 | 
|  |

Operations Update
2011 Third Quarter
Land status
The following summarizes the Company's current land holdings:
| Country |
Project Name and Interest Held |
Area (km2) |
| Botswana |
Boteti AK6 Diamond License (100% interest) |
15.3 |
| Lesotho |
Mothae Diamond Mining Lease (75% interest) |
20.0 |
Boteti AK6 Diamond Project, Botswana
Boteti was granted a mining license in 2008 over the AK6 Diamond Project which is located in central Botswana and is part of the Orapa/Letlhakane kimberlite district, one of the world's most prolific diamond producing areas. The kimberlite consists of three lobes, South, Centre and North, of which the South Lobe makes up approximately 75% of the kimberlites' resource potential. The pipe has an area of 4.2 hectares at the surface which expands to 7 hectares at a depth of 120 meters.
In July 2010, a formal decision was made to proceed with the construction of the AK6 diamond mine which is estimated to require a capital investment of approximately US$120-US$130 million (based on ZAR/US$ exchange rate of R7.00), which includes the process plant and all mine site and off-site infrastructures.
The project has an Indicated Resource of 51 million tonnes ("mt") containing an estimated 8.2 million carats ("ct") of diamonds. The mine design delineates a Probable Reserve of 36.2 million tonnes of ore, containing an estimated 6.3 million carats of diamonds at a 1.5mm bottom cut-off size, in an open pit to a depth of 324 metres. The reserves will be mined over an estimated 15 year life. The process plant has been designed at an estimated throughput rate of 2.5 million tonnes per annum ("mtpa"). Diamond recovery is estimated at approximately 400,000 carats per year at a March 2010 diamond price of $243/ct.
Nine Months to September Performance
Excellent progress has been made on the development of the AK6 Project. The continued focus on safety, health and environment by the Company, employees, the EPCM contractor and all sub-contractors resulted in 220,000 hours worked with no lost time injuries or environmental incidents. As of the end of September the project had worked 809,474 hours with a LTIFR of 0.25.
Construction advanced from 55% complete at the end of Q2 to 84% complete at the end of Q3. This is as per the August re-baselined schedule, which reflects the impact of the steel industry strike in July. During the quarter, engineering, procurement and fabrication were essentially completed in support of construction activities and the focus of the EPCM contractors and Boteti is fully on the AK6 project site activities. The project is still trending within the initial capital budget, and expenditure to end Q3 is 46% of budget with a total of 83% of the approved capital budget being committed.
In addition to the civil works, structural and mechanical activities, in Q3 building works, piping and electrical installation contractors commenced work on site. By the end of Q3 over 3km of piping around the open pit and to the process plant raw water dam had been installed. Equipping of the required eight dewatering wells is on schedule for delivery of water to the process facility during commissioning. The medium voltage (MV) and low voltage (LV), communications and instrumentation contracts have been awarded. The MV contractor has mobilized to site and work is progressing well. The LV, communications and instrumentation contractor mobilized to site in October.
The overhead power line from the Orapa sub-station to site has been completed. The AK6 substation is expected to be commissioned before the end of November, and the permanent tie in completed during Q4. Initial grid power for commissioning activities will come from a temporary tie in to the Letlhakane line that was completed during Q3.
The senior operation's team has made excellent progress with recruitment of key operations personnel for site. The mining contractor has mobilized to site and the sinking cut for the first production bench has commenced -- the first blast in the pit took place on October 8. Extraction and stockpiling of ore started in October in preparation for commissioning activities early in Q1, 2012. The plant operations and maintenance contractor has mobilized to site and have commenced local recruiting. The contracts management team is working with the Boteti metallurgical team on finalizing operational and critical spares holdings and operational procedures.
In Gaborone the diamond sorting, sales and marketing offices have been completed and senior diamond sorting personnel have been recruited. The stock control software platform has been selected and operational procedures are being developed.
On September 2, Lucara was pleased to host Dr. Ponatshego Kedikilwe, Minister of Minerals, Energy and Water Resources, and other regional and local officials at the AK6 project site. The Minister was impressed by the work completed and the safety, health and environmental accomplishments.
Mothae Diamond Project, Lesotho
The Mothae project is located in northeast Lesotho and is a large low grade kimberlite which is anticipated to contain a population of large, high value Type IIa diamonds.
Mothae Diamonds (PTY) Ltd ("Mothae Diamonds"), an indirect 75% owned subsidiary of the Company, holds a 100% interest in the Mothae Project. The other 25% is owned by the Government of Lesotho. The Company, through a wholly owned subsidiary, is the project operator. One half of the project interest held by the Government (ie 12.5% of the project interest) is a free carried interest and the other 12.5% will ultimately be paid for by the Government through its share of future project dividends, if any.
In 2010, the Company commenced a trial mining program, based on results from the 100,000 tonnes bulk sample completed in 2009. The trial mining program is designed to sample and process up to 720,000 tonnes (including the former bulk sample of 100,000 tonnes) of kimberlite from various kimberlite domains, which have been identified within the pipe to confirm geological potential and the presence of the high value Type IIa diamonds. Periodic open-tender diamond sales, the first of which occurred in March 2011, are being undertaken to validate estimates of diamond value.
Nine Months to September Performance
On the Mothae trial mining project in Lesotho, sampling during Q3 on the 'F' and 'G' kimberlite domains, with samples 2A and G2B having been completed during the period. Results continue to be very good with above average grades returned. Summary tonnage and grade results are shown in the following table:
Table1. Mothae Trial Mining Results as of 3 October 2011
Bulk
Sample |
Dry
Tonnage |
Stones |
Carats |
Ave Stn Size
(cts/stone) |
Dry Grade
(cpht) |
F1D |
1,592 |
111 |
77.65 |
0.70 |
4.88 |
C4A |
29,649 |
1,453 |
757.70 |
0.52 |
2.55 |
C5A |
48,542 |
3,119 |
1,117.07 |
0.36 |
2.29 |
C6A |
7,296 |
525 |
259.54 |
0.49 |
3.40 |
C8A |
49,152 |
3,511 |
1,440.49 |
0.41 |
2.93 |
C9A |
40,370 |
3,835 |
1,938.66 |
0.51 |
4.78 |
G2A |
33,691 |
4,245 |
1,906.87 |
0.45 |
5.65 |
F2A |
50,181 |
4,077 |
1,978.33 |
0.49 |
3.93 |
G2B |
22,689 |
2,997 |
1,280.23 |
0.43 |
5.64 |
G3A* |
19,721 |
2,248 |
985.07 |
0.44 |
5.00 |
Totals |
302,883 |
26,121 |
11,741.61 |
0.45 |
3.88 |
*Sample G3A is currently in progress, with final results expected during Q4.
