DiamondCorp lends Lace mine a new lease on life

diamondcorp lends lace mine a new lease on life

johannesburg - diamondcorp, which is planning a secondary listing on the jse, is set to reopen a diamond mine in the free state that was closed almost 80 years ago at the time of the great depression.

paul loudon, the chief executive of diamondcorp, said yesterday that the lace mine near kroonstad could produce at least $1 billion (r6.7 billion) in revenue for the company from late 2009 until about 2030.

the operation had a diamond resource that was worth close to $2 billion, said loudon.

the discovery of diamonds in 1898 happened where the lace mine is now located.

diamondcorp would spend r200 million on reprocessing mine dumps left from the mine that operated from 1902 to 1930.

during that time, 750 000 carats of diamonds were extracted.

the mine's largest stone so far was 82 carats.

de beers bought the lace mine in 1939 and sold it in the 1990s.

development at lace started in october last year and the plant, where the diamonds are extracted, was commissioned last month. lace will be the second diamond mine to be restarted in the free state, as de beers is spending r1.2 billion on reopening and developing the voorspoed mine.

the lace mine is expected to employ 104 people during its first phase, when the mine dumps will be processed. an extra 120 people will be hired when underground mining starts.

diamondcorp is planning a secondary listing on the jse in february, when it expects to raise more than r41 million and see south african investors take an 8 percent stake.

diamondcorp has a market value of about £34 million (r474 million). it will be the jse's third diamond mining firm, with transhex and diamond core. rockwell and etruscans diamonds are also planning jse listings.

loudon said global supply and demand for diamonds was good, with most of the major diamond mines having moved past their peak production.

he said: "if the supply of diamonds remains flat and the demand continues to grow at its present rate, then the world will see a $3 billion diamond shortfall."

at the present rate of mining, available diamond deposits would be mined in less than 20 years, said loudon.

however, he said a severe pull back in the us economy would pose a threat to the growth of the diamond market.

china's consumption of diamonds was expected to grow from 4 percent of world demand to 13 percent in the next 10 years.