19th Dec 2008 12:01
19 December 2008
LONRHO PLC
("Lonrho" or "the Company")
LONRHO MINING LIMITED (ASX: LOM)
QUARTERLY REPORT FOR PERIOD ENDED 30 NOVEMBER 2008
Lonrho (AIM: LONR), the conglomerate with a structured portfolio of African investments, is pleased to note the following announcement to the Australian Securities Exchange this morning by Lonrho Mining Ltd (formerly known as Nare Diamonds), which is owned 24.16% by Lonrho:
HIGHLIGHTS
LULO PROJECT, ANGOLA
OPERATIONS
LULO DIAMOND CONCESSION - ANGOLA
Kimberlite Exploration
The 1,000 km2 aeromagnetic survey flown in January 2008, revealed a cluster of some 200 magnetic anomalies suggestive of kimberlite pipe intrusives. This interpretation was supported by the presence of historically reported kimberlite pipes within the aeromagnetic target area. The view that diamond rich kimberlite pipes are located within this province is reinforced by the extensive illicit diamond digger (garimpeiro) activity within the Cacuilo River catchment area, which hosts the aeromagnetic anomaly cluster as well as the reported kimberlite pipes.
The aim is to fast track the discovery of any diamond bearing kimberlites. The largest pipe within a kimberlite province is invariably also the most diamondiferous member. Based on that empirical fact, it was decided to inspect the apparent largest eight accessible targets based on both aeromagnetic modelling and aerial-photo interpretation. The targets are listed in Table 1.
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TABLE 1 - KIMBERLITE TARGET ANOMALIES |
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Anomaly No. |
Basis for selection |
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K6 |
aeromagnetic anomaly only |
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K14 |
aeromagnetic anomaly/digger activity |
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K29 |
aeromagnetic anomaly/photo feature/hill |
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K30 |
as above - adjoining targets/1 source? |
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K50 |
aeromagnetic anomaly only |
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K71 |
aeromagnetic/photo anomaly |
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K72 |
aeromagnetic/photo anomaly |
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K212 |
aeromagnetic anomaly only |
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L6 |
historical kimberlite/digger activity |
The field inspection included the surface soil sampling of the selected targets as well as the mapping of any rock outcrops. Targets K212 and the twin targets K29 and K30 were not sampled as the former is a large swamp adjacent to the Cacuilo River and access to the latter was restricted.
On the other six sites, a single -2mm screened sample was collected at the point modelled as the centre of the aeromagnetic anomaly. This material was then concentrated using a gold pan. The concentrates were dried and delivered to the MSA Group laboratories in Johannesburg, South Africa. The final micro-probed mineral results are expected towards the end of January 2009.
K72 represents a hill with outcrops of lateritised breccia and a heavy concentrate of ilmenites which have now been positively identified by MSA as being picro-ilmenites typical of Group 1 kimberlites.
K71 is located about 1.5 km due west of K72. It lies beneath a large grassed area (visible on aerial-photo images) on the summit of a hill. No lateritised outcrops were seen.
L6 is located on the west bank of the Cacuilo River where a historical map has indicated a kimberlite pipe location. Due to security consideration relating to the garimpeiros active there in January 2008, this section was not flown by the low level (25 metres) helicopter borne aeromagnetic survey. However, an area of about 15 hectares has been extensively mined to the water table by the garimpeiros to an average estimated depth of 10 metres. The rim of this disturbed area has a very high concentration of ilmenites. The material excavated consists of white sand, gravels and yellow clay, suggestive of the surface in-filled overburden of a buried pipe. A drilling programme is planned here during the dry season 2009.
K14. This magnetic anomaly is located within a swampy area within the Cacuilo River floodplain. Abandoned garimpeiro diggings are present on the edge of the swamp.
L6. This magnetic anomaly shows no obvious topographic features.
K50. This is the largest of the aeromagnetic anomalies. It lies on an interfluve area with no obvious topographic features.
K212. This magnetic anomaly lies beneath a swampy area within the floodplain of the Cacuilo River. The presence of garimpeiros prevented access onto this site.