Sample F2A yielded 2 stones larger than 20 carats, 10 stones between 10 and 20 carats, 19 stones between 5 and 10 carats, and 95 stones between 2 and 5 carats. The three largest diamonds recovered were 29.94, 22.86, and 19.21 carats.
Sample G2B yielded 2 stones larger than 20 carats, 2 stones between 10 and 20 carats, 9 stones between 5 and 10 carats, and 48 stones between 2 and five carats. The largest 3 diamonds were 28.91, 25.09 and 12.00 carats.
Previous samples yielded the following results:
- F1D, C4A, C5A and C6A completed by October 2011 produced 3 stones greater than 20 carats, 9 stones between 10 and 20 carats, 25 stones between 5 and 10 carats and 97 stones between 2 and 5 carats. The largest three stones recovered to date in this program are 53.53 carats, 37.24 carats and 20.26 carats
- C8A completed in December 2011, produced 1 diamond greater than 20 carats, 12 stones between 10 and 20 carats, 23 stones between 5 and 10 carats and 62 stones between 2 and 5 carats. The three largest stones were 31.87, 17.88 and 16.54 carats.
- C9A completed in mid-March 2011 produced 3 stones greater than 20 carats, 8 stones between 10 and 20 carats, 28 stones between 5 and 10 carats and 82 stones between 2 and 5 carats. The three largest stones were 48.54, 33.80 and 21.82 carats.
- G2A completed in May 2011 produce 1 stone greater than 20 carats, 3 stones between 10 and 20 carats, 10 stones between 5 and 10 carats and 83 stones between 2 and 5 carats. The largest three stones were 41.38, 19.35 and 12.63 carats.
Tonnage estimates are based on daily plant weightometer readings and moisture content measurements to determine a dry tonnage estimate. The process plant is being operated by Minopex under contract to Mothae Diamonds and operates at a 2mm bottom cut off size for diamond recovery. Diamond recovery and characterization work is carried out independently by the diamond sorting staff of Remote Exploration Services, also under contract to Mothae Diamonds.
In August, the Bourevestnik X-ray (high powered X-ray) machine was commissioned on site. The unit has been installed in an audit capacity and is being used to audit recovery tailings. Once audit work has been completed, the unit will be included as part of the sample plant flowsheet, reducing the current bottleneck constraints with currently installed equipment.
A primary crushing unit was delivered to site in early September and has been fully commissioned. A larger capacity secondary crusher will be installed in Q4. Both units are required to efficiently process harder kimberlite and basalt xenoliths, and in particular, to process unweathered kimberlite samples that are planned toward the end of the trial mining program.
A drilling contact was awarded to Remote Drilling Services to conduct a 5,400m delineation drilling program. The objectives of the program are to define the internal geology of the Mothae kimberlite, as well as to extend the currently defined kimberlite volume from a depth of 200m to 320m, to collect suitable sample material for ore dressing studies, and to collect core for geotechnical evaluation.
During October, a contract was awarded to ADP Project, to conduct a pre-feasibility level study in support of a preliminary economic assessment at Mothae. The objective of this study will be to gain an increased understanding of the economic potential of the Mothae project through greater definition of the capital and operating costs required for the development of a mine at Mothae.
Depending on current rough diamond market conditions the Company plans to sell a parcel of diamonds recovered from the trial mining program in December 2011. On March 28, 2011, Mothae had its first diamond sale in Antwerp. The parcel of diamonds totalled 9,381.35 carats and sold for an average price of US$871.70/ carat. Gross proceeds totalled $8.2 million. The three stones with the highest per carat value were a 13.87 carat diamond, which sold for $43,000/ct, a 24.57 carat diamond, which sold for $32,351/ct, and a 20.13 carat diamond, which sold for $27,995/ct.
Namibia
Following an evaluation of the exploration work conducted to-date on the Kavango Project in eastern Namibia, by the Company's joint venture partner, Namdeb Diamond Corporation, the Company has made a determination not to renew the licenses which expire at the end of Q4. The Company is currently preparing the documentation required to formally relinquish its interest in all ten of the prospecting licenses.
2011 Second Quarter
Land status
The following summarizes the Company's current land holdings:
| Country |
Project Name and Interest Held |
Area (km2) |
| Lesotho |
Mothae Diamond Mining Lease (75% interest) |
20 |
| Botswana |
Boteti AK6 Diamond Mining License (100% interest) |
15.3 |
| Namibia |
Kavango Prospecting License (10) (100% interest) |
8,359 |
Boteti AK6 Diamond Project, Botswana
Boteti was granted a mining license in 2008 over the AK6 Diamond Project which is located in central Botswana and is part of the Orapa/Letlhakane kimberlite district, one of the world's most prolific diamond producing areas. The kimberlite consists of three lobes, South, Centre and North, of which the South Lobe makes up approximately 75% of the kimberlites' resource potential. The pipe has an area of 4.2 hectares at the surface which expands to 7 hectares at a depth of 120 meters.
In July 2010, a formal decision was made to proceed with the construction of the AK6 diamond mine which is estimated to require a capital investment of approximately US$120-US$130 million (based on ZAR/US$ exchange rate of R7.00), which includes the process plant and all mine site and off-site infrastructures.
The project has an Indicated Resource of 51 million tonnes ("mt") containing an estimated 8.2 million carats ("ct") of diamonds, the mine design delineates a Probable Reserve of 36.2 million tonnes of ore, containing an estimated 6.3 million carats of diamonds, using a 1.5mm bottom cut-off size, in an open pit to a depth of 324 metres, The reserves will be mined over an estimated 15 year life. The process plant has been designed at an estimated throughput rate of 2.5 million tonnes per annum ("mtpa"). Diamond recovery is estimated at approximately 400,000 carats per year at a base price of $243/ct
As at the end of the second quarter 2011 there were 495 people on site and 497,000 hours worked since the construction decision was made (July 2010). Overall project progress was 75% complete, with engineering 99%, procurement 87%, construction was proceeding on schedule at 55% and fabrication 76% completed. During the quarter, construction of the power line and sub-stations was ongoing and grid power is anticipated to be available in time for early commissioning tasks. In addition, the construction contract was awarded for the employee housing and the contractor has mobilized to site.
