The vision of TSX-V-listed Diamcor Mining to become a key supplier of high-quality diamonds to industry leaders is moving closer to reality with the imminent completion of final work at its Krone-Endora at Venetia project in South Africa’s Limpopo province.

Diamcor Mining CEO and chairperson Dean Taylor tells Mining Weekly that the company’s key focus over the last 24 to 36 months has been the project, which is now in the final stages of development.

“The project is located directly adjacent to De Beers’ flagship Venetia mine and it’s deposits have been identified as occurring as a result of the direct shift and erosion of an estimated one vertical kilometre of material from the higher adjacent grounds of the Venetia kimberlite pipes,” says Taylor.

“The diamond-bearing deposits occur from surface to bedrock, with a total maximum depth of only 15 m, which provides us with a low cost mining operation and excellent diamond quality given the known Venetia source.”

Taylor reports that since finalising the acquisition of the project from De Beers in 2010, the company has been advancing the project at a rapid pace.

“We completed the vast majority of the project’s infrastructure requirements over a period of 18 months, along with the installation of a new 200 t/h modular processing plant. We began commissioning and testing exercises late in 2012, and enjoyed our first sale of diamonds from those exercises in November,” he says.

Just prior to the end of the year, Diamcor also announced the closing of additional funding from its strategic alliance partner, Tiffany & Co, with the funds to be used to secure the final quarrying and processing developments to support the project for the long term.

“We expect this final work to be completed early in the first quarter of 2013, after which we are targeting the move to 24/7 operations as quickly as possible,” says Taylor.

“In conjunction with that move, we plan to complete additional bulk sampling on the surrounding areas not yet accounted for in our current NI 43-101 report and, with that work completed, we will release an updated and amended NI 43-101.

“Our initial production target is to achieve 10 000 ct/m in the short term, with the midterm target being 250 000 ct/y. We are targeting a life-of-mine of about 15 years,” says Taylor.

He adds that the company considers itself lucky with the Krone-Endora at Venetia project, given that the areas of K1 already provide it with an estimated 7 to 10 years of production from that area alone, and the surrounding areas are expected to also provide additional production life.

“These additional areas have not been accounted for in our current NI 43-101 and we expect an increase of two to three times the estimated resource from pending work on those areas. In essence, we have a fully capitalised near-term production scenario, with significant additional exploration upside as well,” says Taylor.

He explains that the company keeps a close eye on consumer confidence in the various geographical areas of the world, with the future growth in the Asian and Indian markets still being at the top of its list.

“The key driving forces for Diamcor growth really come down to consumer demands. However, the purchase of quality diamonds for weddings, anniversaries and special occasions always occurs despite whatever else is going on in the world, so we believe we are not only positioned well for the short term, but also for the longer term as key emerging markets will inevitably continue to grow,” says Taylor.

Taylor adds that the imminent shortfall in rough supply, with no new sources of size-for-quality diamonds having been found in recent years, and existing sources now reaching the later stages of their mine life, is also expected to have a positive effect on rough prices achieved by Diamcor in the coming years.

“We see the current state of the global diamond market as following a pattern which is driven by the ability of various industry sectors to access capital to achieve their goals. In recent years the prices of rough diamonds moved up significantly based on the developing supply/demand scenario and the increasing demands from the emerging markets of China and India, with significant shortfalls expected based on current worldwide supply.

“With areas such as the US softening last year and the Asian markets slowing down, prices seemed to weaken a bit and level off. That being said, the underlying supply/ demand scenario remains the same, and we anticipate any recovery in the various key regions will produce the same supply/ demand scenario and rough diamond prices will continue to increase going forward,” says Taylor.

“Throughout most of 2012 rough diamond prices remained relatively stable, but by early 2013 many are predicting stockpiles will be getting depleted and we would, therefore, expect to see an increase in the near term, and then increases of 3% to 5% a year going forward year-on-year.”

He adds that global recovery of the financial markets is key to all sectors as it will inspire consumer confidence and increased spending.

“We feel our high percentage of gem- and near-gem-quality rough diamonds isolates us somewhat in the short term and, moving forward, positions us very well. The goal for us will be to increase production in an effort to increase the benefits of these potential future demands when they occur.”

“Our vision is to be a key supplier of high-quality diamonds to respected industry leaders, and given what we have accomplished to date, we are close to achieving that,” comments Taylor.

“We have established key relationships with a high-quality black economic- empowerment group, namely Nozala Investments, which exceeds all legislated requirements and furthers the objectives of the South African government. We have secured an excellent project which is directly adjacent to and related to one of most well-known diamond mines in the world, secured a strategic alliance with world famous Tiffany & Co, and are now preparing to begin the delivery of rough diamonds to Tiffany & Co’s facilties in Johannesburg, which will support their beneficiation in South Africa.

“We believe we have all the collective elements in place to allow us to achieve our overall vision and provide broad-based benefits to all involved.”

Visit Diamcor Mining at PDAC 2013 at booth #2809.