Petra Diamonds Regulatory News (PDL)

23 Jul 2008 07:00



Petra Diamonds Limited

Exploration update: promising developments in Angola and Botswana

Petra Diamonds, ("Petra" or "the Company"), the international diamond mining group, today announces promising developments with regards to the Company's exploration activities in Angola and Botswana.

Highlights

Johan Dippenaar, Chief Executive Officer, commented "These promising results from our programmes in Angola and Botswana, where we have some of the world's most prospective diamond exploration ground, are highly encouraging and firmly underpin Petra's growth prospects. Our exploration projects, combined with our rapidly growing production in South Africa, support Petra's fast growing status as a leading diamond company."

Angola - Alto Cuilo and Luangue

On 13 May 2008 Petra announced the transfer of BHP Billiton's interests in the Alto Cuilo Joint Venture and the Luangue Joint Venture to Petra, with the Company taking control of both projects with effect from 1 April 2008 and 1 May 2008 respectively. The following is an update of the development at each project, which Petra is now operating and funding. 

Alto Cuilo

Petra has embarked on an intensive and focused programme to test the near-surface crater rim resedimented volcaniclastic kimberlite ("RVK") deposits of the kimberlites prioritised from Petra's review of the Alto Cuilo exploration data received from BHP Billiton. Petra believes that the crater rims have the potential to contain substantial deposits of economic diamond-bearing material, as is the case at other diamond mines with similar mineralisation, such as Catoca in Angola and Williamson in Tanzania.

(i) AC16 - bulk sample result records significant grade increase

Kimberlite AC16 (with a geophysically estimated surface area of 120 hectares) is one of Petra's lower ranked kimberlites, but, due to ease of access and the presence of diamonds from previous sampling, Petra decided to take a mini-bulk sample from the RVK rim. 

The RVK sample has been subdivided into upper and lower sections, and geological interpretation indicates the lower section to be of better quality. A bulk sample estimated at 4,500 tonnes* has been taken from a five metre thick layer of outcropping crater rim RVK and to date 1,898 tonnes** from the upper section of this RVK layer have been processed through a 10 tonne per hour ("tph") Dense Media Separation plant (bottom cut-off 1mm). A total of 170.47 carats of diamonds have been recovered from the 1,898 tonnes, giving a grade of 9.0 carats per hundred tonnes ("cpht") for the material processed to date.

This result is highly significant as it is almost treble the grade achieved from BHP Billiton's sampling of this kimberlite, where primary tuffisitic kimberlite was sampled from the kimberlite vent and a grade of 3.6 cpht was recorded from 214 tonnes* of material processed. 

The diamonds from Petra's sampling have a large percentage of white stones and initial valuations indicate that the value will be in excess of US$200, which is highly encouraging for such a small parcel of diamonds and reaffirms values in excess of US$200 per carat achieved from BHB Billiton's sampling in 2006.

(ii) AC9 - narrow diameter drilling confirms significant RVK material

Kimberlite AC9 has been estimated from the current drilling campaign to have a surface area of 25 to 30 hectares and is now Petra's number one ranked kimberlite based on Heavy Mineral Analysis ("HMA") and proximity of RVK to surface. No microdiamond testing has been previously done as the initial drilling of this kimberlite occurred very late in BHP Billiton's tenure, however the presence of abundant and intensive artisinal mining attests to it being significantly diamondiferous. 

In Petra's programme a total of seven NDD boreholes (827 metres total) have been completed, of which four have intersected crater rim RVK and indicate that this material is virtually continuous on the north, west and southern rims of the kimberlite. MBS sites are being investigated and prepared. One location has been identified where coarse grained RVK extends to surface and a bulk sample is currently being excavated at this locality.

(iii) AC42 and AC110 - narrow diameter drilling intersects RVK from 40 to 80 metres

A total of 11 NDD boreholes (2,024 metres total) have been drilled on anomalies AC42 and AC110, which together form a virtually contiguous kimberlite with a combined surface area of 112 hectares (estimated from geophysics). These NDD boreholes targeted the high magnetic response on the southern portion of AC42 that continues west onto the adjacent anomaly AC110. The NDD intersections have confirmed that this magnetic high is due to the presence of RVK, the top of which has been intersected between 40 and 85 metres from surface in all boreholes. MBS drilling sites are currently being investigated for the impending MBS programme.

  (iv) Next steps - MBS drilling programme 

MBS drilling has been waiting for the NDD campaign to advance to a stage where areas of proximal RVK have been located. This has been completed over anomalies AC9 and AC42, and NDD rigs are moving to the other anomalies for further exploration of the crater rim RVK material. MBS drilling will commence at AC9, where a minimum of 50 tonnes of RVK material will be taken from individual RVK units at each sample site. MBS drilling will proceed to AC42, and then to the other anomalies in the work programme. 