In July 2011, there was an industrial action in the South Africa steel industry that caused delays to steel fabrication and delivery of supplies to the project. Work did continue on the site, delivered steel was erected and project tasks re-prioritised to mitigate the impacts on the construction schedule. The Company is currently evaluating the full impact of the industrial action, which has now ended, on the construction schedule and will provide further updates at they become available.
An agreement was reached with Kalcon (Proprietary) Ltd for a three year mining contract in early July 2011 and they are expected to mobilize to site during the third quarter. The processing contract was awarded to Minopex and negotiations are underway with the agreement anticipated to be finalized in August 2011.
In addition, negotiations continued with Lucara's primary sales consultants to provide diamond sales advisory services for Boteti, with the aim of developing an in-house sales team. Boteti's corporate office relocated in July 2011 and conversion of the current office space in the diamond technology park in Gaborone to a sorting/sales office is expected to be completed during the fourth quarter.
Mothae Diamond Project - Lesotho
The Mothae project is located in northeast Lesotho and is a large low grade kimberlite which is anticipated to contain a population of large, high value Type IIa diamonds.
Mothae Diamonds (PTY) Ltd ("Mothae Diamonds"), an indirect 75% owned subsidiary of the Company, holds a 100% interest in the Mothae Project. The other 25% is owned by the Government of Lesotho. The Company, through a wholly owned subsidiary, is the project operator. One half of the project interest held by the Government (ie 12.5% of the project interest) is a free carried interest and the other 12.5% will ultimately be paid for by the Government through its share of future project dividends, if any.
In 2010, the Company commenced a trial mining program, based on results from the 100,000 tonnes bulk sample completed in 2009. The trial mining program is designed to sample and process up to 720,000 tonnes of kimberlite from various kimberlite domains, which have been identified within the pipe to confirm geological potential and the presence of the high value Type IIa diamonds. Periodic diamond sales, by open tender, will be conducted in order to improve the validity of our valuation process.
Total dry tonnes of kimberlite processed for the current quarter and first half of 2011 were 55,850 and 107,891, respectively, bringing the project to date to 245,539 tonnes, resulting in the recovery of 19,658 stones weighing 8,890 carats.
Diamond recovery information remains provisional; as Mothae Diamonds commissioned a grease table recovery unit during the current quarter and is in the process of treating x-ray recovery tailings for audit purposes. Results of this work will be incorporated into revised diamond recovery and grade information when complete. In addition, the Bourevestnik ("BV") x-ray diamond recovery unit was installed and commissioned subsequent to quarter end and is anticipated to be fully operational in August 2011.
Mothae Diamonds completed an upgrade to the process plant screens during May and early June as a means to reduce maintenance time and thereby increase daily plant throughput. In addition, Mothae Diamonds is planning the installation of a primary crushing circuit and an upgrade to the secondary crusher to improve the plant's ability to process harder kimberlite material encountered as mining progresses deeper into less weathered portions of the Mothae pipe.
During the quarter, work commenced on the Environmental Impact Assessment (EIA) in support of future mine development. It is anticipated that the EIA will be available prior to the end of the third quarter 2011.
2011 First Quarter
Land status
The following summarizes the Company's current land holdings:
| Country |
Project Name and Interest Held |
Area (km2) |
| Botswana |
Boteti AK6 Diamond Mining License
(100% interest) |
15.3 |
| Lesotho |
Mothae Diamond Mining Lease (75% interest) |
20 |
| Namibia |
Kavango Prospecting License (10) (100% interest) |
8,359 |
Boteti AK6 Diamond Project, Botswana
Boteti was granted a mining license in 2008 over the AK6 Diamond Project which is located in central Botswana and is part of the Orapa/Letlhakane kimberlite district, one of the world's most prolific diamond producing areas. The kimberlite consists of three lobes, South, Centre and North, of which the South Lobe makes up approximately 75% of the kimberlites' resource potential. The pipe has an area of 4.2 hectares at the surface which expands to 7 hectares at a depth of 120 meters.
In July 2010, a formal decision was made to proceed with the construction of the AK6 diamond mine which is estimated to required a capital investment of approximately US$120-US$130 million (based on ZAR/US$ exchange rate of R7.00), which includes the process plant and all mine site off-site infrastructures.
The project has an Indicated Resource of 51 million tonnes ("mt") containing 8.2 million carats ("ct") of diamonds, the mine design delineates a Probable Reserve of 36.2 million tonnes of ore, containing 6.3 million carats of diamonds, using a 1.5mm bottom cut-off size, in an open pit to a depth of 324 metres, The reserves will be mined over an estimated 15 year life. The process plant has been designed at an estimated throughput rate of 2.5 million tonnes per annum ("mtpa"). Diamond recovery is estimated at approximately 400,000 carats per year at a base price of $243/ct.
As at the end of the May 2011, project execution is on schedule at overall 64% complete and 65% of the capital investment being committed. Agreements were reached during the first quarter with Botswana Power Corporation for the supply of power and contracts for the construction of the bulk power line which has commenced. Grid power is anticipated to be available in July 2011 in time for early commissioning tasks.
Fabrication of mechanical package orders are progressing very well, with some of the critical long lead items on route or have been delivered to warehouse in South Africa. First planned steel recoveries deliveries have arrived.
Mothae Diamond Project, Lesotho
The Mothae project is located in northeast Lesotho and is a large low grade kimberlite which contains a population of large, high value Type IIa diamonds.
Mothae Diamonds (PTY) Ltd ("Mothae Diamonds") an indirect 75% owned subsidiary of the Company, holds a 100% interest in the Mothae Project. The other 25% is owned by the Government of Lesotho. Mothae Diamonds Holdings Inc, an indirect wholly owned subsidiary of the Company, is the project operator. One half of the project interest held by the Government (ie 12.5% of the project interest) is a free carried interest and the other 12.5% will ultimately be paid for by the Government through its share of future project dividends, if any.
In 2010, the Company commenced a trial mining program, based on results from 100,000 tonnes bulk sample completed in 2009. The trial mining program is designed to sample and process up to 720,000 tonnes of kimberlite from various kimberlite domains, which have been identified within the pipe to confirm geological potential and the presence of the high value Type IIa diamonds. Periodic diamond sales, by open tender, will be conducted in order to improve the validity of our valuation process.
For the quarter 51,966 dry tonnes of kimberlite were processed bringing the project to date to 189,994 tonnes, resulting in the recovery of 13,985 stones weighing 6,261 carats.
