Development of the Lace diamond project in the Free State will cost as much as $18.6 million, DiamondCorp announced this week.

According to miningmx.com, the company has just reviewed a detailed breakdown of development and operating costs for the project, located near Kroonstad. Estimates range from $14.8 million on the lower end to the aforementioned $18.6 million.

The Lace project is expected to reach full production by November 2012. By then, some 400,000 tons of kimberlite will have been mined. Diamonds recovered from the kimberlite are expected to generate $13.3 million to $17.1 million, depending on grade and per-carat price. This revenue will be used to defray development costs.

DiamondCorp CEO Paul Loudon noted that the Lace mine could have a life of 25 years and be a "significant cash generator for DiamondCorp." Loudon said that strong diamond prices in the current market would give the project an initial operating margin of 46%, which would increase if the project's diamond grade improved.