K29 and K30 are two magnetic anomalies within 400m of each other and may represent feeders of one pipe. Access was not possible due to the rugged terrain and prevailing weather conditions.
Alluvial Exploration
The exploration of the west bank Cacuilo River terrace gravels will commence early in the dry season as access into these wet areas present difficulties during the current wet season. A 4 km river frontage has been selected for the first phase of exploration. Access tracks along the bank of the river will be constructed along which control points can be established for the surveyed base lines cut at right angles to the river. These parallel base lines will be spaced at 500 metre intervals along which exploration pits at 100 metre intervals will be sited. This will allow for accurate sub-surface geological mapping on which the bulk sampling and trial mining programmes will be based.
The planning for the rotary pan construction and transportation to site is well advanced. This diamond recovery plant is scheduled to commence operations within the second quarter of 2009.
Most of the garimpeiros have departed following an Angolan army operation in August 2008. However, it was obvious from this recent visit that many diggers have drifted back into the Cacuilo River valley. This issue is being addressed with Endiama, the Angolan government diamond mining department. The current camp is located some 5 km from the river.
A contingent of 21 Manbodji security guards armed with AK47 rifles were despatched to the Lulo Concession in September 2008 and are now deployed in a defensive role to protect the exploration activities.
SCHMIDTSDRIFT - SOUTH AFRICA
Production and Sales for the Quarter
Production for the quarter was 910 carats from 219,088 ROM tonnes at an average grade of 0.42 carats per hundred tonnes. The production included 15 stones in excess of 5 carats in size. This included 5 stones between 10 and 30 carats in size.
During the quarter, 720 carats were sold at an average price of US$472 for a total of US$340,003. A total of 694 carats were sold to Representation Investments (Pty) Ltd (previously Unitrade 1266 CC) for US$330,467 and 26 carats were sold to the State Diamond Trader for US$9,536.
Sale of the Schmidtsdrift operation
In August 2008, the Company entered into an option agreement to sell the Schmidtsdrift operation to New African Mining AG (NAM).
Under the Option Agreement, NAM paid a non-refundable option fee of US$500,000 for an exclusive option to conclude an agreement for the sale of the Company's interests in the Schmidtsdrift operation.
On 6 October 2008 the Company signed formal agreements (the agreement) for the sale of the Schmidtsdrift operation. In terms of the agreement, NAM was to acquire all the Schmidtsdrift assets from Lonrho. This included all plant and equipment on the Schmidtsdrift site, the prospecting right for the Schmidtsdrift property, all rehabilitation deposits for the Schmidtsdrift property and the 80% shareholding in Schmidtsdrift Mining Enterprises (Pty) Ltd (collectively hereafter referred to as the Schmidtsdrift asset).
The total purchase consideration for the Schmidtsdrift asset was US$11.8 million payable in cash. In addition, NAM was to assume rehabilitation liabilities of US$1.4 million.
On 31 October 2008 NAM paid the required US$500,000 into trust with their lawyers in terms of the agreement. The US$500,000 was to be released to the Company on the Effective Date - refer to the Company's 31 August 2008 half year report.
On 14 November 2008 the South African Competition Commission granted the unconditional approval for the sale of the Schmidtsdrift asset. The Effective Date of the Sale, in terms of the agreement, is the date of approval by the Competition Commission, namely 14 November 2008.
NAM has instructed their lawyers not to release the US$500,000 held in trust and has failed to make any further payments in terms of the agreement. The Company has served NAM with notice to remedy their breaches and the agreement will now be cancelled. The South African companies are likely to be placed into liquidation and this process has commenced.
KAMFERSDAM - SOUTH AFRICA
In November 2007, the Company agreed to sell certain tailings dumps near Kimberley in South Africa and its Kamfersdam new order prospecting rights to Meepo Investment Consortium (Pty) Ltd for A$3.7 million (see announcements dated 15 and 28 November 2007). De Beers has approved the sale of the tailings dumps which was a condition of the transaction. Completion of the sale of the new order prospecting rights will also now occur subject to receiving final approval of that transaction from the Department of Minerals and Energy.
No exploration costs have been incurred by the Company on this asset during the quarter.