Mothae Diamonds completed an upgrade to the process plant screens during May and early June as a means to reduce maintenance time and thereby increase daily plant throughput. In addition, Mothae Diamonds is planning the installation of a primary crushing circuit to the sample plant to improve processing of harder kimberlite material encountered as mining progresses deeper into less weathered portions of the Mothae pipe.
2010 Annual
Land status
The following summarizes the Company's current land holdings:
| Country |
Project Name and Interest Held |
Area (km2) |
| Lesotho |
Mothae Diamond Mining Lease (75% interest) |
20 |
| Botswana |
Boteti AK6 Diamond Mining License (100% interest) |
15.3 |
| Namibia |
Kavango Prospecting License (10) (100% interest) |
8,359 |
Boteti AK6 Diamond Project, Botswana
In December 2009, the Company, through its indirect wholly-owned subsidiary Boteti Diamond Holdings Inc. ("Boteti Diamond"), acquired an initial 70.268% interest in Boteti Mining (Pty) Limited ("Boteti"). In April 2010, African Diamonds exercised its option to increase its interest in Boteti by a further 10.268% in consideration of a cash payment of $7.3 million to the Company. After the exercise of the option, Boteti was held 60% held by Boteti Diamond and 40% held by African Diamonds.
In December 2010, the Company acquired African Diamonds' non-controlling interest in Boteti for consideration of 80,245,726 common shares of the Company on the basis of 0.80 ("Ratio") of a common share of the Company in exchange for every one common share in the capital of African Diamonds.
Boteti was granted a mining license over the AK6 Diamond Project which is located in central Botswana and is part of the Orapa/Letlhakane kimberlite district, one of the world's most prolific diamond producing areas. The Boteti AK6 kimberlite consists of three lobes, South, Centre and North, of which the South Lobe makes up approximately 75% of the kimberlites' resource potential. The pipe has an area of 4.2 hectares at the surface which expands to 7 hectares at a depth of 120 meters.
In June 2010, a definitive feasibility study updating previous work to a confidence level to support project approval was completed. The study detailed a cost effective technical solution with a process plant initially designed at a throughput rate of 2.5 million tonnes per annum ("mtpa") increasing to 4.0 mtpa after 4 years. This phased production approach, combined with contract mining reduces up-front capital required to bring this project on stream.
As part of the feasibility study, a resource update was completed on the project. From an Indicated Resources of 51 million tonnes ("mt") containing 8.2 million carats of diamonds, the mine design delineates a Probable Reserve of 36.2 million tonnes of ore, containing 6.3 million carats of diamonds, using a 1.5mm bottom cut off size, in an open pit to a depth of 324 metres. The reserves will be mined over an estimated 12 year mine life.
A formal decision was made to proceed with the construction of the AK6 diamond mine which is estimated to require a capital investment of approximately US$120-US$130 million (based on ZAR/US$ exchange rate of R7.00 to 7.50), which includes the process plant and all mine site and off-site infrastructure. Operating costs over the life of mine are estimated to average US$17.51 per tonne treated (based on ZAR/US of R7.53).
Project development activities commenced upon completion of the feasibility study with the selection of Dowding Reynard and Associates ("DRA") as the engineering, procurement and construction management contractor. The project development focus areas in 2010 were the critical path activities to ensure that ramp up to full production in the first quarter of 2012 is achieved. By year end engineering was 40% complete and all major equipment orders had been placed and procurement was 55% complete. The earthworks contract for the site civil works and the access road upgrade was awarded and the contractor mobilized to site in September 2010.
During 2010, parties affected by the mine development were relocated in accordance with the Botswana Land Board assessment report as a minimum. Relocation and resettlement claims were finalized to all parties' satisfaction.
Agreements were reached with Botswana Power Corporation for the supply of power to project and Debswana Diamond Company (PTY) Ltd, to use their existing construction camp. The bulk power line contract was put out to tender and the contract was awarded in March 2011, and grid power is anticipated to be available in July 2011 in time for early commissioning tasks.
Amendments to certain provisions of the mining license with the Government of the Republic of the Botswana ("GRB") were concluded. The mining license was amended to allow the sale of the entire AK6 production of diamonds either through open tender sales or exclusive contract, the removal of the commercial production start date and the mine lease area expanded.
As of the end of the 1st quarter of 2011, project execution is on schedule at overall 42% complete and 55% of the capital investment committed. Major operations contracts for mine operations and plant operations and maintenance are being adjudicated and ramp-up of Boteti manpower continues. All permits and licenses to operate are in place.
Mothae Diamond Project - Lesotho
The Mothae project is located in northeast Lesotho and is a large low grade kimberlite which contains a population of large, high value Type lla diamonds.
Mothae Diamonds (PTY) Ltd ("Mothae Diamonds"), an indirect 75% owned subsidiary of the Company, holds a 100% interest in the Mothae project. The other 25% is owned by the Government of Lesotho. Mothae Diamonds Holdings Inc, an indirect wholly owned subsidiary of the Company, is the project operator. One half of the project interest held by the Government (i.e. 12.5% of the project interest) is a free carried interest and one half is funded by the Government through its share of project dividends.
In 2010, the Company commenced a trial mining program, based on results from the 100,000 tonne bulk sample completed in 2009. The trial mining program is designed to sample and process up to 720,000 tonnes of kimberlite from various kimberlite domains which have been identified within the pipe to confirm geological potential, the presence of the high value Type lla diamonds and achieve true price discovery through periodic diamond sales by open tender.
Prior to the initiation of trial mining significant modifications were made to the process plant to allow for recovery of large diamonds (up to approximately 40mm in diameter) and to minimize diamond breakage.
Following a competitive bidding process for mining and process plant operations, a mining contract was awarded to Lesotho based Thotanyana Mining and Civil Works and a plant operation contract was awarded to Lesotho based Minerals Operation Executive (Pty) Ltd. Key personnel in Lesotho have been recruited to manage the operations.
Test mining commenced in late May 2010 and continues. The upgraded process plant was commissioned using F domain kimberlite remaining on stockpile from the prior bulk sampling program and plant throughput achieved design capacity of 30,000 tonnes per month in August 2010. Mining and processing during the year was focused on the C domain kimberlite, which is currently interpreted to comprise the largest kimberlite domain of the Mothae pipe. In 2010, a total of 138,798 dry tonnes of kimberlite were processed resulting in recovery of 8,723 stones weighing 3,671 carats. As in the prior bulk sampling program, the bottom cut-off size for diamond recoveries is 2mm. In addition, a total of approximately 90,000 cubic meters of topsoil and residual overburden material have been stockpiled for processing at a later date.
