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Gold/Mining/Energy : Coleville Resources - CLL

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To: Wayne McCormick who wrote (1615)	5/14/1997 12:58:00 PM
From: Gerry Belanger Jr.	of 3058

Attempting to compare the Pemon to the Buffalo Hills find will proved to be very difficult. Apples and Oranges. The Pemon is an alluvial diamond property while the Buffalo Hills discovery is a kimberlite target. The Pemon deposit was laid by water erosion of a kimberlite pipes. The diamonds are free from the kimberlite rock. They are spread out and less concentrated. The initial number from the Buffalo hills discovery was a little over one carat per ton. This is a fairly big number (IMO). This looks to be economic if the target proves to be large enough. The Pemon has yielded about 1/3 carat per cubic metre. Also very economic, but the size of the Pemon deposit is much more difficult to estimate, because of dense vegetation and environmental concerns. CLL can't just go dig up the whole property, but must methodically produce from smaller areas while simultaneously reclaiming and re-planting behind them. There is currently an indicated reserve from a 300 by 500 area of 91,000 carats. New areas are being tested (looking good) but it is still too early to estimate reserves for the new areas. Comparatively, the potential annual production for the kimberlite target is much larger and only limited by how much rock you can move from underground. CLL consulting geologists originally hypothesized that kimberlite pipes could potential be located on the property. I am not aware of any detailed follow up on this. It is an apples and oranges comparison. But CLL does have the advantage of having seen cash flow from the property already. I am not an expert on alluvial or kimberlite diamond mining, so you should also be contacting other sources of information on the topic. Gerry Belanger Silicon Capital

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