GROEN RIVIER - SOUTH AFRICA
The Groen River prospect is an exploration alluvial diamond prospect located in Namaqualand adjacent to an exploration programme conducted by Firestone Diamonds and De Beers.
No exploration costs have been incurred by the Company on this asset during the quarter.
KLIPSPRINGER JOINT VENTURE - SOUTH AFRICA
Background
The Company owns a 20 percent interest in the Mwana Africa Plc (Mwana) operated Klipspringer mine.
During 2007 a trial mining and bulk sampling exercise was undertaken by Mwana to try a new mining method and test market conditions. The mining method was changed to a more conventional underhand stoping method as opposed to the long hole open stoping method used in the initial mine design. The mine was re-engineered with the new mining method resulting in reduced tonnage along with a significant reduction in manpower and costs but designed to operate in a strong Rand environment. The trial mining programme was operated successfully and in December 2007 a decision was made by Mwana to commence commercial production.
Production and Sales for the Quarter
Production for the quarter was 7,579 carats from 15,487 ROM tonnes at an average grade of 48.94 carats per hundred tonnes.
During the quarter, 8,681 carats were sold at an average price of US$97 per carat raising a total of US$838,257.
The mine currently employs 210 people including contractors. This is under review given the current market conditions.
No costs were incurred by the Company during the quarter.
MILES KENNEDY
DIRECTOR
19 December 2008
Competent Persons Disclosure
The information in this report that relates to Exploration Results, Mineral Resources or Ore Reserves has been prepared by Consulting Geologist Manfred Marx and Consulting Consulting Geophysicist, E.O. Kostlin (in relation to Angola) and Gerhard du Plessis (in relation to South Africa). Mr Marx and Mr Kostlin are consultants to the Company and have sufficient experience with the relevant style of mineralisation and type of deposit under consideration and to the activity which they are undertaking to be qualified as a Competent Person as defined in the 2004 Edition of the 'Australian Code for Reporting of Exploration Results, Mineral Resources and Ore Reserves'. Dr du Plessis is a full time employee of the Company and has sufficient experience with the relevant style of mineralisation and type of deposit under consideration and to the activity which he is undertaking to be qualified as a Competent Person as defined in the 2004 Edition of the 'Australian Code for Reporting of Exploration Results, Mineral Resources and Ore Reserves'. Each of Mr Marx, Mr Kostlin and Dr du Plessis consents to the inclusion in the report of the matters based on his information in the form and context in which it appears.
LONRHO ENQUIRIES
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Lonrho Plc |
+44 (0)20 7016 5105 |
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David Lenigas, Executive Chairman |
+44 (0)7881 825 378 |
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Geoffrey White, Chief Executive Officer |
+44 (0)7717 307 308 |
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Emma de Borchgrave, Executive Director |
+44 (0)7867 785 177 |
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Pelham PR |
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Charles Vivian |
+44 (0) 20 7743 6672 |
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+44 (0) 7977 297903 |
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James MacFarlane |
+44 (0) 20 7743 6375 |
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+44 (0) 7841 672831 |
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Collins Stewart Europe : NOMAD to Lonrho |
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Hugh Field |
+44 (0) 20 7523 8350 |
About LONRHO:
Lonrho Plc is an expanding conglomerate that is rapidly growing a successful business throughout Africa. The Company's shares are traded on the London AIM stock exchange (LONR). Lonrho is strategically focused on the development of business opportunities in infrastructure, transportation, support services, hotels and natural resources. The Company has over 19,000 shareholders and substantial institutional backing to support its mandate to build a profitable business that plays a fundamental role in the development of the African economy.
Since 2006, the Company has invested in or acquired control of:
Hotel Cardoso - www.hotelcardoso.co.mz (retained)
Lonrho Mining - www.lonrhomining.com
Luba Freeport - www.lubafreeport.com
Fly540 - www.fly540.com
Swissta Holdings - www.swissta.com
SA Independent Liner Services - www.saliners.com
Bytes and Pieces www.bytespieces.com
Kwikbuild - www.e-kwikbuild.co.za
LonZim - www.lonzim.co.uk
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Lonrho