To the end of December 2010, the Company has recovered a total 17,602 stones containing 7,538 carats during the 100,000 bulk sample and test mining phases. The diamonds recovered have been valued and classified as inventory based on weighted average valuations of US$492/ct used for the preparation of the Kingdom of Lesotho Kimberley Process Certificate and export to Antwerp where the diamonds were subsequently sold.
In March 2011, Mothae Diamonds held its first diamond sale by open tender of 9,381 cts and realized total proceeds of $8.18 million at an average of US$871/ct. Included in the sale were diamonds recovered subsequent to year end that had a higher weighted average valuation than those recovered prior to year end.
2010 Third Quarter
Land status
The following summarizes the Company's current land holdings:
| Country | Project Name and Interest Held | Area (km2) |
| Lesotho | Mothae Diamond Mining Lease (75% interest) | 20 |
| Botswana | Boteti AK6 Diamond Mining License(60% interest) | 9 |
| Namibia | Kavango Prospecting License (10) (100% interest) | 8,359 |
Boteti AK6 Diamond Project, Botswana
In December 2009, the Company, through its indirect wholly-owned subsidiary Boteti Diamond Holdings Inc. ("Boteti Diamond"), acquired an initial 70.268% interest in Boteti AK6. In April 2010, African Diamonds exercised its option to increase its interest in Boteti AK6 by a further 10.268% in consideration of a cash payment of $7.3 million to the Company. The current shareholdings in Boteti AK6 are 60% held by Boteti Diamond and 40% held by African Diamonds. Boteti Diamond is the operator.
In October 2010, the Company entered into an agreement with African Diamonds to acquire its interest in Boteti AK6 by acquiring all of the issued and outstanding shares of African Diamonds on the basis of 0.80 of a common share of the Company for each African Diamond common share ("Acquisition"). It is anticipated that the Acquisition will close in December 2010. Upon completion of the Acquisition, ownership of the Boteti AK6 will be consolidated and the Company will hold an undivided 100% indirect interest in the project. In connection with the Acquisition, all of African Diamonds' other assets other than its interest in Boteti AK6, will be transferred into a newly formed company which will be owned by the former African Diamond shareholders.
The Boteti AK6 Diamond Project is located in central Botswana and is part of the Orapa/Letlhakane kimberlite district, one of the world's most prolific diamond producing areas. The Boteti AK6 kimberlite consists of three lobes, South, Centre and North, of which the South Lobe makes up approximately 75% of the kimberlites' resource potential. The pipe has an area of 4.2 hectares at the surface which expands to 7 hectares at a depth of 120 meters.
In June 2010, a definitive feasibility study updating previous work to a confidence level to support project approval was completed. The study details a cost effective technical solution with a process plant initially designed at a throughput rate of 2.5 million tonnes per annum ("mtpa") increasing to 4.0 mtpa after 4 years. This phased production approach, combined with contract mining reduces up-front capital required to bring this project on stream.
The updated study indicates the first phase will require a capital investment, including a 14.5% contingency of approximately US$120 million, which includes the process plant and all mine site and off-site infrastructure. Operating costs over the life of the mine are estimated to average US$17.51 per tonne treated. The project holds all government approvals to proceed and the execution schedule indicates that with work, which commenced in the third quarter, diamond production is expected to ramp up to full design capacity during 2012.
As part of the feasibility study, a resource update was completed on the project. From an Indicated Resources of 51 million tonnes ("mt") containing 8.2 million carats of diamonds, the mine design delineates a Probable Reserve of 36.2 million tonnes of ore, containing 6.3 million carats of diamonds, using a 1.5mm bottom cut off size, in an open pit to a depth of 324 metres. The reserves will be mined over an estimated 12 year mine life.
Project engineering has been awarded to DRA Africa (PTY) Ltd ("DRA") and work commenced in July 2010. Work on weather sensitive tasks commenced in the third quarter such as the upgrading of the mine access road, contractors lay down area, and plant terracing. In addition, orders for long lead items, the autogenous mill, primary jaw crusher and X-Ray Machines, have been placed.
Agreements were reached during the quarter with Botswana Power Corporation for the supply of power to project and Debswana Diamond Company (PTY) Ltd, to use their existing construction camp. In addition, contracts are being finalized to secure homes and housing plots in the town of Letlhakane for employees.
Relocation of parties affected by the mine development has been completed in accordance with the Botswana Land Board assessment report as a minimum. Relocation and resettlement claims have been finalized to all parties' satisfaction.
Amendments to certain provisions of the mining license with the Government of the Republic of the Botswana ("GRB") have been concluded. The mining license was amended to allow the sale of the entire AK6 production of diamonds either through open tender sales or exclusive contract and the removal of the commercial production start date.
Recruiting of senior management and operating team personnel is progressing according to schedule.
Mothae Diamond Project - Lesotho
The Mothae project is located in northeast Lesotho and is a large low grade kimberlite which contains a population of large, high value Type lla diamonds.
Mothae Diamonds (PTY) Ltd ("Mothae Diamonds"), an indirect 75% owned subsidiary of the Company, holds a 100% interest in the Mothae project. The other 25% is owned by the Government of Lesotho. Mothae Diamonds Holdings Inc, an indirect wholly owned subsidiary of the Company, is the project operator. One half of the project interest held by the Government (i.e. 12.5% of the project interest) is a free carried interest and one half is funded by the Government through its share of project dividends.
Based on results from the 100,000 tonne bulk sample completed in 2009, the Company commenced a test mining program at Mothae to sample and process up to 720,000 tonnes to confirm geological potential and the presence of the high value Type lla diamonds.
Following a competitive bidding process for mining and process plant operations, a mining contract was awarded to Lesotho based Thoytanyana Mining and Civil Works and a plant operation contract was awarded to Lesotho based Minerals Operation Executive (Pty) Ltd. Key personnel in Lesotho have been recruited to manage the operations.
Test mining commenced in late May and to the end of September a total of 100,939 tonnes of kimberlite have been mined from the F and C kimberlite domains. The C domain comprises the largest kimberlite domain of the Mothae pipe. In addition, a total of approximately 90,000 cubic meters of topsoil and residual overburden material have been stockpiled for processing at a later date.
