Hi John,
Feel like you're talking to yourself. I decided to give you some company.
I was at the PDAC when Richard Garnett gave the technical session presentation on Luderitz concession. There is a great summary of it on the website,
http://www.diamondfields.com/s/MarineDevelopment.asp
Interesting to note that the current resource estimates are likely undervalued by 4-5 times due to poor sampling technique. The neighbors (Namco and ODM) mining efforts are confirming much higher diamond grades in areas very close and geologically similar to DFI's. DFI's story will likely not get out to the market until their next phase of exploration bulk samples are made public at the end of this year.
Current earnings are low because production has not ramped up yet. This will give us a few more months to pick up some shares at $0.60 and hopefully below. At the PDAC meeting, Richard Garnett predicted their concessions would host the biggest inventory of diamonds on the west coast of Africa and make them the #1 producer of marine diamonds in the world in about 2 years based on those Luderitz concessions. I think he may be right.
I'll print the technical paper over two posts,
Introduction
Diamond Fields International Ltd. holds eight sea diamond concessions in Namibia and South Africa encompassing some 10,000 square kilometres.
The Company has recovered diamonds from the shallow waters out to 100 meters of water depth in its Luderitz concession. The search for diamonds has extended to over 400 meters water depth in its South African Cape Canyon concession 20d where the primary ancient river carrying diamonds from the hinterlands exited the continental shelf.
The Company's main focus is the systematic development of its Luderitz concession. Historical and current production surrounding the concession, coupled with sampling and small scale mining in the concession, all point towards the Company's belief that the Luderitz concession represents one of the most potentially profitable sea diamond deposits known.
The Company's goal is to unlock the value of the concession in a socially and environmentally sound manner and provide superior returns for our shareholders.
<Picture: Show printable version of 'History And Timeline' in a New Window>History And Timeline
1992
Diamond Fields Resources (DFR) is formed on the heels of diamond discoveries by DiaMet in Canada
1993
DFR acquires Luderitz concessions
1994
Frank Smith and Loxton Dal mines purchased, JV with BHP-Benco for Luderitz concession formed, and initial Voisey's Bay discovery
1995
BHP/Benco/DFR JV outlines 1.15 million carat resources on Luderitz concession Voisey's Bay's nickel potential outlined and all diamond activities cut back
1996
DFR sold to INCO for Cdn$4.3 billion, Diamond Fields International created as part of transaction package with imputed asset value of Cdn$15 million
Mar. 1997
BHP-Benco-DFI JV formally dissolved with property reverting back to 100% DFI ownership
Oct. 1997
DFI hires President - Daniel D. Johnson, first full time senior management employee
Aug. 1998
DFI sells Loxton Dal and Frank Smith mines and closes private placement for total proceeds of US$3.4 million
Nov. 1998
Phase I of Advanced Sampling Program using De Beers Marine shows average sample grade of 1.30 carats per square meter
Dec. 1998
Dr. Richard Garnett appointed Chairman of the Board
Jan. 1999
TSE/VSE Listing - 41 million shares outstanding
Mid 1999
Phase 2 sampling with De Beers Marine on Marshall Fork feature
Late 1999
Phase 3 sampling with De Beers Marine in other areas
Late 1999
Feasibility study
2000/2001
Development, production commences
<Picture: Show printable version of 'Diamond Market' in a New Window>Diamond Market
<Picture: Historical Trend in Rough Diamond Prices in US Dollars>
The diamond market saw severe downturn in 1998 with sharply lower demand in the important Far Eastern markets. The De Beers. Central Selling Organization (CSO) reported lower sales and began restricting supplies and stock piling to support price levels.
With the lower global sales in 1998 the Company also experienced price drops in the size and quality category associated with the DFI Luderitz deposit. DFI estimated prices fell on the order of 20-25% from late 1997 through to the end of 1998. Market prices have responded favourably to strong US 1998 holiday season sales. DFI sold the 4,500 carats recovered from its Phase 1 program and received US$164/carat. DFI's longer term financial planning assumes an average market price of US$150/ carat. Namibian goods in general remain in strong demand and DFI's planned production is expected to be easily absorbed by the market.