* estimated tonnage (rounded to the nearest tonne) from number of Front End Loader bucket loads, a representative number of which have been weighed accurately

**  estimated tonnage (rounded to the nearest tonne) from measured dry bulk density and theoretical borehole dimensions.

Luangue

As at Alto Cuilo, the Luangue work programme will focus on proving up the potential of enriched near-surface RVK deposits, which have been shown by exploration at Alto Cuilo to be most likely to host economic mineralisation. The low level, high resolution "towed bird" aeromagnetic survey recently completed at Luangue identified 138 targets, and certain of these have been selected from the survey data for NDD follow up.

L60 - confirmation as kimberlite

The NDD campaign commenced at Luangue in July 2008. The first anomaly to be drilled, L60, has been confirmed as kimberlitic, with the first NDD bore hole intersecting sandy RVK, grading to RVK between 43 metres to 92 metres. Kimberlite L60 has an estimated surface area of 156 hectares, and was not distinguishable on the previous airborne magnetic data set that was acquired when Petra originally acquired its interest in Luangue. 

Botswana - Kalahari Diamonds

Kimberlite discovery - BK 1 (south)

Petra is pleased to announce the discovery of a new kimberlite, BK 1, in the Orapa - Letlhakane area, close to Debswana's producing Damtshaa mine. The kimberlite is capped with basalt and was first intersected at a depth of approximately 40 metres; some holes were stopped at a depth of 100 metres, still in kimberlite. The kimberlite has been petrographically classified by a leading independent kimberlite expert as an incipient transitional, hypabyssal-facies, partly segregationary, macrocrystic, altered monticellite kimberlite and is rated as moderate to high interest with respect to diamond potential. 

This kimberlite discovery extends northwards into the Debswana mining licence and the portion in Petra's licence areas could represent 20 to 30 percent of the total kimberlite. Petra has been in contact with Debswana in relation to this discovery.

Kukama - drilling campaign to commence

In the Kukama project area, target generation and selection utilising the high-resolution regional magnetic gradiometer (Xcalibur) data has been completed and geophysical ground follow-up of the targets is ongoing. 30 anomalies were selected for ground follow-up and 15 have been selected as drill targets. 

The Kukama drilling campaign will also include approximately 2,000 metres of drilling on known kimberlites such as the GO173 kimberlite cluster, as a second phase of investigation following initial geophysical and geological modeling. GO173S has been modeled as a "champagne glass" shaped kimberlite with a surface area of approximately 25 hectares. The current drilling campaign has been designed to test this model, and to intersect diatreme facies kimberlite below the interpreted transition zone between crater and diatreme facies. Previous limited MBS test work by De Beers (restricted to the north of this kimberlite) returned various grades, including one hole at 9.6 cpht. The remainder of this potentially large deposit remains untested.

This programme is also designed to test the RVK potential of the diamondiferous Ki1 kimberlite, whose associated magnetic anomaly has a diameter of 500 metres.

~ Ends ~

Notes

1. The information in this update that relates to Exploration Results, Mineral Resources 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 South Africa, a 'Recognised Overseas Professional Organisation' ('ROPO'). Jim Davidson is the Qualified Person for the purposes of the AIM Guidance Note on Mining, Oil and Gas Companies dated March 2006. Jim Davidson is a full-time employee of the Company and has sufficient experience which is relevant to the style of mineralisation and type of deposit under consideration and to the activity which he is undertaking to qualify. Jim Davidson has given his written consent to the inclusion in this announcement of the matters based on his information in the form and context in which it appears. 

2. It should be noted that the potential quantity in this report is conceptual in nature, there has been insufficient exploration to define a Mineral Resource and it is uncertain if further exploration will result in the determination of a Mineral Resource.

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Notes to Editors:

About Petra Diamonds

Petra Diamonds is an international diamond mining group with a balanced portfolio combining major producing mines, world class exploration assets and a cutting and polishing business.

With operations in South Africa, Angola, Botswana and Sierra Leone, Petra's objective is to continue to grow production, developing its stature as a leading diamond producer in all of the countries in which it operates. 

In South Africa, Petra has five producing mines and recently reached agreement to acquire a further asset, the Kimberley Underground mines, from De Beers. The group is on track to increase its annual production from 180,000 carats in the year to June 2007 to around 1 million carats in the year to June 2009.

Complementing the Group's production is an exploration and development portfolio spread across some of the world's most prospective diamond fields. In Angola, Petra is developing the world class Alto Cuilo and neighbouring Luangue projects. In Botswana, Petra has established the largest diamond exploration landholding in the country, where it believes that modern exploration techniques will hold the key to the discovery of new, major kimberlites. In Sierra Leone, Petra is developing a fissure operation with its JV partner Stellar Diamonds and test work to date indicates the potential for economic operations.

The Petra group now employs some 4,000 people and over the last 10 years the Company has developed a range of social initiatives which continue to make a meaningful impact upon the lives of employees and surrounding communities. Petra's focus remains upon sustainable development, via educational programmes and skills transfer, to ensure a broad based approach with a lasting legacy, and all operations are carried out with the highest regard for the environment according to best practice.

Petra will only commit to working in countries which are members of the Kimberley Process and shareholders can remain assured that Petra's diamonds will only ever be 100% conflict free.

For further information, please visit www.petradiamonds.com.