“This has been achieved,” says managing director James Campbell in an exclusive interview with Mining Review Africa, “by acquiring a 35.42% share in Bugeco SA – a private Belgian company cooperating in the DRC. The total consideration paid was just over US$1.6 million (more than R11 million) in cash.

DRC expansion1

The AK6 bulk sampling plant
in Botswana

Bugeco’s key asset is a joint venture with De Beers on 22 licences covering 17 480 km2 of prospective diamondiferous ground. Initial exploration has discovered several new kimberlites in an area where alluvial diamonds are already in evidence. Analysis indicates the presence of microdiamonds in several of the newly discovered kimberlites.

Bugeco announced in July that it had entered into a joint venture agreement with De Beers in respect of Bugeco’s exclusive prospecting permits in the Eastern Kasai province of the DRC. The Belgian company has carried out an aeromagnetic survey of its area, and has made a start on sampling and analysis on the ground.

The agreement grants De Beers an option to earn a substantial share in the joint venture in the event of a major discovery by financing and managing all further exploration and eventual mine development. In turn, Bugeco has the right to retain a 70% share in any discovery below an agreed threshold of annual output, as determined by the feasibility study.

DRC expansion2

Large diameter drilling on AK6

A RARE OPPORTUNITY
“This is a rare opportunity to take a stake in a highly prospective diamond venture where new diamondbearing kimberlites have already been found, and more discoveries are expected,” says African Diamonds chairman John Teeling. “Aside from Botswana – where African Diamonds is a significant player – the DRC is one of the most prospective diamond areas in the world. The combination of excellent operational staff, our successful De Beers JV experience in Botswana, intimate in-country knowledge of the DRC through Bugeco, and the very attractive geological prospects, make this an ideal fit for African Diamonds.”

The 22 licences held by Bugeco are going to be radically reduced because of the DRC’s very strict policies regarding prospecting licences and costs.

“We are going to be relinquishing a very large proportion of the area, and will basically be left with the 10 kimberlites we have discovered,” Campbell reveals. “We have purged the remaining area with ground geophysics, sampling and drilling, and we are as sure as you can be in the exploration business that there will be nothing worthwhile in the licence areas other than those 10 kimberlites,” he adds.

“The kimberlites are in two clusters – one with eight and the other with two – and our first priority will obviously be the larger cluster,” Campbell explains. “We are now going into an evaluation stage. They all have microdiamonds, but these were taken from fairly small samples which are not truly representative, so we are now moving into the bulk sampling or macro-diamond phase,” he continues.

DRC expansion3

Geological model of the AK8
prospect in Botswana

FROM EXPLORATION TO EVALUATION
A great deal of discovery drilling has been done in this area, and no new kimberlites have been discovered, so the focus is now shifting to larger diameter drilling, and the recovery of macro-diamonds. “In other words, the exploration phase is complete and we are moving into the evaluation phase,” Campbell confirms.

“What will happen now,” he says, “will be the drilling of three or four 12-inch holes down to 100-150 m in each pipe. These will be screened on site and product will be put through the sampling plant which is centrally located in the DRC, reducing it to a DMS concentrate. That will then go to the De Beers macro-diamond laboratory in Johannesburg where any diamonds will be recovered and reports completed,” Campbell explains.

In terms of timing, African Diamonds has almost had a monopoly on the macro-diamond laboratory for the past 18 months, but between now and the end of the year it will be working on samples from the De Beers/African Diamonds AK6 project in Botswana. Subsequently there is other work scheduled, and only then will the Bugeco samples from the DRC be treated.

DRC expansion4

Helicopter sampling in the Bugeco
concession, in the DRC

“So we are hoping to be in a position to report on the results at some stage of H1 of 2008,” Campbell states. We are working with De Beers to try and speed up the process – obviously the sooner we can make decisions the better,” he points out.

“The next step if warranted,” he discloses, “will be to drill a 75-100m grid pattern down to 200m in the kimberlite, with an on-site sampling plant to recover and process the samples. This programme could easily take up to two years, depending on the size of the kimberlite,” he adds.

Campbell quotes the comparison of AK6 in Botswana, which took two-and-a-half years from first bulk sampling to delivery of a feasibility. “So a feasibility study for the DRC project is unlikely before the end of 2010,” he reasons.

NO DRC PRODUCTION BEFORE 2011
“In my view if the Bugeco prospects prove to be economic, they are more likely to be smaller mines,” he predicts. “If that is the case it would be good for Bugeco and African Diamonds, because we would then be the operators in terms of the agreement with De Beers,” he surmises.

DRC expansion5

Core drilling on the AK6
project in Botswana

“Either way,” Campbell calculates, “taking everything into account, it is clear that we would not be able to produce diamonds in the DRC before 2011 at the very earliest.”

Looking further ahead, African Diamonds is examining other possible diamond opportunities in the DRC. “Unfortunately these are chiefly alluvial,” Campbell points out, “and our focus is on primary kimberlite exploration development. Nevertheless, we are considering establishing a company called Congo Diamonds, and will continue our efforts towards increased diamond production in the DRC,” he reveals.

Turning briefly to Botswana, Campbell confirms that African Diamonds is still aiming conservatively at starting production at its AK6 project in H2 of 2009. Its latest declared inferred resource is 51.6 m tonnes at an average grade of 24 cpht. Initial throughput remains at 2.7 Mtpa at a cost of between US$120 million (R850 million) and US$140 million (R1 billion), but the plant has been designed with a view to increasing throughput to 4.2 Mtpa in due course. This will cost in the vicinity of another US$100 million (R700 million).

Also in Botswana, the AK8 prospect – which has a resource of 15 Mt to 300 m at 9 to 16 cpht – has made progress, and macro-diamond results are expected by the end of this year. “These will enable us to make decisions on whether or not we move from a low inferred resource to an indicated resource, and on conducting an evaluation and moving the project forward,” Campbell concludes.