Upgrades to the plant were completed during the first half of the year and commissioning completed during the third quarter. A total of 70,339 dry tonnes of kimberlite has been processed to end of September 2010, with the plant reaching design capacity of 30,000 tonnes per month mid August 2010.
To the end of September a total of 3,823 stones containing 1,760 carats have been recovered, including, 20 stones greater than 5 carats, 8 stones greater than 10 carats and 3 stones greater 20 carats. The bottom cut-off size on the Mothae Project is 2mm. The diamonds recovered have been valued and classified as inventory based on June 2009 valuation report.
Diamond recoveries for the period were lower than forecast in part due to limited plant throughput through commissioning and ramp up to full capacity, and part due to sampling work being concentrated on the comparatively lower grade C domain kimberlite versus forecast recoveries being based on the global grade estimate for Mothae project from previous bulk sampling.
Mothae Diamonds anticipates holding its first diamond sale by open tender in the first quarter of 2011.
During the current quarter, work commenced to increase the tailings dam capacity by raising the height of the dam walls a further 7 meters above current elevation. The expansion is expected to be completed prior to year end and is estimated to cost US$1.0 million.
2010 Second Quarter
The following summarizes the Company's current land holdings:
Country Property Type
|
Area (km2)
|
| Lesotho |
Mothae Diamond Mining Lease |
20 |
| (75% interest) |
|
|
| Botswana |
Boteti AK6 Diamond Mining License |
9 |
| (60% interest) |
|
|
| Namibia |
Kavango Prospecting License (10) |
8,359 |
| (100% interest) |
|
|
Boteti AK6 Diamond Project, Botswana
In December 2009, the Company, through its indirect wholly-owned subsidiary Boteti Diamond Holdings Inc. ("Boteti Diamond"), acquired an initial 70.268% interest in Boteti AK6. In April 2010, African Diamonds exercised its option to increase its interest in Boteti AK6 by a further 10.268% in consideration of a cash payment of $7.3 million to the Company. The current shareholdings in Boteti AK6 are 60% held by Boteti Diamond and 40% held by African Diamonds. Boteti Diamond is the operator.
The Boteti AK6 Diamond Project is located in northeast Botswana and is part of the Orapa/Letlhakane kimberlite district, one of the world's most prolific diamond producing areas. The Boteti AK6 kimberlite consists of three lobes, South, Centre and North, of which the South Lobe makes up approximately 75% of the kimberlites' resource potential. The pipe has an area of 4.2 hectares at the surface which expands to 7 hectares at a depth of 120 meters.
The partners retained an independent Johannesburg based EPCM firm to complete a bankable feasibility study to upgrade previous work to a confidence level to support project approval. This updated feasibility study was completed in June 2010. The study details a cost effective technical solution with a process plant initially designed at a throughput rate of 2.5 million tonnes per annum ("mtpa") increasing to 4.0 mtpa after 4 years.
This phased production approach, combined with contract mining reduces up-front capital required to bring this project on stream.
The updated study indicates the first phase will require a capital investment, including a 14.5% contingency of US$120 million, which includes the process plant and all mine site and off-site infrastructure. Operating costs over the life of the mine are estimated to average US$17.51 per tonne treated. The project holds key government approvals to proceed and the execution schedule indicates that with work commencing this quarter, diamond production is expected to ramp up to full design capacity during 2012.
As part of the feasibility study, a resource update was completed on the project. From an Indicated Resources of 51 million tonnes ("mt") containing 8.2 million carats of diamonds, the mine design delineates a Probable Reserve of 36.2 million tonnes of ore, containing 6.3 million carats of diamonds, using a 1.5mm bottom cut off size, in an open pit to a depth of 324 metres. The reserves will be mined over an estimated 11 year mine life.
Project engineering has been awarded to DRA Africa (PTY) Ltd ("DRA") and work has commenced. Work on weather sensitive tasks has commenced in the third quarter such as the upgrading of the mine access road and plant terracing.
Relocation of parties affected by the mine development has been completed in accordance with the Botswana Land Board assessment report as a minimum. Relocation and resettlement claims have been finalized to all parties' satisfaction.
Amendments to the diamond sales provisions of the mining license with the Government of the Republic of the Botswana ("GRB") have been concluded. The mining license was amended to allow the sale of the entire AK6 production of diamonds either through open tender sales or exclusive contract. A further amendment to the mining license pertaining to a revised start of commercial production has been submitted to the GRB. The Ministry of Mines has made their recommendation to the Minister and the formal approval of the amendment is expected by the end of the third quarter.
The first of key personnel have been hired, including Mr. Ribson Gabonowe as CEO of Boteti and Gerald Ndlovu as Boteti's General Manager.
Mothae Diamond Project -- Lesotho
The Mothae project is located in northeast Lesotho and is a large low grade kimberlite which contains a population of large, high value Type lla diamonds.
Mothae Diamond, an indirect 75% owned subsidiary of the Company, holds a 100% interest in the Mothae project, in partnership with the Government of Lesotho, which holds a 25% interest. Mothae Diamonds is the project operator. One half of the project interest held by the Government (i.e. 12.5% of the project interest) is a free carried interest and one half is funded by the Government through its share of project dividends.
Based on results from the 100,000 tonne bulk sample completed in 2009, the Company is pursuing a test mining program at Mothae to sample and process up to 720,000 tonnes over the next 18 to 24 months to confirm geological potential and the presence of the high value Type IIa diamonds
Following a competitive bidding process for mining and process plant operations, a mining contract was awarded to Lesotho based Thoytanyana Mining and Civil works and a plant operation contract was awarded to Lesotho based Minerals Operation Executive (Pty) Ltd. Mining commenced in late May establishing a kimberlites stockpile feed for the diamond recovery plant. Planned upgrades to this plant were completed during the quarter and plant commissioning completed in mid July 2010. The process feed rate is being ramp up to design capacity of 30,000 tonnes per month, with the target of achieving this throughput by the end of the third quarter. Total cost to complete the process upgrades was approximately $3.2 million.
All diamond recovery units are functioning well and provisional audit work on x-ray tailings indicates a high level of recovery efficiency which was a key object of the plant upgrade.
A 53.3 carat, Type lla diamond was recovered in the first week of processing. Diamond grades for the material processed to date have been consistent with material processed during previous treatment of the Mothae kimberlite material.
