DiamondCorp, the Southern African diamond mining, development and exploration company, is pleased to provide the following update on diamond sales and March quarter production from the Lace diamond mine in the Free State province of South Africa.

Highlights

• A total of 8,648 carats of diamonds have been sold through a combination of direct sales and competitive tender, marking the first sale of kimberlite diamonds from the Lace mine since 1931.


• The Company experienced good demand for its production in all size categories, and all lots offered for sale were sold.


• 6,247 carats were diamonds greater than 1.25 mm in diameter which were recovered from kimberlite development and production ramp up. These diamonds, which are representative of the plant in its current production configuration, were sold for a total of US$1.09 million, representing an average of $175 per carat.


• 2,401 carats were from tailings production and fine diamonds less than 1.25 mm in diameter recovered during bulk testing when the plant was configured with finer bottom screens. These diamonds sold for a total of $0.046 million representing $19 per carat.


• Two special stones were included in the sales. A 22.11 carat diamond reported previously which was sold into the Company's beneficiation joint venture as an H coloured stone at $5,000 per carat and a 1.08 carat Type II purple stone which sold at tender for $6,363 per carat.


• The purple diamond is an early indicator of the extra value that Type II and coloured stones can add to the Lace resource.


• The 22.11 carat stone has been cut and polished into two stones - a 7.19 carat F coloured VVS2 emerald shape diamond and a E/F colour 0.85 carat pear shape diamond. The Company will receive an additional 50% of the profit from these stones when the polished diamonds are sold.


• The significant increase in colour achieved when these stones were cut and polished is also an early indicator of the potential value accretion beneficiation can add to the Lace resource.


• Production from Lace in the first three months of 2016 comprised 6,324 tonnes of K4 kimberlite at an average recovered grade of 36 carats per hundred tonnes (cpht), 8,327 tonnes of K6 kimberlite from ventilation tunnel development at average recovered grade of 8 cpht and 18,307 tonnes of tailings at an average recovered grade of 5 cpht. Total diamonds recovered for the period were 3,438 carats.


• Blasting of the slot for the first production trough in the Upper K4 Block together with a 1,500 tonne underground ore pass and silo is on track for production to achieve 30,000 tonnes of kimberlite mining per month from July onwards.

Diamond market and sales

Management commenced diamond sales in the last week of March through a combination of direct sales and competitive tender, marking the first sale of kimberlite diamonds from the Lace mine since 1931.The large number of diamantaires who booked viewing of the diamonds on offer and the prices achieved has indicated that strong demand exists for the Lace production.

A total of 8,648 carats of diamonds were sold, comprising 6,247 carats of kimberlite diamonds greater than 1.25 mm in diameter and 2,401 carats of tailings diamonds and fine diamonds less than 1.25 mm in diameter recovered during bulk testing when the plant was configured with finer bottom screens. The kimberlite diamonds sold for $1.09 million, representing an average of $175 per carat, and the tailings and fine diamonds sold for $0.046 million, representing an average of $19 per carat.

Two special stones were included in the sales: a 22.11 carat diamond reported previously which was sold into the Company's beneficiation joint venture as an H coloured stone at$5,000 per carat and a 1.08 carat Type II purple stone which sold at tender for $6,363 per carat. The purple diamond is an early indicator of the extra value that Type II and coloured stones can add to the Lace resource.

The 22.11 carat stone has been cut and polished into two stones - a 7.19 carat F coloured VVS2 emerald shape diamond and a E/F colour 0.85 carat pear shape diamond awaiting GIA certification. The Company will receive an additional 50% of the profit from these stones when the polished diamonds are sold. The significant increase in colour achieved when these stones were cut and polished is also an early indicator of the potential value accretion beneficiation can add to the Lace resource.

Commenting on the results of the initial diamond sales, DiamondCorp CEO Paul Loudon said: 'We are extremely pleased with the level of demand shown for the Lace production and the prices we achieved in all size categories. Overall sentiment in the diamond market remains relatively positive compared to the end of 2015, and the price increases seen in January are being maintained.'

March quarter production

During the three months ended 31 March 2016, the Company's 74%-owned subsidiary Lace Diamond Mines (Pty) Limited (LDM) continued with the implementation of the revised development schedule and budget for the ramp up of commercial production from underground kimberlite mining at the Lace mine.

Underground mining and development resumed in January and remains on target to achieve production of 30,000 tonnes per month by July. Tailings retreatment has also resumed as an adjunct to processing of kimberlite from underground.

Production from Lace in the first three months comprised 6,324 tonnes of K4 kimberlite at an average recovered grade of 36 carats per hundred tonnes (cpht), 8,327 tonnes of K6 kimberlite from ventilation tunnel development at average recovered grade of 8 cpht and 18,307 tonnes of tailings at an average recovered grade of 5 cpht. Total diamonds recovered for the period was 3,438 carats.

Blasting of the slot for the first production trough in the Upper K4 Block together with a 1,500 tonne underground ore pass and silo is on track for production to achieve 30,000 tonnes of kimberlite mining per month from July onwards.

The 400 tonne per hour conveyor belt system is performing well and the 200 tonne per hour dense media separation plant is now operational in production mode, with bottom screens set at 1.25 mm bottom screen size.

The only operational difficulty being experienced is availability of trucks and loaders on the production level. This matter is being addressed with the proposed purchase of near new rolling stock lying idle at one of several third party mines which have shut as a result of commodity price weaknesses. The purchase of these trucks and loaders from existing cash resources is due to be completed in the coming month, ensuring that the truck availability required to deliver 30,000 tonnes per month of kimberlite to the conveyor belt is on place when it is required.