AMI.L Regulatory News (AMI)

11 Apr 2006 15:18

Sierra Leone Diamond Company Ld11 April 2006 Immediate release 11 April 2006 Sierra Leone Diamond Company Limited ("SLDC" or the "Company") Alluvial Operation and Exploration Activity Update Sierra Leone Diamond Company (AIM: SLD), the diamond exploration company withlicence interests wholly focussed in the country of Sierra Leone, is pleased toreport an update on its alluvial operations from its mining lease based in theKono district of Sierra Leone and an update on its exploration activities. Alluvial Operations On 9 February 2006, SLDC completed the acquisition of the diamond processingplant, with a capacity of two million tons per annum, located beside the BafiRiver in the Kono district of Sierra Leone. Since the acquisition much of the Company's time has been spent reconditioningthe plant and earth moving equipment acquired in the transaction. However, theCompany has continued to mine the Tefeya area with increasing efficiency and has just completed its first river diversion to expose 1.6 kilometres of thealluvial gravels located in the bed of the original course of the Bafi River.The Company will shortly commission a diamond x-ray final recovery plant whichwill significantly increase the recovery efficiency of diamonds from the miningactivities allowing the processing plant to be operating at full capacity bythe end of the second quarter 2006. In the third quarter of 2006 the Company will commission a further diamondprocessing plant which will increase our capacity by a further one million tonsto a total of three million tons from the fourth quarter onwards. Alluvial Exploration The Company is currently mapping the high and low terraces and paleo channels and is conducting a comprehensive drilling program in the new mining lease areato define a drill intersected resource. This area was mined until 1965 by Sierra Leone Selection Trust ("SLST"), aBritish colonial alluvial diamond mining company holding the exclusive mineralrights to Sierra Leone. The only reliable data available comes from a report"The Diamond Fields of Sierra Leone" produced in 1968 by P K Hall. The reportindicates that diamond recovery from alluvial production in the lower and upperterraces and paleo channels in the Tefeya area has averaged approximately 50carats per hundred tons of alluvial gravels mined. Hard Rock Exploration Activities SLDC has over the past months been collating the results of the High ResolutionAero Magnetic Survey (HRAM) and geological mapping with the results from the5,000 regional samples taken to date. The HRAM has generated in excess of 140magnetic anomalies ranging in size from 1 hectare to 40 hectares. These havebeen prioritised for further follow up sampling. The regional sampling program has discovered in mining licence area EXPL 16/96,a large number of microprobe confirmed kimberlitic and diamondiferousindicators including the presence of G10 and G9 garnets, which are the bestindicator of the presence of diamonds, as well as ecologitic garnets andkimberlitic ilmenites. These garnets also show only slight signs of abrasionand are thought to be close to the original source. These will be prioritisedfor detailed follow up sampling. Micro probe confirmed follow up sample results, taken in the southern part ofthe mining licence area EXPL 16/96 near to the village of Bumpe, have confirmedthe abundance of high interest garnets of which 66 have been classified as G10 garnets. These grains are accompanied by numbers of ecologitic garnets and byhigh counts of kimberlitic ilmenite and chromite grains. A drill program andfurther sampling and field work will be conducted in these areas with the aim ofdiscovering a new source of diamonds within Sierra Leone. Micro probe confirmed results from EPL 01/03, the north-east region, haveconfirmed the presence of four kimberlitic ilmenite grains. The samples weretaken approximately 15 km south of the Guinea-Sierra Leone border in the most northern part of the licence. This being the only positive results in thenorthern part of this exploration licence the Company is conducting furthersampling to discover if this is a new kimberlite region outside the knowndiamondiferous area of Sierra Leone David Gadd-Claxton, Chief Executive Officer commented: "The commencement of alluvial diamond mining is excellent news for the Companyas SLDC has fulfilled one of the stated objectives at the AIM listing inFebruary 2005 of becoming cash generative from the commencement of alluvialdiamond production. Once established, these activities will be able to generatesufficient funds to cover all the Company's near term working capitalrequirements including its wider exploration activities. "The exploration results are also extremely encouraging with exploration dataindicating the possibility of a significant kimberlite find or the discovery ofa new source of diamonds within the Country. "A further production update will be provided by the end of the second quarter." For further information, please contact; Sierra Leone Diamond Company 01442 257246David Gadd-Claxton, Chief Executive OfficerMartin Dunham, Chief Financial Officer Buchanan Communications 020 7466 5000Bobby MorseBen Willey This information is provided by RNS The company news service from the London Stock Exchange