AIM newcomer Diamondcorp expects gem production from tailings at South Africa's Lace mine to start in June.

Headed by Australian mining entrepreneur Paul Loudon (of investment group Loeb Aron and BDI Mining fame), Diamondcorp, which plans a listing and small fundraising soon on Johannesburg's AltX junior stockmarket, acquired Lace, for 70 years in the De Beers empire, in a deal with South Africa's leading private gem miner Christiaan Potgeiter. Chaired by ex-City mining guru and Celtic Resources director Euan Worthington, the company, which raised nearly £4 million at 60p privately before February's £2.5 million AIM float at 90p through Cenkos Securities, has a two-fold strategy to develop a hoped-for 25-year diamond-mining project.

Diamondcorp intends to use cash from extracting an estimated 370,000 carats, potentially worth $63 a carat, from the tailings to fund a bankable feasibility study in 18 months on the next phase of the project. The next phase involves reopening one shaft and digging a new one at Lace.

At present, the company reckons Lace could hold between 13.7 and 14.1 million carats, smallish clear stones worth around £125 a carat, with shallower deposits possibly grading 27 carats per hundred tonnes of rock and those below 360 metres underground perhaps grading 60 carats per hundred tonnes. Loudon argues there should be new exploration possibilities around Lace and does not rule out 'corporate opportunities' in the future.

But Lace is the prime focus and Loudon argues the company's two black empowerment partners, each with 13 per cent of Diamondcorp, play a crucial role. Shanduka, headed by former trade union leader turned powerful businessman Cyril Ramaphosa, and Sphere, run by black ex-Merrill Lynch fund managers, have agreed to contribute pro rata to development costs after the feasibility study is produced.

If the project goes ahead, Diamondcorp, whose shareholders include the US Millennium fund, J.P.Morgan and the private Aktive group from Eastern Europe, will clearly need more funds at some stage. But, if Lace lives up to expectations, that should not be problem, overall market conditions permitting.

At 88.5p, valuing the company at £30 million, the shares should be worth a punt.