<Picture: Show printable version of 'Marine Diamonds' in a New Window>Marine Diamonds
<Picture: Historic Namibian Diamond Production>
Over 100 million carats of valuable gemstone diamonds have been recovered from the modern and ancient beaches exposed along a thin strip on the coast of Southern Africa. After the deposits were discovered in the dry Namib desert near Luderitz in 1908, they were traced south to just north of Cape Town, and northwards up to the Namibian/Angolan border, constituting the richest and most valuable alluvial diamond deposits in the world. Onshore, they have been mined extensively and those mines, which have produced over 100 million carats, are nearing the end of their life. Attention is now being turned to diamonds which lie under the sea.
<Picture: Overview of marine diamond concessions on the west coast of southern Africa>The sea level has changed many times in the geological past, often exposing huge flat plains of land right out to the continental shelf. The Orange and other rivers flowed out onto this plain, dumping rocks, sand, and many millions of carats of diamond eroded from the kimberlites deposits inland. In time, the sea rolled back, distributing the diamonds along strand lines which are now buried below the sea, between the shoreline and up to 200 metres and more below the sea surface.
Production levels of marine diamonds have increased annually and have now surpassed 750,000 carats a year. There are many more beach levels buried below the sea than there are exposed on land, and geologists estimate that the marine deposits contain between 1 and 3 billion carats of diamonds, transported down the rivers from rich inland deposits, such as those in Kimberley. Most of these lie in the territorial waters of Namibia.
<Picture: Show printable version of 'Republic Of Namibia' in a New Window>Republic Of Namibia
Namibia is one of the world's most sparsely populated countries, with many contrasting landscapes and a variety of cultures. The following points contribute to its position as an attractive place for investment:
•Independence from South Africa in 1990
•Stable, democratically elected government
•Low population base - 1.8 million
•Economy GDP US$8.0 billion - currency tied to South African Rand (ZAR)
•English is the official language of the country
•Strong mining industry, led by Namdeb (De Beers), Rossing (RTZ) and others
•Well administered and transparent mining regulations, secure land tenure
•Government values all diamonds for royalty purposes
•Upon payment of royalties, DFI is free to export and sell diamonds.
<Picture: Show printable version of 'Shallow Waters Mining' in a New Window>Shallow Waters Mining
The Company is currently mining in the Luderitz concession shallow waters (less than 30 metres) with contractors on a commission basis. All gravels recovered are processed through the Company's processing plant. The operation is 100% staffed by Namibians and each contractor employs on average seven local residents. The Company is committed to the Luderitz community and the operation has produced 1,000 carats since its restart in mid-1998. Historically shallow waters operations produced over 33,000 carats from 1987-1990.
The Company's goal is to build up and maintain a sustainable production of over 6,000 carats per year. The key to this buildup will be attracting and maintaining successful contractors with each contractor being able to maintain a minimum production of 100 carats per month. DFI currently has two contractors on the property and looks to increase the number over the next two years. The Company provides geological, financial and administrative support to assist these small vessel contractors.
<Picture: Show printable version of 'The Environment' in a New Window>The Environment
Diamond Fields International is committed to conducting its operations in an environmentally sound fashion. The Company operates its advanced sampling program activities in accordance with Environmental Management Plan Report (EMPR) prepared by DFI and accepted by the relevant Namibian Government agencies prior to work starting on the program. The Company is also represented on the Namibian Marine Diamond Mines Association (NMDMA). The Company also participates in the Luderitz Forum, a regular meeting between Luderitz residents, the fishing industry and the marine diamond industry. Studies have shown minimal impacts caused by the marine diamond industry. DFI embraces the collective efforts shown by mining operators, the fishing industry, the government and the local people to maintain an open discussion on the impacts of mining.
<Picture: Show printable version of 'Luderitz Bay Property - H...' in a New Window>Luderitz Bay Property - Highlights
The DFI Luderitz property adjoins land where diamonds were first discovered near Luderitz. The initial discovery led to extensive mining in the early 1900's with over 5.4 million carats recovered and a mining centre built in Kolmanskop.
In the 1960's, Marine Diamond Corporation (MDC) led by Sammy Collins recovered 340,000 carats in four months in Hottentots Bay on the northern boundary of DFI's concessions. MDC was bought out by De Beers and its operations eventually became De Beers Marine.
In the late 1980's, an active shallow water program using divers from small boats and shore based units recovered over 33,000 carats from the extended surf zone to the north of Luderitz. Only a small fraction of the potential areas has been mined and DFI has restarted shallow water operations.
