Petra Diamonds Regulatory News (PDL)

20 Jun 2006 07:00

Petra Diamonds Ld20 June 2006 Petra Diamonds Limited Exploration Update - Alto Cuilo Petra Diamonds Limited ("Petra" or "the Company"), the AIM-quoted and ASX-listeddiamond mining group, announces an important update with regards to the AltoCuilo project (the "Project" or "Alto Cuilo") in north-eastern Angola. Highlights • Laboratory analysis of drill core has revealed a favourable mantle geotherm conducive for diamond formation in conjunction with some highly encouraging diamond stability field mineral grain counts and compositions, consistent with some of the world's economic kimberlite deposits • Kimberlites have been ranked in preparation for the large diameter drilling and bulk sampling campaign • Diamond drilling in the north-west of Alto Cuilo makes further progress, with the discovery to date of 39 kimberlitic occurrences (25 April 2006: 38) out of 46 targets drilled, an exceptional success rate of 85% • The third drill rig that arrived on site in April 2006 has been deployed to the north-east of the Project area, and will assist in the drilling of the 88 anomalies still to be investigated during this first core drilling phase of the Project • 507 alluvial pits (25 April 2006: 412) and 7 alluvial bulk sample trenches have been excavated, placing the Project in a position to commence with a trial alluvial mining test in the next few months • Budget of circa US$20 million for the year to June 2007, to be funded by BHP Billiton, has been approved - this would take the total invested by BHP Billiton at June 2007 to around US$45 million Adonis Pouroulis, Petra's Chairman, comments: "These highly encouraging diamondindicator mineral chemistry and geotherm results from Alto Cuilo are consistentwith diamond-producing kimberlites globally and confirm Petra's belief that theAlto Cuilo Project could host economic diamond deposits. The forthcoming largediameter drilling and bulk sampling programme will move exploration to the nextlevel, targeting the kimberlites prioritised from the indicator mineralanalysis. It is also important to note that the first five target kimberlitesare all of considerable size. Furthermore, we expect to upgrade several morekimberlites to bulk sampling status as additional indicator mineral results arereceived. Exploration success at Alto Cuilo is following a focused approachwhich reflects the support of our partner, BHP Billiton." Diamond indicator mineral chemistry While the core drilling programme continues, Petra and BHP Billiton have beenworking on the laboratory analysis of drill core recovered in advance of thelarge diameter drilling campaign that is set to commence in Q3 Calendar 2006. Todate drill core samples have been submitted for laboratory analysis from 35kimberlites - analysis from 11 kimberlites has been completed, samples from afurther 8 are in transit to the laboratory facility whilst electron microprobingof indicator grains derived from 16 kimberlites is underway. The laboratoryanalysis of kimberlite core is an ongoing process and results will be announcedas and when available. The analysis of the first 11 kimberlites has delivered some highly encouragingdiamond indicator mineral results, leading to the prioritisation of 5 of thekimberlites for large diameter drilling. Key data as revealed is summarisedbelow: (i) Chrome diopside analysis returned a favourable mantle geotherm, indicating that there is a high probability that the kimberlite will have sampled material derived from the earth's diamond stability field at a temperature favourable for the formation of diamonds; (ii) Peridotitic garnet analysis revealed pressure-temperature conditions compatible with the presence of diamond stability field G10 garnets derived from well within the diamond stability field; and (iii) Eclogitic garnet analysis also gave excellent results, with an abundance of high sodium eclogitic garnets in some samples, further increasing the potential for quality diamondiferous kimberlite. Diamond indicator mineral chemistry is crucial in terms of assessing akimberlite's likelihood of hosting diamonds. It is accepted by the world'skimberlite experts that the higher the count of the acknowledged diamondstability field indicators (garnets and spinels), the higher the likelihood ofthe kimberlite hosting economic grades. The results at Alto Cuilo are veryexciting and are comparable to other economic kimberlite deposits around theworld. Although there is very little official data available on the nearby Catoca mine,where 2005 production was around 4 million carats, diamond indicator mineralchemistry analyses published by Sobolev et al (1990) points towards some of theAlto Cuilo kimberlites having G10 garnet populations similar to those of Catoca,again further increasing the likelihood for some of the Alto Cuilo kimberlitesto host significant diamond deposits. Bulk sampling Following the diamond indicator mineral analyses, a technical targetprioritisation meeting was recently held between representatives of Project AltoCuilo, Petra and BHP Billiton, where it was decided which kimberlites should beprioritised for inclusion in the forthcoming large diameter drilling programme.The ranking is as follows: Kimberlite Ranking Surface area (hectares) estimated from aeromagnetic signaturesAC 60 1 30AC 98 2 175AC 42 3 106AC 72 4 30AC 16 5 120 Delivery of the large diameter drill rig and 10 tonne per hour sample plant tosite has unfortunately been delayed by up to 10 weeks, with the large diameterdrilling campaign now expected to commence in September 2006. This delay wasoutside of Petra's and BHP Billiton's control and is symptomatic of the problemsbeing experienced by the mining industry in general with the heavy demand onequipment manufacturers. However, Petra still expects the first bulk samplingresults to be available in Q4 Calendar 2006, just later in that quarter. The time delay does have one major benefit, in that the diamond indicatormineral analysis of the remaining kimberlites (as well as anomalies still to bedrilled) may well result in other kimberlites being prioritised for bulksampling, therefore making the large diameter drilling campaign as efficient andeffective as