2020”, it said.

That plays very nicely into Diamondcorp’s hands as far as the likely pricing of its product is concerned. Loudon doesn’t expect a great deal of strengthening in the price this year, but thereafter there could be significant uplift.

“Diamond prices have to increase because the world can’t produce enough,” he says.

Diamondcorp can. It has a 25-year life at Lace, potentially producing around 500,000 carats per year. It won’t be enough to challenge the hegemony of De Beers, but it should certainly provide the wherewithal for the substantial return of cash to shareholders that Loudon holds so dear.

[iicb] 07/5/2015 14:36

What is the mine life once we start production?

[darcon] 30/4/2015 09:49

At first glance it looks like a positive update. Good to see that the royalty financing remains on track.

[ged5] 30/4/2015 07:44

A very comprehensive update. Without comparing to previous updates this seems very positive.

For anyone else not sure about Eskom load shedding:-

[tiger60] 30/4/2015 07:40

Mostly happy with this as no major surprises. Interesting to note the subtle difference in prod date from qtr 3 to H2 2015 but overall good stuff. The conveyor belt installation needs to be ready July/August. Also aquestion of cost for new machinery but we should get over 10p.

[riyazpatel] 30/4/2015 07:40

Overall good news

[jaf1948] 30/4/2015 07:35

30 April 2015

DiamondCorp plc


Lace DIAMOND mine Project update

DiamondCorp, the Southern African diamond development and exploration company, is pleased to provide the following update on the underground development at the Lace diamond mine in the Free State province of South Africa.

Highlights

-- Development work in the Upper K4 (UK4) block remains on schedule for commencement of mining operations in H2 2015, four months ahead of the original plan.

-- A total of 3,321m of underground core drilling in 21 holes has delineated 2.6 million tonnes of K4 (high grade) kimberlite above the 370m level, an increase of more than 2 million tonnes over the original Lace geological model.

-- The drilling of the UK4 block provides the volume data required for an updated resource statement. The final resource statement will require grade data from the bulk testing currently scheduled to be completed by the end of Q2.

-- Processing of K6 kimberlite recovered from the production level drives has commenced, including recovery of a 19.83 carat clear white gem diamond, being the largest gem diamond recovered from underground development so far.

-- The underground conveyor system is 91% fabricated and on site, 51% installed and on schedule for commissioning ahead of the mining ramp-up.

-- Mine development costs to date are averaging R38,961 per metre against a budget of R37,000 per metre.

-- Detailed technical and legal due diligence for the US$7 million royalty financing facility with Acrux Resources, as well as finalisation of detailed terms, is nearing completion and preliminary consents from lenders have been received. Subject to Board approval and signing of a satisfactory final facility agreement, it is anticipated that the drawdown of funds could be completed in the current quarter.

[jahl frezi] 29/4/2015 11:11

The Darwin facility expires this year, it will not be used

[darcon] 29/4/2015 10:23

fanny - so long as the news is positive once released and there are no issues with the royalty financing process then I agree with hpcg that it looks like the Darwin EFF is unlikely to be used.

[darcon] 29/4/2015 10:17

Someone posted this link to an IC blog article on Darwin EFFs:

[hpcg] 29/4/2015 09:23

I would think there is now zero prospect of DCP using the Darwin EFF, indeed there hasn't been for about a year. Darwin can't force anything and the share price says that equity could be raised well above the Darwin facility.

[fanramptastic mate] 29/4/2015 07:54

Darcon post 1100.

Would Darwin be able to create a death spiral from these actions?

TIA

fanny

[darcon] 28/4/2015 23:46

Another possibility is that Darwin got wind of some difficulty arising with the royalty financing process (remember that only a term sheet has been signed and the potential financing could still fall through). But that would be a case of trading on inside information.

[darcon] 28/4/2015 23:34

The company updated their shareholder info page on 15 April with the info that there are now nil warrants.

Darwin notified the FCA about their short on 17 April.

The company announced the US$7 million royalty financing on 17 March. At this point the share price jumped. Persons purchasing on T20s on or shortly after 17 March would have had to fund their purchases on or around 14-17 April or sell prior to or around that time.

Darwin may have been trying to take advantage of speculators being expected to have to close their positions by adding to the selling pressure.

[wisecat2] 28/4/2015 23:09

Don't think that's their style

[darcon] 28/4/2015 22:54

wisecat2 - perhaps Darwin were taking the sell-side on some large retail trades and then were caught short (e.g. as a result of retail punters choosing to fund their purchase rather than sell) and as a result Darwin chose the cheaper option of exercising their warrants rather than covering their short in the market.