KimCor Diamonds has started production from tailings at Bellsbank in South Africa and is investigating targets at Koffiefontein near Kimberley.

Chief executive officer Martyn Churchouse says the Bellsbank operation was ready by late August at a cost of £550,000 – well below a budgeted £900,000 – and is already attracting approaches from US and Cape Town diamond buyers for certain categories of stone. AIM-quoted KimCor reckons Bellsbank has three million tonnes of tailings from earlier mining at an average grade of more than 6.5 carats a tonne, plus 800,000 tonnes of coarser material.

Churchouse says the company hopes it will produce 45,000 to 50,000 carats a year for six years. Bellsbank stones are mostly fairly small, in the three to 0.8 carats range and colourless when cut. Output from a pilot plant there achieved an average price of $120 a carat, with $180 or more per carat for the better stones.

On the exploration front, loss-making KimCor has abandoned hopes to developing the 'Van Zeulen' kimberlite pipe, but is awaiting samples from Riviera, close to Bellsbank. The company has signed an agreement to prospect on 50,000 hectares, an area containing 18 farms, 30 kms south of Kimberley, where there are ten targets and indicator minerals and micro-diamonds have been recovered.

Having raised £3.3 million at 15p with its flotation in March and expecting cashflow imminently from Bellsbank, Churchouse says KimCor does not expect to need more money from investors for its present programme and is still looking at other possible projects. He concedes small stone prices have been easing of late, but says the longer term outlook is fair.

At 16.25p, down 0.5p this morning, KimCor shares have speculative appeal unless the US gem vogue does run out of steam.

KimCor Diamonds	AIM	£3m	1.12p	0.00p
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Robert Tyerman’s Exploration Insights			13/03/2006
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