Mothae Diamonds has recruited the first of key personnel in Lesotho, including Nyakallo Mpatuoa as the Managing Director and Shaun Simmonds as the Company Site Representative, required to manage and oversee the test mining program. Mothae Diamonds has engaged in dialogue locally and with the Government to foster relationships at all levels and to ensure integration within the community.
2010 First Quarter
Land status
The following summarizes the Company's current land holdings:
Country Property Type
|
Area (km2)
|
| Lesotho |
Mothae Diamond Mining Lease |
20 |
| (75% interest) |
|
|
| Botswana |
Boteti AK6 Diamond Mining License |
9 |
| (60% interest) |
|
|
| Namibia |
Kavango Prospecting License (9) |
7,411 |
| (49% interest) |
|
|
Mothae Diamond Project -- Lesotho
The Mothae project is located in northeast Lesotho and is a large low grade kimberlite which contains a significant population of large, high value Type lla diamonds.
Mothae Diamond, an indirect wholly owned subsidiary of the Company, holds a 75% interest in the Mothae project, in partnership with the Government of Lesotho, which holds a 25% interest. Mothae Diamonds is the project operator. One half of the project interest held by the Government (i.e. 12.5% of the project interest) is a free carried interest and one half is funded by the Government through its share of project dividends.
Based on results from the 100,000 tonne bulk sample completed in 2009, the Company is planning a test mining program at Mothae to sample and process up to 720,000 tonnes over the next 18 to 24 months commencing in June 2010 to confirm geological potential and the presence of the high value Type IIa diamonds. In order to carry out this phase of processing, the Company commenced in early 2010 an upgrade to the process plant, including a large diamond recovery system, enhanced water systems and a new X-ray recovery circuit. Electrical systems in the process plant were upgraded to provide for sustainable operations over the next two years. Total estimated cost to complete the process upgrades is approximately $3.0 million ($905,000 expended by March 31, 2010).
Following a competitive bidding process for mining and process plant operation, a mining contract has been awarded to Lesotho based Thoytanyana Mining and Civil works and a plant operation contract has been awarded to Lesotho based Minerals Operations Executive (Pty) Ltd. The mining fleet mobilized to site in early May to begin pre-stripping of overburden and stockpiling kimberlite for plant commissioning. Commissioning of the plant is expected to continue through June, subsequent to which trial mining will commence at a targeted production rate of 30,000 tonnes per month.
Based on average grade estimates from the 100,000 tonne bulk sample completed in 2009, the trial mining program is expected to produce approximately 1,000 carats of diamonds per month and the Company anticipates holding Mothae diamond sales periodically, with the first sale expected before year end.
Mothae Diamonds has recruited the first of key personnel in Lesotho, including the Managing Director and the Company Site Representative, required to manage and oversee the test mining program.
Mothae Diamonds has engaged in dialogue locally and with the Government to foster relationships at all levels and to ensure integration within the community.
Boteti AK6 Diamond Project, Botswana
In December 2009, the Company, through its indirect wholly-owned subsidiary Boteti Diamond Holdings Inc. ("Boteti Diamond"), acquired an initial 70.268% interest in Boteti AK6. In April 2010, African Diamonds exercised its option to increase its interest in Boteti AK6 by a further 10.268% in consideration of a cash payment of $7.3 million to the Company. Following the option exercise, the Company has a 60% interest in Boteti AK6 and is the project operator. The remaining 40% is held by African Diamonds.
Boteti AK6 is located in northeast Botswana and is part of the Orapa/Letlhakane kimberlite district, one of the world's most prolific diamond producing areas. The Boteti AK6 kimberlite consists of three lobes, South, Centre and North, of which the South Lobe makes up approximately 75% of the kimberlites' resource potential. The pipe has an area of 4.2 hectares at the surface which expands to 7 hectares at a depth of 120 meters.
The partners have retained an independent Johannesburg based EPCM firm to complete the feasibility study to upgrade previous work to a confidence level to support project approval. The project scope includes a revised mine plan, confirmation of process plant flowsheet and design, confirmation of site and support infrastructure, engineering and cost estimated to support capital and operating cost estimates and the preparation of an execution schedule.
As part of the ongoing feasibility study, a resource update was completed on the project in March 2010. The new resource update estimates an indicated resource of just over 51 million tonnes at an average grade of 22 cpht and an average modeled diamond value of US$194 per carat, and an inferred resource of approximately 20 million tonnes at an average grade of 19 cpht and an average modeled diamond value of US$183 per carat.
Boteti AK6 is on schedule for construction to commence in the fourth quarter of this year, and to be in production in late 2011, ramping up to full production in first half of 2012. The project holds key government approvals to proceed to development -- a Mining License and an approved Environmental Impact Assessment ("EIA").
In order to achieve the project schedule, key tasks will be initiated ahead of full capital approval. An early works budget has been approved to bridge the gap between completion of the feasibility study and full capital approval. This budget is focused on weather sensitive project tasks such as the upgrading of the mine access road and completion of plant terracing before the rainy season. Ongoing environmental and socio-economic activities which are essential to project success will be funded by this budget.
The first of key personnel have been hired, including the General Manager, required to guide the project through detailed engineering, construction and commissioning. In line with the EIA, an Environmental and Community Liaison Officer has also been hired which will enable consistency and continuity in environmental and socio-economic programs throughout the mine life.
The feasibility study considers a phased development. Phase I mining will commence in late 2011 with production ramping up to 2.5 million tonnes per annum in 2012. Phase II is scheduled to commence in 2015 with production ramping up to 4.0 million tonnes per annum by the addition of a second mill circuit. The process design contemplates a 1.5 millimeters bottom cutoff so as to optimize plant throughput and enhance project economics. Open pit optimisation work has been conducted by Johannesburg based ASG Consulting to determine open pit mine reserve, waste to ore stripping ratio, pit depth and provisional mine life. Work on the feasibility study is well advanced and is scheduled to be complete by mid year 2010.
2009 Annual
Mothae Diamond Project - Lesotho
Prior to the start of the calendar year 2009, Lucara elected to proceed with Phase II of the Mothae Project evaluation sampling program, which comprised the processing of an additional 70,000 metric tonnes) of kimberlite and the completion of a 2,500 metre delineation drilling program to define the Mothae kimberlite ore body to a depth of approximately 200 metres. The program was completed in April of 2009 under a budget of approximately $4.2 million.
The following table summarizes the tonnage sampled and diamonds recovered (greater than 2 millimeters) from both Phase I and Phase II of the Mothae evaluation program.
