Activity update
The transition from exploration to diamond exploration and mining continued during the first semester and Nora has taken key steps towards meeting its main objective: building value for shareholders.
Four major developments occurred during the semester. Nora acquired a minority interest in one of the world's largest offshore diamond marine concessions. Nora completed its new treatment plant upgrade on schedule and below estimated cost. Nora signed an option agreement whereby it can increase its participation in the second largest offshore diamond area in Namibia to an 80 % interest. And finally Nora commissioned a detailed geophysical survey on the deep-water concession by the Council for Geoscience, (Marine Geoscience Section) an independent research center affiliated with Cape Town University.
Review of Operations
New Acquisitions
On September 8th, 1997 the Company announced that it had just purchased a ten percent interest (10%) in the second largest offshore diamond marine concession in Namibia from Namibian Gemstones Mining Corporation (Pty) Limited ("Namibian Gemstones") at a cost of $552,000.
Subsequently, Nora announced on December 12th, 1998 that it entered into an option agreement whereby it can obtain an additional seventy percent interest (70%) in the property. By funding a detailed geophysical survey on the concession - at a cost of US $1.2 million - Nora, as operator, is entitled to obtain an additional twenty percent (20%) participation. Upon completion of the survey Nora will have until May 15, 1998 to exercise its option on the remaining fifty percent (50%) at a cost of US $ 3.6 million payable in five equal monthly installments of US $ 720,000 commencing at that time.
The Namibian Gemstones Concession
Our Marine Jewel
Namibian Gemstones, a privately held Namibian Company holds 23 concessions of 1,000Km2 each, in the Namibian offshore mining zone. The 23,000Km2 deep-water concession begins at the 200m isobath and is the second largest position, in terms of area, on the Namibian offshore mining zone.
The Namibian Gemstone property is unique as it occurs as a single block that starts on the Namibian-South African border and extends northwards along the outer edge of the continental shelf and on the continental slope. The southern part of the concession is opposite the mouth of the Orange river, while the eastern margin of the concession is adjacent with the western border of Namdeb's (a joint venture of the Namibian Government and DeBeers) main set of concessions from which the great majority of DeBeers offshore production is derived. During 1996, DeBeers Marine recovered 471,000 carats from this area. The Namdeb area is so rich that production is scheduled to increase by 50 percent in 1997-1998 as DeBeers Marine increases its production capacity. (Source: Economic Intelligence Unit).
The following table summarizes the other current holdings and illustrates the significance of the Namibian Gemstones and Nora Exploration's holdings.
COMPANY AREA HELD (Km2)
NAMDEB / DeBeers Marine 25,000
Namibian Gemstones / NORA 23,000
Ocean Diamond Marine 6,074
NAMCO 1,900
D.F.I. 660
An Unlimited Potential with and High Probability of Success.
The current conceptual model on offshore diamond location state that marine diamonds come from the erosion of upper assemblages of countless diamondiferous kimberlites pipes in the Southern African hinterland. Erosion of the diamondiferous pipes followed continental uplift and liberated some 3 billion carats of diamonds around 25 million years ago. These diamonds were transported to the west coast of Africa by a series of drainage systems that flowed into the sea in the vicinity of the Orange river, the international border between Namibia and South Africa. Through erosion, transportation and distribution, a unique combination of geological and geographical factors has resulted in the concentration of a conservatively estimated 1.5 billion carats of gem-quality diamonds in the ocean off the coast of Namibia and South Africa. These deposits are probably the largest known resource of gem-quality diamonds in the world.
According to a marine diamond resource valuation method established by "BZW Gold Revue" and general information on the industry published by "Soci‚t‚ G‚n‚rale Frankel Pollack", a concession with little or no published exploration information, can have its probable diamond resource determined using the following parameters.
It is generally assumed that only ten percent (10%) of a concession may be covered in diamondiferous sediments. Therefore it is thought that only fifteen percent (15%) of the sedimentary area is mineralized. An average recovery rate from mineralized sand is 0.25 diamond carats per square meter. Therefore, for every 1,000 Km2 in a concession, up to 3.75 million carats can be expected to be recovered.
Using these assumptions, the following table summarizes the probable resource of the various marine concessions held by the parties concerned.
AREA HELD (Km2) Probable Resources (Carats)
Namded / DeBeers Marine 25,000 93.8 million carats
Namibian Gemstones / Nora 23,000 86.2 million carats
Ocean Diamond Marine 6,074 22.5 million carats
NAMCO 1,900 7.1 million carats
D.F.I. 660 2.4 million carats
However, this valuation is an oversimplification of the marine diamond concessions potential. Simple percentage sediment and percentage sediment mineralized is not representative of all areas. Diamond distribution and grades vary so, even after sampling, an area may be shown to contain economic deposits (i.e. a resource established) or to be barren.
Having retained the services of the Council for Geoscience Marine (Geoscience section), an independent research center affiliated with South Africa's Cape Town University to conduct the geophysical survey, a preliminary report on the results on the Namibian Gemstones concession, identified very large areas of marine eroded bedrock with abundant features of similar types to those in which diamonds are concentrated elsewhere in the Namibian offshore zone.
