The Angolan government recently approved the formation of the operating company Sociedade Mineira do Camafuca Lda (SMC). This company will hold the mining licence for the Camafuca diamond project allowing construction of the project to commence. The project involves a joint venture between SouthernEra Diamonds and Angolan state owned diamond group Endiama.

Camafuca is one of the largest known undeveloped diamondbearing kimberlite complexes worldwide and is located in the Lunda Norte province in north-eastern Angola 20 kilometres southeast of the town of Lucapa. The project area covers the outcropping primary kimberlite deposits associated with the five Camafuca-Camazambo kimberlite pipes with a combined surface area of 160 hectares.

Through a feasibility study completed in 2000 SouthernEra defined an inferred mineral resource from surface to a depth of 145 metres of 210 million m3 at an average grade of 0.111 carats per m3 for a total resource of 23.25 million carats. An independent valuation in 2000 attributed an average value to the Camafuca diamonds of US$109 per carat.

Since then, global rough diamond prices have increased by more than 35%. The 2000 feasibility study was concluded while Angola was still in a state of civil war and reflected inflated operating costs associated with the circumstances prevailing at the time. Angola’s civil war ended in 2002 and that 2000 feasibility study is being updated to reflect current operating conditions.