possible. Core drilling exploration Since the last update on 30 April 2006, the core drilling exploration programmehas moved ahead rapidly, with the discovery of a further kimberlite and thedeployment of one of the three core drills to the north-east of the Projectarea. In summary: • The total number of kimberlite occurrences now stands at 39 from 46 targets drilled, an exceptional success rate of 85% by reference to other global diamond exploration projects • Approximately 23,000 metres (25 April 2006: 19,000) of core drilling has now been completed, illustrating the effectiveness of the three drills now working on site. A total of 158 holes have been drilled to date • A further 88 aeromagnetic anomalies greater than 8 hectares in estimated surface area remain to be drilled within the area surveyed by the Helimag in July 2005. Due to the very large number of both kimberlite occurrences identified to date and anomalies identified in the Helimag survey, it has been decided to only focus on anomalies greater than 8 hectares in size. There are numerous magnetic anomalies smaller than 8 hectares, but this size has been selected as the bottom cut at this stage. Furthermore, this frees up core drill capacity, assisting in the drilling of additional holes into some of the larger kimberlites so as to get more material for ongoing diamond indicator mineral analysis • Drilling of anomalies in the north-east of the Project area is about to commence. Access roads have already been cut by the heavy earth moving equipment and the satellite camp to service this operation is almost complete. The anomalies in the north-east are smaller in estimated size (40 hectares or less) than those in the north-west, but are well defined on the Helimag survey, suggesting a good possibility of the discovery of fresher Reworked Volcaniclastic Kimberlite ("RVK") and Tuffisitic Kimberlite Breccia ("TKB") facies, possibly closer to surface. Alluvial Exploration Programme The alluvial pitting and trenching programme is also progressing well, with 507exploration pits and 7 bulk sample trenches having been excavated. Some 5,800cubic metres of gravel have now been excavated, resulting in the identificationof a test block ("Luange 1") hosting approximately 115,000 cubic metres ofgravel (Petra internal estimate) with an indicated stripping ratio ofapproximately 6:1 and an indicated grade is 0.36 carats per cubic metre for thein situ material. BHP Billiton Joint Venture As at 31 May 2006, BHP Billiton had advanced cumulative funding of US$21.1million (31 March 2006: US$16.1 million) to Petra Diamonds Alto Cuilo Limited inrespect of exploration at Alto Cuilo. The exploration budget at Alto Cuilo forthe year to June 2007 (to be funded by BHP Billiton) is circa US$20 million,further illustrating the importance of Alto Cuilo to all parties involved. Ends Notes 1. The information in this update that relates to Exploration Results, MineralResources or Ore Reserves is based on information compiled by Jim Davidson, Pr.Sci Nat (reg No 400031/06), who is a Member of the Geological Society of SouthAfrica, a 'Recognised Overseas Professional Organisation' ('ROPO'), included ina list promulgated by the ASX from time to time. Jim Davidson is a full-timeemployee of the Company and has sufficient experience which is relevant to thestyle of mineralisation and type of deposit under consideration and to theactivity which he is undertaking to qualify as a Competent Person as defined inthe 2004 Edition of the 'Australasian Code for Reporting of Exploration Results,Mineral Resources and Ore Reserves'. Jim Davidson has given his written consentto the inclusion in this announcement of the matters based on his information inthe form and context in which it appears. 2. It should be noted that the potential quantity in this report is conceptualin nature, there has been insufficient exploration to define a Mineral Resourceand it is uncertain if further exploration will result in the determination of aMineral Resource. For further information, please contact: Justine Howarth / Cathy Malins Telephone: +44 (0) 20 7493 3713Parkgreen Communications, London Notes to Editors: Overview of Petra's Operations • Petra is focused on the exploration and mining of diamonds in Africa. Petra's strategy is to continue to build its portfolio of revenue producing and exploration assets, achieving the objective of becoming a 'mid-tier' diamond group. • Petra has operations in Angola, South Africa, Botswana and Sierra Leone. Petra is well placed to achieve high yielding results from the increasingly robust market for diamonds. • Petra's exploration activities at Alto Cuilo in Angola continue to deliver ever more exciting results and the joint venture with BHP Billiton has expedited exploration with the identification to date of 39 kimberlitic occurrences together with diamond indicator mineral results comparable with some of the world's economic diamond deposits. • In May 2006 Petra announced that it has entered into a strategic cooperation agreement with AIM quoted Xceldiam Limited, with regards to the neighbouring Luangue and Alto Cuilo diamond projects • The South African operations are expected to deliver a significant increase in production for the year to June 2006, giving the group healthy production revenues. Two large stones have been reported in the last year, one 76 carat stone which sold for US$465,000 and also a 67 carat stone which was sold for US$704,265. • In Botswana, exploration is currently focused on the Gope area where Petra holds diamond prospecting licences covering ground that is known to host several diamondiferous kimberlites. A 700km(2) low-level Xcalibur horizontal gradient magnetic survey has been completed in the immediate vicinity of the Gope kimberlites. • In Sierra Leone, Petra has earned a 51% interest in the Kono Project, following the expenditure of $3million on the project. This JV with AIM and TSX-listed Mano River Resources Inc is progressing well and first production from the Lion fissures is on schedule for June 2006. For further information on Petra Diamonds, please visit www.petradiamonds.com This information is provided by RNS The company news service from the London Stock Exchange