Tawana - Daniel Alluvials Project 16 Aug 2015 12:57
Tawana has risen from 75 A cents in our first report to 90 A cents in last September's note, to A$1.50 recently. News has been very encouraging, particularly from the big world-class Daniel Alluvials Project (6 kms from De Beers' Finsch mine in South Africa). The company raised A$3m in June by the early exercise of 4m, 75 A cent directors' November 2005 options and it now has around A$6.5m in cash. The market capitalisation of A$81m (£31m) makes it the largest of the six juniors in this note. The Daniel Alluvial Project (DAP) is a world class alluvial diamond asset and Tawana (40%) are partnered by BHP Billiton (60%) in the project. Moreover, the DAP has spun off a substantial secondary, but related, venture the Tawana Alluvials, which is 100% owned by Tawana, subject to BHPB retaining a 2.5% royalty on gross revenue.
In more detail; "BHPB has advised Tawana that the DAP has been shown by Tawana to contain a very large tonnage of diamond-bearing gravels with the extent and potential to be of interest to BHPB, and thus BHPB has elected to participate in further evaluation of the DAP". A recent 518 tonne bulk sample turned up 13 diamonds - captured from Finsch in the Daniel paleo channel in 8 of the 14 sites tested. The DAP has the potential to become the largest alluvial mine in the world. The sheer size and value implied by BHPB's confirmed commitment to the DAP in April suggests an in-situ diamond resource greater than the US$2bn estimated in our September 2003 note and a value to Tawana of over US$147m (A$214m or £81m). Further work programs are discussed with BHPB and Tawana remains the operator. Any future diamond production will be marketed by BHPB
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