TORONTO (miningweekly.com) – Vancouver-based explorer Gem International Resource sees bonanza diamond potential at its flagship Dala project, in Angola, and is preparing plans for the immediate development of alluvial diamond deposits, followed with systematic exploration that would hopefully result in discovering diamondiferous kimberlites.
“The Dala project offers excellent potential. Together with our partner in Angola GlobalGems, we plan to immediately initiate bulk sampling on the best alluvial targets with a view to generate cash flow within the first year of operations,” Gem International director and consultant Denis Hayes told Mining Weekly Online during a recent interview.
According to Hayes, Gem planned to conduct exploration on the project to prioritise alluvial targets and develop a plan for longer-term kimberlite exploration with the goal of a “big win”.
Late last year, Gem entered into a binding agreement with Global Gems International for an option to acquire 91.5% ownership of Global Gems, and thereby attain 91.5% of a 45% interest in the Dala project.
In exchange for the option, Gem had agreed to pay a total cash option fee of $500 000, issue five-million shares of the company to the vendors, and contribute $5-million towards the exploration expenditures over a two-year period.
Hayes stressed that partnering with Global Gems provided a significant competitive advantage owing to its partner’s proven track record of success in Angola. Global Gems had successfully operated a series of alluvial mining operations between 1993 and 2002, through which it had gained sophisticated knowledge of all aspects of alluvial diamond mining in the Southern African country.
“Global Gems has practical expertise with importing and transporting equipment and supplies into and within Angola and its well established relationships with the State diamond mining company, as well as with government and local authorities, will be invaluable to us as we proceed with the bulk sample,” Hayes said.
Previously, Global Gems had operated the Chimbongo alluvial project, in the Lunda Norte province, which had produced between 5 000 ct/m to 7 000 ct/m at an average value of $350/ct; the Lua River project, in Lunda Sul province where mining using divers in the active river channel of the Tchicapa river produced 2 000 ct/m with an average value of more than $1 000/ct; and the Lua Breakwater project, also in Lunda Sul, which produced 5 000 ct/m at an average value of $970/ct.
Together, the Lua projects had generated about $180-million in revenue before being sold.
POTENTIAL BY PROXY
According to Hayes, Angola represented one of the most compelling diamond exploration areas in the world, and nearby success stories could also serve as a proxy for the potential at Dala.
Located just 25 km north of the Dala project, and with a surface area of 64 ha, the Catoca mine, owned and operated by a joint venture between Angola’s State miner Endiama (32.8%), Alrosa (32.8%), LLV (18%) and Odebrecht (16.4%), represented the fifth-largest diamond mine in the world.
Accounting for about 6% of global diamond production, Catoca output in 2013 totalled 6.6-million carats worth $594-million. Of the total output, 35% was designated as gem quality, compared with the global average of 20%.
The mine had reserves of 271-million tonnes of kimberlite at a grade of 70 carats per hundred tonnes for a total of 189-million carats of diamonds.
Further, Hayes pointed out the “spectacular” results that Perth-based miner Lucapa Diamond Company had achieved at the nearby Lulo project.
“Located to the west of Dala, the Lulo project provides an excellent example of the strategy to be implemented by Gem and Global Gems,” Hayes advised.
Lucapa had implemented a two-pronged strategy, by first establishing positive cash flow from alluvial diamond mining and then, in the longer term, focusing on kimberlite exploration to find resources that could sustain the operation.
Having started alluvial diamond mining operations in January 2015, Lucapa had demonstrated the ability to consistently produce exceptional, high-value diamonds from its alluvial operation, including fancy coloured pink and yellow precious gems.
Three diamond sales completed last year had generated about $5.1-million for Lucapa, something Gem hoped to replicate at Dala, Hayes said.
As proof of the exceptionally high-value potential offered by alluvial diamond deposits in Angola, Lucapa had recently announced the recovery of a 90.32 ct D colour Type IIa diamond – one of the rarest and highest-value categories of diamonds in nature, as well as several special diamonds larger than 10.8 ct from a high-grade area where mining had started on August 10, 2015.
According to Hayes, the Dala concession held potential for the immediate development of alluvial deposits and, with systematic exploration, the discovery of diamondiferous kimberlites.
At 3 000 km2, it is the largest allowable size for a diamond concession under the Angolan Mining Code, Hayes stressed, adding that the proximity to the capital of the Lunda Sul province, Saurimo, provided convenient access to services and supplies.
The concession had more than 100 km of exposure to two of the best diamond-bearing rivers in Angola – the Tchicapa and Luachimo. The Tchicapa and Luachimo rivers cut into basement lithologies, providing excellent potential for sampling of the diamond-bearing Cretaceous horizons.
Hayes explained that historic exploration had detected the presence of at least four confirmed kimberlite pipes; however, it remained to be seen whether they were diamondiferous. Previous owner Moydow Mines had undertaken an airborne geophysical survey over the entire concession, totalling 15 000 line kilometres, as well as follow-up work, including 102 ground magnetic survey grids over airborne anomalies.
This delivered 29 compelling exploration targets, of which only 11 had been drill-tested.
Hayes said work stopped in 2009 in response to the global economic crisis.
He noted that, at present, a group of independent mineral prospectors, known as ‘garimpeiros’ was conducting small-scale alluvial mining within the Dala concession. Despite only processing small volumes of gravel, they regularly recovered high-quality diamonds, including a 47.36 ct gem recovered from the Luachimo river in July last year, that had an estimated value of about $1-million, or about $20 000/ct.
The company had recently closed a private placement financing of C$806 000 through issuing 16.12-million units at a price of C$0.05 each.
Since the start of the year, Gem’s TSX-V-listed stock had gained 150% at C$0.14 apiece on Thursday afternoon.