In late 1994 and early 1995 the BHP/Benco/DFR joint venture sampled 882 sites on the property with the Bauer tool resulting in a conservative resource estimate of:
•8.44 sq.km. •0.12 cts/sq.m. •containing 1.15 million carats @ 0.34 carats/stone
In addition to the five features containing estimated resources, two other high potential areas were identified but not sampled at the time.
Highlights of DFI's Luderitz Concession
•Adjacent to extensive onshore diamond deposits
•Full range of water depths
•Exploration by BHP
•Sampling and test mining by De Beers Marine
•Past production record
•Mining in progress at concession boundary
Since 1996, ODM (Ocean Diamond Mining) has been producing at an annual rate of 60,000 carats per year on DFI's southern boundary with an identified resource of over 200,000 carats. In 1998 and 1999 Namco (Namibian Minerals Corp.) has recovered 150,000 carats in 10 months directly on the western edge of the DFI property.
•1908 - 1915 5.4 million carats produced in adjacent coast
•1960's 340,000 cts in 4 months on northern boundary
•1987 - 1990 33,000 cts from shallow water operations
•1994 - 1995 BHP/Benco/DFR drilled 882 Bauer holes
Conservative estimated resource of:
•8.44 km 2 •0.12 ct/m 2 grade •containing 1,150,000 cts@0.34ct/stone
•ODM mining 60,000 cts/year on southern boundary (200,000 carat resource)
•Namco mining at projected 180,000 cts/year on western boundary (2,200,000 carat resource)
<Picture: Show printable version of 'Previous Bhp/Dfr Sampling...' in a New Window>Previous Bhp/Dfr Sampling Program
An indicated and inferred resource of 1.15 million carats was estimated based on the results of the 1994/95 sampling program using the Bauer tool, (a modified slurry trench cutting machine) deployed from the vessel mv Geomaster.
The results, although outlining a resource, are believed to have grossly underestimated the resource and as such are considered by DFI to be more of a qualitative result rather than a quantitative result. This belief is supported by:
1.The results of Phase 1 of the Advanced Sampling Program with an average sample grade of 1.30 carats per square meter in the area sampled, over five times the grade of estimated resource grade for the entire Marshall Fork using the Bauer tool.
2.Neighbouring producers NAMCO and ODM are producing at levels which infer in-situ grades four to five times higher than adjacent DFI areas tested by the Bauer tool.
3.Resource estimates using the Bauer tool results increased the sample area by 20% over the actual Bauer tool footprint area as a conservative factor.
4.The tool design and/or operation is believed to have been inadequate in cleaning the sea floor potentially leaving the highest diamond bearing area behind. In addition the location of the intake and the slow speed of the cutter wheels may have resulted in partial inability to sufficiently lift diamond particles off the sea floor.
Based on these factors, DFI designed the Advanced Sampling Program utilizing proven diamond sampling techniques to more accurately define the diamond deposits identified with the Bauer program. Sampling programs using the De Beers Marine Wirth tool and Megadrill are planned. Despite apparent deficiencies associated with the BHP program, DFI believes that the positive features of Bauer tool coupled with design modifications to ensure complete recoveries will result in an effective sampling technique for the future.
Luderitz Concession Resource Estimates
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Mid-waters Average Grade Total
(carats/sq.m) (carats)
Indicated Resource 992,900
Inferred Resource 154,900
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Subtotal (0.10 ct/sq.m cutoff) 0.12 1,147,800
(Source: BHP-Benco, confirmed
by Marine & Coastal Geoconsultants)
Shallow-waters
Inferred Resource 0.12 276,000
(miniumum resource based on
historical production records)
(Source: Marine & Coastal
Geoconsultants)
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<Picture: Show printable version of 'Advanced Sampling Program...' in a New Window>Advanced Sampling Program - Phase 1
Objective:
Confirm grades and mineability of gravels
Method:
De Beers Marine.s mv .Coral Sea. using proven
Wirth Drill for detailed sampling and test mining
Timing:
1 month - November 1998
Details:
•67 holes 25 m apart for 2% extraction with 10 m 2 drill •Test mine 3,000 m 2 with 21 m 2 drill •Average sample grade 1.30 cts/sq. m •Average sample stone size 0.38 cts •Total carats recovered 4,484 |
