Mano River, DiamondWorks fancy Sierra Leone’s diamonds

Sierra Leone’s Ministry of Natural Resources has awarded London-based explorer Mano River Resources (MNO-V) an exclusive, 1-year prospecting licence covering 9,700 sq. km in the southeastern quadrant of the country, which is underlain by Archean craton.

The new licence extends from the Kono diamond fields, where Mano already holds two licences totalling 206 sq. km around the town of Koidu, near the Liberian border in the east. In western Liberia, Mano discovered the first-ever known diamond-bearing kimberlite pipes, which are now under joint venture with South Africa’s Trans Hex Group.

Mano is required to surrender half of the licence area after one year, at which time the tenure conditions for the retained portion will revert to those of a standard licence.

Mano is in discussions with a potential joint-venture partner to carry out diamond exploration on the new licence, including an airborne geophysical survey.

In November 2003, Mano brought in Golden Star Resources (GSL-T) as a joint-venture partner on three gold properties covering 500 sq. km in central Sierra Leone.

Golden Star can earn a 51% interest in the properties, named Pampana, Sonfon and Nimini, by spending US$6 million over four years. The company can boost its stake to 65% by funding a feasibility study, and to 85% by funding commercial mine development. At that time, Mano River would have a 15% participating interest plus a 2% net smelter return royalty.

Mano River closed out 2003 by raising L2.4 million in a private placement of 49 million shares priced at L0.05 apiece. As well, a slew of warrants were converted, resulting in the issuance of 2.4 million shares for gross proceeds of L71,400.

After enduring a particularly horrific, decade-long civil war, Sierra Leone is enjoying a renaissance in mineral exploration following the securing of peace in 2001.

The highest-profile event has been the resumption, in December 2003, of diamond mining by DiamondWorks (DMW-T) and privately held Magma Diamond Resources at their Koidu project, which cost about US$14 million to bring back to life. DiamondWorks and Magma each hold a 40% interest in the project, whereas the Sierra Leone government holds the remainder.

During the commissioning phase, mill feed was derived primarily from Dyke Zone B, which was mined while crews drove an access ramp to Koidu’s Pipe 1, and from a newly discovered, 10-metre-diametre blow on Dyke Zone B.

The commissioning recovered 2,000 carats of diamonds, and 3,200 more carats were recovered during half-capacity, commercial production in early January. Full capacity is expected to be achieved in February.

Five special stones were recovered in January from Pipe 1, the largest being a 35-carat octahedron; the others weighed 25, 24, 13 and 12 carats.DiamondWorks says these preliminary results suggest that the grade of Pipe 1 is in line with a historical estimate of 0.67 carat per tonne.

Meanwhile, the company has cleaned up its balance sheet by converting $1.5 million of debt owed to two creditors into 1.1 million shares, and placing 8 million units priced at $1.35 per unit for gross proceeds of $10.8 million. Each unit comprises a share and half a warrant, with each whole warrant entitling the holder to buy a share for $1.80 within 18 months.

Brian Menell has become chairman and a director of DiamondWorks, while Hasher Maktoum Juma Al Maktoum, a sheik from Dubai, has become a non-executive director and vice-chairman.

Other companies active in Sierra Leone include Diamond Fields International (DFI-T), Afcan Mining (AFK-V), Ashanti Goldfields (ASL-N), Sierra Rutile and bauxite developer Sierra Minerals. Ashanti Chairman Sam Jonah is chairman of Sierra Rutile and a director of Sierra Minerals, both of which are privately held.

The U.S. government’s Overseas Private Investment Corporation is providing a US$25-million loan guarantee to Sierra Rutile for the restart and expansion of its mineral sands mine in southwestern Sierra Leone.

When phase one is completed, the project will generate approximately 110,000 tonnes of rutile and 20,000 tonnes of ilmenite annually.

Rutile and ilmenite are feedstocks for producing titanium-dioxide pigments, which are used in paint, paper and plastics.

Sierra Rutile operated the mine from 1979 to 1995 when it was shut down due to the war. The mine had tapped into the world’s largest deposit of rutile, and generated about 25% of the world’s natural rutile supply.