07/02/2006 - 21:00

April float targets African diamonds

07/02/2006 - 21:00

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A small Perth company exploring for diamonds in South Africa’s fabled Kimberley region expects to be in production within a year of listing on the Perth stock exchange in April.

April float targets African diamonds

A small Perth company exploring for diamonds in South Africa’s fabled Kimberley region expects to be in production within a year of listing on the Perth stock exchange in April.

Central Kimberley Diamonds Ltd is seeking to raise $3.5 million, on top of $1 million raised privately during the past couple of years, to mine its Plooy-burg alluvial project in the diamond rich central Kimberley region.

Recent exploration, including a 132-hole drilling program and trenching, has identified about 15 million tonnes of favourable host gravels in an ancient shallow paleo channel or river bed, 8.8 kilometres long and 1km wide.

Exploration has also turned up two diamonds, weighing 1.8 carats and 0.81ct, “so we know we have diamond bearing grounds” the miner’s managing director and diamond marketer, James Lehman, told WA Business News.

Central Kimberley Diamonds also has an 8,000-tonne stockpile ready to treat.

Plooyburg is on the lower Riet River, below the convergence of the Modder and Riet rivers, which collect diamonds from existing Kimberley mines such as the Koffiefontein and Jagensfontein mines. The Lower Reit also hosts the Skutsekama alluvial mine, above Plooyburg, renowned for its large diamonds.

To facilitate the project, Central Kimberley Diamonds has a joint venture with local company, Eran Diamonds, a Black Economic Empowerment (BEE) company required under South African law.

Eran, which has offices in Johannesburg and Kimberley, and diamond cutting facilities in the Kimberley region, paid its way into the joint venture by part funding exploration to date.

“It’s an excellent arrangement. I’d rather be dealing with BEEs in South Africa than Native Title here in Australia,” Mr Lehman said.

The outlook for diamonds generally is good. World diamond stockpiles have been running down over the past five years, so prices, particularly of big white and coloured rough diamonds, have been rising. Projections show this trend is set to continue to 2012.

Major mines are also closing, with no new major discoveries on the horizon and a minimum six-year lead time to get a big new mine up and running. Others are becoming more expensive, like the big Argyle mine in Western Australia, where Rio Tinto has earmarked $1.2 billion for under-ground development 10 years ahead of schedule.

With the assistance of Kirke Securities Ltd’s Simon Cato, Central Kimberley Diamonds is in the final stages of completing its initial public offer document. If successful, the company will have 50 million shares on issue.  Current shareholders include local businessman Peter Rosenthal, previously associated with Perth landmark Caris Brothers Jewellers.

Mr Lehman said the capital raising would be followed by a pre-feasibility study, a bulk sampling program of up to 100,000t and the probable establishment of a 50t/hour treatment plant within two years.

“Not many new companies can expect diamond production and cash flow within a year of listing. Whether the project will be economically viable or not, we don’t know, but initial results are very encouraging,” he said.

Mr Lehman will be joined on the board by chairman and diamond marketer Bryan Miller, geologist and project developer Ross Brown, and South African manager Mike Parry.

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