Releasing the company’s results for the six months ended 30 June 2007, CEO Rob Still reports excellent results in the Central African Republic (CAR), improved production levels and sales values in Angola, satisfying momentum in the Democratic Republic of Congo (DRC), and encouraging early results in South Africa.

“This period has been one of significant progress for PDF,” he reveals, “and in the period ahead to Q1 of 2008 we intend progressing the evaluation of these projects with the objective of being in a position to make commercial mining go-ahead decisions in H1 of 2008.”

Looking first at the CAR, in the period under review PDF successfully executed mining development agreements with the government over two concession areas – Dimbi and Etoile.

At a development cost of US$3.2 million R22 million), PDF commenced bulk sampling at Dimbi. Mining equipment and a bulk sampling plant were transported there, constructed on site, and commissioned. One of the primary objectives of the bulk sampling exercise was to produce and sell a sufficiently large parcel of diamonds to determine expected future carat prices and quality.

Bulk sampling activities are now well-advanced with diamond recoveries improving towards the development of sale parcels for valuation purposes. The initial diamond valuation parcel of about 3 000 carats has been exported from the CAR, and marketing options for the optimal sale of diamonds from Dimbi are currently being investigated.

The objectives of the next period will be to continue bulk sampling to establish the requisite data and confidence to design, plan and install future mining operations on a commercial scale.

Meanwhile exploration continues on the 1,000 km2 Dimbi diamond project using the tractor-mounted auger drill, as well as local labour, to assist in pitting activities further afield from the bulk sampling activities.

At the Etoile project, field camps in new licence areas are currently being established and reconnaissance exploration has commenced with newly recruited geological staff.

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General overview of the
Cassanguidi plant, in Angola

SIGNIFICANT GROWTH IN DRC
In the DRC, the Tshikapa project in particular has grown significantly with the acquisition from various parties of five new licence areas contiguous with the existing ones along the Tshikapa and Longatshimo Rivers. The Group now holds ten licence areas in the DRC.

The new licences were selected for their location and excellent resource potential. Pangea has economic interests in excess of eighty per cent and full management control in these new licence areas.

Negotiations are underway to acquire more properties adjacent to existing exploration areas. Due to this expansion and the increase in activities, the Tshikapa Project has reached such a critical mass that it has been split into two projects – the Tshikapa River project and the Longatshimo River project.

The Tshikapa River project includes five licence areas along the Tshikapa River from 20km south of the town of Tshikapa. Exploration has concentrated on the Mvula Milenge area of the project area where more than 120 small pits and 25 large pits have been dug by hand to determine vertical and lateral gravel distribution and diamond grade. The recent arrival on site of a tractormounted auger will enhance and accelerate the evaluation process significantly.

At the Longatshimo River project, exploration has continued throughout 2007 confirming resources previously announced. The project now includes five licence areas, and exploration has commenced on the two newly acquired properties. More than 150 small pits have been dug at 100m x 50m intervals over areas identified for bulk sampling in order to acquire a better understanding of geology and grade distribution over selected optimal sites.

The recent arrival of earthmoving equipment on site will result in the excavation of large samples prior to the arrival of bulk sampling equipment. Following the decision to commence bulk sampling activities on the project, all procurement of plant and equipment for the bulk sampling operation has been completed.

A decision was made to develop an overland route from South Africa to the project area, and to facilitate this, a lead truck was dispatched to test the routing and logistical difficulties. This lead truck delivered its load to the project site,and despite the challenges, this represents the opening up of a new route to supply equipment from South Africa to the company’s southern DRC project areas, significantly reducing lead time and expense.

The main convoy of 16 trucks was expected to be on site by late October for commissioning in Q4 2007. The operational team has been recruited and is now on site preparing the plant site as well as the rehabilitation of access roads from Dundo in Angola to the project site in the DRC, in order to facilitate the access of heavy equipment to site on low-bed trucks. Capital expenditure for the six months to June 2007 was US$ 2.5 million (R17 million).

Reconnaissance exploration on other properties for potential projects in the DRC is in progress.

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DRC

ANGOLAN PILOT PROJECT IMPROVES
In Angola, pilot mining operations continue at Project Cassanguidi and production levels continue to improve with better grades being recovered. Exploration activities to increase the gravel resources have been stepped up with the introduction of a tractor-mounted auger drill. The recently commissioned and site-constructed 16-foot rotary pan has further expanded the processing capacity of the plant, enabling the processing of the significant historical tailings resources in addition to the current areas being worked.

Diamond sale prices through Sodiam – the marketing arm of Endiama, the state-owned diamond company through which all Angolan diamonds are sold – were disappointing in the latter part of last year and the beginning of this year. Discussions to establish more market-related selling arrangements for Cassanguidi production are underway, and average sales values have improved consequently thereby increasing confidence in the longer term potential of this project.

Despite the small scale of the pilot mining operations at Cassanguidi, it is generating positive cash flows. Once the group is comfortable that market-related diamond sales values can be sustainably achieved, consideration will be given to investing the required capital to upgrade this project from pilot to mine status.

Turning to South Africa, two large bulk sampling sites within the Malmani area (Driehoek and Stiglingspan) were excavated and the contained gravels processed through the newly acquired mobile 20 ton per hour dense medium separation plant. The results from both bulk sampling sites were disappointing, and as a result bulk sampling activities have ceased. The tenure over the properties in this area of the larger Bakerville project areas has been relinquished, with exploration capacity now focused on the Patsema and Geluksdal Projects.

A successful drilling campaign on the farm Zamenkomst has already delineated a number of highly prospective pothole structures on the Patsema property, which lies just to the south of and in a similar geological environment to historical potholes which have yielded significant quantities of diamonds in the past.

The next phase in the exploration programme involves generating samples from these pothole structures using a large diameter drill. Drilling of 19, 2.5m diameter holes has been completed and the bulk sampling plant from Malmani has been relocated to the Patsema project to process these samples. The company expects to announce results of this bulk sampling process during Q4 of 2007.

Phase 1 drilling on the Geluksdal target area indicated the presence of a large pothole structure containing significant gravel resources. Reverse circulation drilling has outlined a large gravel resource. Six large diameter holes have been completed and samples are being transported the bulk sampling plant at the Patsema project for processing.