The survey has covered approximately forty percent (40%) of the 23,000 sq. km. (9000 sq. km.) block of 23 concessions and involved collecting more than 6000 km of state-of-the-art geophysical information. The Council for Geoscience advises that this has been one of the largest continuous surveys ever undertaken on the west coast of southern Africa. Surveying was limited to water depths of less than 500m. Between depths of 500m and 300m, survey lines were spaced at 5 km intervals, and at depths shallower than 300m, lines were spaced at 1 km intervals. Digital data was collected by two high-precision echo sounders for bathymetry, by sidescan sonar for sea floor surface feature mapping and by two seismic systems for both shallow (10-15m) and deeper (to 300m) sub-bottom sediment profiling.
The most significant result is that in some twenty percent (20%) of the area surveyed, that is approximately 1,800 sq. km., the sea bed consists of exposed rocky areas or rock covered by a veneer of unconsolidated sediments. In these areas there is evidence of erosional activity in the form of palaeo-channels, old marine terraces (wave-cut platforms) and incised gullies. Sediment veneers 1-2m thick overlie portions of the rocky areas. All these types of features are known to contain diamond concentrations elsewhere on the Namibian offshore zone.
Nora's management is particularly pleased with these results which significantly enhance the potential of the Namibian Gemstones concession. The size of the wave-abraded areas are notable and can be compared to the total concession holdings of Namibian Minerals Corp. (Namco) at 1900 sq. km.. The position of these areas of rock outcrop opposite and to the north of the Orange river mouth is also highly encouraging as it is in such locations that the largest sizes and highest concentrations of diamonds occur on the coast and in the offshore water of Namibia.
Otjua Minerals (Pty) Limited
A Corporate Jewel
Nora's affiliated company's (OTJUA) contractual concession is located on the eastern shores of the Atlantic Ocean and stretches 140 kilometers along the Namibian coastline. They include the beaches from North Rock in the south to Grosse Bucht (near Luderitz) in the north, are 100 meters wide above the high water mark, and extend five kilometers into the ocean.
Under contract to NAMDEB Diamond Corporation (Pty.) Ltd., Otjua's mineral rights are valid until 2019.
NAMDEB is jointly and equally owned by the Namibian government and De Beers Consolidated Mines, the world's largest diamond mining company. With annual output estimated at about 1.3 million carats NAMDEB is, in turn, Namibia's leading diamond mining company. NAMDEB holds the mineral rights to what is known as Diamond Area No. 1 extending from the Orange River (the geographical boundary between South Africa and Namibia) north past Hottentot Bay, surrounding the Otjua concession. The central coastline south of the Orange River has been called the world's largest and greatest gem diamond deposit.
Nora's independent report was prepared by Dr. Donald Sutherland, of Placer Analysis Limited, a world renowned alluvial diamond deposit geologist. In his report, Dr. Sutherland describes OTJUA's contractual concession in the following manner:
"First and foremost, this is an outstanding exploration opportunity in an area of proven diamond mineralisation with diamonds of very high quality (generally exceeding 90% gem quality) combined with a profitable mining concern with a five (5) year history of diamond production...as an order of magnitude, the diamond present in the area could be around 3-3,5 million carats... the inferred resource is equivalent to there being 20-25,000 carats per kilometer of coastline ... these numbers may be compared with the coast north of Oranjemund where there is of the order of 700 Km raised and present beach deposit that has an intensity of mineralisation of the order of 80,000 carats per kilometer average over all shoreline. Various comparisons lend credence to the gross inferred reserve on this coast and that if a minimum realizable diamond value of US $110 / ct is taken, then this places the inferred resources in the $510 million + category for the concession."
Moreover, in Dr. Sutherland's evaluation of the potential of the concession, he states that: "no consideration has been given to the wider potential in the offshore areas that could be realized by the development of the diver-support platform (Creepy Crawler) and no consideration has been given to the raised beaches that are known to occur around at least some of the embayments."
As previously planned the treatment plant upgrade and transfer on the Otjua concession went ahead on schedule and below estimated cost during the first semester. The "new" treatment plant with its two Dobson Jigs operating in tandem has increased its throughput four-fold, from 8 tons per hour to 32 tons per hour. Furthermore, by taking advantage of the increase in production capacity, the treatment plant's throughput shall be steadily increased to attain 50 tons per hour. Under the terms of the contract with NAMDEB, areas must be completely mined before moving to another area. Having completely mined the area at First Rock, production has now been transferred to Jammerbucht. The treatment plant set-up was completed in mid-January 1998 and operations started early in February 1998.
Review and Outlook
Production is steadily increasing to 50 tons per hour at the plant and our new shallow-water marine mining equipment has just completed its "wet quarry test" and should be in operation shortly.
Management estimates that the production revenue loss during the "shut-down period" (upgrade and transfer) of the plant on the Otjua concession during the first semester should be recuperated in the third and fourth quarter.
With the preliminary results of the geophyscial survey on the marine concession now under review, management will soon be in a position to announce it's future development plans for the concession.
These acquisitions combined with other holdings and licenses being applied for, Nora Exploration Inc. can look forward to a significant position in the Namibian marine diamond industry. Namibia, the focus of Nora's current exploration and production activities, is one of the world's top diamond producers.
When looking back from the Corporation's present position, management is pleased with the results of their efforts and confident that 1998 will be a great year for the Corporation and its shareholders.
John
Nora Exploration |