Table M-1 - Mothae Phase I & II Sample Grade Information
Kimberlite Domain |
Wet Tonnes |
Dry Tonnes |
# of Stones |
Total Carats |
Carats/ Stone |
Dry Grade |
| A Phase |
5,341 |
4,565 |
372 |
129.83 |
0.35 |
2.84 |
| C Phase |
28,529 |
23,592 |
2,042 |
902.51 |
0.44 |
3.83 |
| E Phase |
5,363 |
4,338 |
255 |
99.61 |
0.39 |
2.30 |
| F Phase |
26,223 |
21,664 |
2,681 |
1,160.05 |
0.43 |
5.35 |
| G Phase |
34,503 |
28,169 |
3,536 |
1,575.04 |
0.45 |
5.59 |
| |
|
|
|
|
|
|
| ALL SAMPLES |
99,959 |
82,328 |
8,886 |
3,867.04 |
0.44 |
4.70 |
A fifteen hole, 2,452 metre core drilling program was completed in early February, 2009 and led to the development of a preliminary geological model which outlined between 35 and 40 million tonnes of kimberlite to 200 metres depth. The southern lobe of the Mothae pipe, which produced the highest bulk sample diamond grades, is estimated to contain between 20 and 25 million tonnes of the outlined 35 to 40 million tonnes. At this stage of the evaluation, these tonnage figures indicate the geologic potential of the Mothae kimberlite and are not intended to imply a 43-101 compliant resource tonnage.
Of significance, several large, high quality diamonds were recovered during the bulk sample program including the recovery of a 23.39 carat white anhedral Type IIa broken diamond with additional pieces indicating an original stone estimated to be greater than 60 carats. Other highlights include the recovery of 217 stones greater than 2 carats, 63 stones greater than 5 carats, 13 stones greater that 10 carats, and 5 stones greater than 20 carats. The five largest diamonds weigh 24.60, 23.39, 22.71, 22.62 and 20.04 carats.
In April, 2009, a conceptual study was completed for Mothae which contemplated the requirements to build and operate a mine at Mothae which would be capable of processing at a rate of 2.5 million tonnes per annum. The conceptual study formed the basis for an application to the Government of Lesotho for a mining license at Mothae. In September, 2009, the Government of Lesotho awarded a mining license to Mothae Diamonds (Pty) Ltd. to mine for diamonds at Mothae. As part of the license award, the Government of Lesotho has taken a 25% interest in the project, 50% of which will be free carry with the remainder being contributed from dividends. The license was awarded for a 10 year period, renewable for a further 10 years.
Looking forward at Mothae
In order to confirm the potential for Mothae to yield large high value diamonds, a preproduction test mining phase that contemplates the processing of up to 720,000 tonnes at a rate of 30,000 tonnes per month, was initiated in November 2009. To complete this phase of processing, the process plant will be upgraded to include a large diamond recovery X-ray system, enhanced water systems and a new X-ray recovery circuit. Additional to the above, the electrical systems in the process plant will be upgraded to provide for sustainable operations over the next two years. Additional delineation drilling may also be completed to help better define the internal geology of the Mothae kimberlite. The capital costs for the plant upgrade is estimated to be in the order of C$3.0 million.
Boteti AK6 - Botswana
In early November, the Company acquired a 70.268% interest in Boteti, which holds a 100% interest in the AK-6 project, from De Beers in consideration for US$49.0 million. The AK-6 project is an advanced diamond development project located in the Orapa district of Botswana, the largest diamond producing region in the world. The acquisition of the De Beers interest in AK-6 was completed on December 17, 2009.
The Company entered into a Share Holder Agreement with its development partner on the AK-6 property, African Diamonds plc. ("African Diamonds"). The Agreement includes a Call Option whereby African Diamonds can earn an additional 10.268% interest in the AK-6 property through a cash payment of approximately US$7.0 million. African Diamonds have 120 days from December 17, 2009 to exercise this option. Under the Agreement, the Company is the operator of the joint venture with a minimum 60% interest in AK6.
The Company initiated a feasibility study update for AK-6 which is scheduled for completion in the second quarter of 2010. This study will confirm the capital costs and detailed schedule which currently is contemplated to have detailed design, development and construction activities taking place during the latter half of 2010 and through 2011.
Paradigm Project Management has been selected to complete the feasibility study update.
Looking Forward at Boteti
Lucara intends to aggressively develop the AK-6 project in Botswana. The initiation of tasks defined in the project's Environmental Management Plan (EMP), which encompasses both environmental and socio-economic programs, will be an area of focus early in 2010 as we advance the AK-6 project and establish ourselves as a partner of choice in Botswana. Boteti will recruit key staff in Botswana to further foster relationships at all levels to ensure the successful integration of Boteti within the community and for the advancement of the EMP commitments.
Exploration
Kavango Project - Namibia
Lucara's joint venture partner, Namdeb, did not conduct any field programs in 2009 due to budget restrictions. Data analysis and reporting early in 2009 of drill programs completed in 2008 identified a high interest down-hole heavy mineral anomaly in drill hole RC-29, located northwest of the main Omatako indicator mineral anomaly. Namdeb is developing a follow-up program of detailed ground geophysics and further drill testing for 2010.
Namdeb failed to meet its vesting obligations required to hold a 51% interest in the Kavango project in 2009. The agreement has been amended, in principle, such that all interest held by Namdeb reverts to Lucara, and the time period in which Namdeb has to meet its expenditure obligation has been extended to December, 2010.
Drill hole RC-29 produced a down-hole kimberlite indicator mineral anomaly that suggests that the source kimberlite may be located nearby. Follow-up work planned for 2010 includes detailed ground geophysical surveys over selected areas near RC-29 and subsequent drill testing of any anomalies generated from this work.
Lufupa Option - DRC
Lucara has the option to earn a 50% interest in diamond prospects in southern DRC by incurring exploration expenditures of US$2.0 million by October, 2012. To date, approximately US$250,000 has been spent on heavy mineral sampling and ground geophysical surveys designed to develop drill targets.
A work program to drill test up to 18 prioritized drill targets on a budget of approximately US$300,000 was proposed in May 2009. This program was deferred in response to other priorities and budget uncertainties.
Heavy mineral sampling carried out in 2008 and interpretation of airborne magnetic data has resulted in identification of 18 priority drill targets as potential source contributors to the regional kimberlite indicator mineral anomaly. Work planned for 2010 includes additional ground geophysical work as needed to position drill collars, followed by drill testing of these targets.
|  |  |