Diamondcorp reschedules sale to 17 September, pre-tax loss narrows

13th Sep 2016 10:39

(ShareCast News) - Diamondcorp reduced the size of a scheduled sale of its diamonds due to operational setbacks as it moved to ramp-up production at its main asset, the Lace mine in South Africa, even as it managed to stem the red ink.Its net loss for the six months to June narrowed to £247,000, compared to the loss of £3.159m in the same period last year, after adjustments for a stronger South African rand exchange rate.Administrative expenditure for the period increased by about 33% to £893,000 due to a change on audit remuneration and additional expenses as the company moves from development to production.By the end of June, total assets had increased about 20% to £39.227m and liabilities also rose nearly 13% to £28.456m, according to the company.Cash was £108,000 and since the 30 June a further £2m was raised through an issue of shares.Production in August from the first mining block on the 310m level was interrupted by flooding following attempts to drill return air pass, until specialist contractors were able to seal the flow.Nine production days were lost in the first half of August as a result, meaning diamond sales for September will now be about 5,700 carats, not the 7,000 previously forecast.An additional eight production days were lost in the second half of August from further water issues as the return air pass tunnel was advanced into the contact area then resealed, which now remains sealed from any serious water inflow, the company said in a statement.AIM-listed DiamondCorp also announced that its mining results for the month included significant tonnage of lower grade kimberlites, reducing total tonnage for August by two-thirds in comparison to the outfit's forecasts and diluting the recovered grade from the budgeted 31 carats per hundred tonnes to 18.The company said these operational issues were not unusual as it ramps up underground mining operations and the financial impact of the operational issues was expected to be met by existing cash and a new third party convertible debt facility.Mining is progressing in high-grade K4 kimberlite. Geological consultants MPH Consulting are monitoring the kimberlite mines and said reconciliation of the kimberlite mined demonstrated that recovered grades were in line with the geological model.The company said the diamonds yielded during August remain of a "high quality", and four stones larger than the 10 carats were recovered, including a 12.7 carat gem diamond, which will be sold in October.Production forecast for the rest of the year was revised to 20,000 tonnes in September, 25,000 in October, 30,000 in November and 30,000 in December.Current diamond inventory stands at 7,003 carats. It takes between 30 and 45 days for recovered diamonds to move from the mine to Antwerp to be sold, and it is anticipated the October sale will be small, but monthly sales are expected to build up to the 9,000 carat base-case by December.Shares in Diamondcorp were down 16.15% to 5.66p at 1037 BST.