27th Oct 2005 07:00
Dwyka Diamonds Limited27 October 2005 Dwyka Diamonds Limited Dwyka secures two diamondiferous kimberlites in deal with De Beers Highlights • Dwyka completes joint venture with De Beers to secure access to two diamondiferous kimberlites in Tanzania, located approximately 100km to the west of De Beers' Williamson Mine • The diamondiferous kimberlites, known as Mahene and Itanana, are 6.8 hectares and 2 hectares respectively • Dwyka will immediately take bulk samples of 20,000 tonnes at each of the project sites • The 6.8 hectare surface expression of Mahene offers the potential for a long term mine treating more than 700,000 tonnes per annum Dwyka Diamonds Limited ("Dwyka" or "the Company") (AIM:DWY), the AIM and ASX listed diamond producer and project developer, today announces a joint venture with De Beers, giving Dwyka access to two diamondiferous kimberlites located in the Nzega District of Tanzania following the signing of agreements with De Beers in Johannesburg yesterday. Under the terms of the transaction, De Beers will transfer the prospecting licences for the two pipes to Dwyka Tanzania Limited, a company which will be 95 per cent owned by Dwyka Diamonds Limited and 5 per cent owned by De Beers. Dwyka will be responsible for bulk sampling of the two pipes, with expenditureexpected to be in the region of US$1.5m. Dwyka's Tanzanian partner, Thorntree Minerals Limited will assist Dwyka with the bulk sampling programme in-country and provide all the necessary logistical, managerial and government liaison support. Thorntree Minerals will have the right to participate in 20 per cent ofDwyka's equity interest in the projects once the decision to progress to feasibility study is taken at the end of the bulk sampling period. Thorntree will be required to fund their share of costs to maintain their equity position. De Beers will have the option to acquire a 51 per cent shareholding in Dwyka Tanzania Limited, by re-imbursing Dwyka three times the costs incurred by the Company to evaluate the projects. Alternatively, De Beers may elect to remain asa 5 per cent shareholder in Dwyka Tanzania Limited or convert its shareholding into a 1.5 per cent gross royalty payable on diamond revenues. As part of the agreement Dwyka Tanzania will sell all diamonds recovered in thelicence areas to De Beers. Mahene Kimberlite Mahene sub-outcrops over an area of approximately 6.8 Hectares (Ha),representing a target of significant size for Dwyka, and making it the largestkimberlite now in the Company's portfolio. The pipe is comprised mainly ofdiatreme zone kimberlite and lies near a failed rift on a favourable (fordiamond preservation) cratonic geotherm of less than 40 mW/m2. Limited drillcore sampling (53 tonnes) by De Beers returned a diamond grade of approximately8 cpht; which compares favourably with the grade being mined economically at theWilliamson mine. Microdiamond interpretations from De Beers' samples suggestpossible macro grades of over 26 cpht. This will be tested by further sampling.Studies of diamond size frequency distributions suggest the potential for thepresence of larger stones that have not as yet been located due to the smallsize of samples taken to date. Dwyka will immediately embark on a major bulk sampling programme at Mahene tofully assess the economic potential of the kimberlite. At well in excess of100,000 tonnes of diamondiferous kimberlite per vertical metre, the Mahene pipehas an excellent chance of being able to host an economic open pit diamondextraction project. Itanana Kimberlite The smaller of the two kimberlites is Itanana, measuring between 2.0 and 2.3 Hain sub-outcrop. Very limited sampling by De Beers has returned a sampling gradeof 3 carats per hundred tonnes. However, interpretation of microdiamond resultssuggest that a macro grade in the region of 8 cpht may be possible, again wellin line with the grades being mined economically at De Beers' Williamson Mine.Dwyka will take a substantial bulk sample to increase the sample size in orderto accurately assess the diamond bearing potential of the Kimberlite, sincesamples taken from the overburden have contained larger diamonds than thosefound in the kimberlite testing by De Beers to date. Such results suggest that amuch larger sample may lead to a significant increase in grade. Dwyka will testItanana concurrently with Mahene with activity beginning immediately. Commenting today Melissa Sturgess, Executive Chairman of Dwyka Diamonds Limited,said: "This year has seen Dwyka build up an excellent portfolio of producing andnear term producing assets and today's deal significantly strengthens theCompany's potential to generate strong and profitable cash flow going forward.Our ongoing dialogue with De Beers has allowed Dwyka to gain access to twohighly prospective assets, ideal for an operator of our size in a region thatcomplements existing operations." The technical exploration and mining information contained in this report wascompiled by Mr Ed Nealon, a Dwyka Diamonds Ltd director. Mr Nealon providesconsulting services via his company Athlone International Pty Ltd. Mr Nealon isa member of the Australasian Institute of Mining and Metallurgy and isconsidered to be a Competent Person in his respective area of expertise pursuantto the Australasian Code for Reporting of Mineral Resources and Ore Reserves. MrNealon consents to the inclusion in the report of the matters based on hisinformation in the form and context in which it appears. For further information please contact: In Australia: In United Kingdom:Melissa Sturgess Laurence Read/Leesa PetersDwyka Diamonds Limited Conduit PR(+618) 9324 2955 +44 (0)20 7618 8707/+44 (0)7979 955 923 Or visit: http://www.dwykadiamonds.com This information is provided by RNS The company news service from the London Stock ExchangeRelated Shares:
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