Understandably preoccupied with the Voisey’s Bay nickel discovery during the mid-1990s,
At the time of its launch in 1993, DFI’s predecessor company, Diamond Fields Resources, was a fledgling venture created by promoters Jean-Raymond Boulle and Robert Friedland chiefly as a vehicle for diamond ventures.
The junior’s marine-diamond assets in Namibia sparked the interest of
BHP and Benguela had been actively sampling up and down Africa’s Atlantic coast, and their marine-diamond exploration program was, at the time, the most ambitious ever carried out on the African coast outside of the
The best results from the BHP-led program came from Diamond Fields’ Luderitz offshore concession in Namibia. However, the diamond grades were still judged to be too low for BHP and Benguela to continue exploring. Eventually, the property reverted to being wholly owned by Diamond Fields.
However, in late 1993, even before the exploration program got under way at Luderitz, two prospectors funded by Diamond Fields, Albert Chislett and Chris Verbiski, had discovered a rich nickel showing at Voisey’s Bay in Labrador.
The prospectors’ work only slowly attracted the interest of Diamond Fields’ management, so that it was not until late 1994 that the spectacular drill results first came from the rich Ovoid deposit.
“Then things took off and the diamond assets just got lost under the Voisey’s Bay shuffle,” says Diamond Fields President Daniel Johnson.
The next chapter of the Voisey’s Bay story is now part of mining lore: a wild bidding war masterfully orchestrated by Friedland culminated in
The junior’s diamond assets remained out of the deal and were transferred at a book value of $11 million into a newly incorporated private company named Diamond Fields International.
“The [Luderitz] property didn’t go anywhere, and the company sat, I’ll be the first to tell you, neglected for at least a couple of years,” says Johnson, who joined the company as president in late 1997 after leaving his position as project manager for BHP Diamonds.
Diamond Fields spent most of 1998 bulking up its board of directors, hiring staff, preparing for a new round of sampling on the Namibian concessions and laying the groundwork for a public listing, achieved in January 1999.
During that time, Diamond Fields also pocketed US$350,000 by disposing of two diamond mines, Loxton Dal and Frank Smith, both of which are in the Kimberley district of South Africa.
During Diamond Fields’ extended absence from Namibia, two new juniors —
While the two juniors had once been spurred on by the pioneering work carried out by the BHP-Diamond Fields-Benguela partnership in 1994, the situation has reversed and Diamond Fields can now point to Namco and ODM’s current production success as justification for further development of its own Luderitz concession.
“You’ll find that Namco’s resources, the vast majority of where they’re mining, is a single feature that goes from the Diamond Fields property on to the Namco property, which we call the Marshall Fork and they [Namco and ODM] call the Koichab feature [or features 19 and 20],” says Johnson. “They started virtually on the boundary line and are mining away from it.”
The Marshall Fork is an sunken river or stream channel. Sediment cover in the channel increases from 1 to 4 metres downstream in a southerly direction, so that, as work progresses southward, more mining is required to reach the 1-metre-thick diamond-bearing gravels at the bedrock surface.
Diamond Fields’ current exploration program at its Luderitz concession has been divided into three phases:
- Phase 1 — The first phase was conducted under contract by De Beers Marine and completed in November 1998 using De Beers’s sampling and mining vessel, Coral Sea. The work was limited to a portion of the Marshall Fork feature, where 67 sample sites were tested, recovering 4,450 carats that were sold in Antwerp, Belgium, for an average of US$164 per carat. The average diamond grade was 1.3 carats per sq. metre — a five-fold increase over the previously estimated grade for the entire feature.
Johnson says the grade difference between the BHP-led work and the phase 1 work is primarily due to the different sampling tools used. BHP and Benguela had used a modified civil-engineering tool called the Bauer tool (developed by Germany’s Bauer company) that was designed to work in all kinds of conditions from thick sediments to exposed rock.
“It’s fair to say it worked in all the conditions it was supposed to, but to a large extent, it just didn’t work very well,” says Johnson. “It was more of an indication that diamonds were there than a quantitative assessment.”
In contrast, the phase 1 work was carried out with the more-reliable Wirth tool, currently used by both Namdeb and Namco.
However, Johnson concedes that while the Wirth tool is an improvement, it is still not the optimum tool, as it was designed for conditions typically seen on Namdeb’s concessions: deeper water with thin-layered sediments and diamond-bearing gravels overlying clay. In contrast, Diamond Fields’ and Namco’s concessions are shallower, much more rugged and less able to be cleanly cut by the Wirth tool.
Following the completion of the phase 1 work, De Beers modified the Coral Sea so that it can now operate in waters as shallow as 40 metres, compared with the 65-metre minimum depth achieved during phase 1.
- Phase 2 — The second phase of sampling, completed in August using the retrofitted Coral Sea, involved surveying the balance of the 1.3-million-sq.-metre Marshall Fork feature, conducting further test mining, and sampling another portion of the Luderitz concession, named Diaz Point, which is adjacent to an area mined by ODM.
A total of 6,604 carats was recovered during phase 2, and the stone size averaged 0.32 carat. A portion of the diamonds is due to be sold in the coming months.
Diamond Fields has collected sufficient samples so that an upgraded resource estimate for the Marshall Fork feature can be included in a feasibility study due in the first quarter of 2000. The study will examine the mining of the Marshall Fork feature at a rate of hundreds of thousands of carats per year, beginning as early as two years from now.
- Phase 3 — Independently of the feasibility study, Diamond Fields has embarked on phase 3 of its exploration program. This phase, which makes use of De Beers Marine’ sampling vessel, the Douglas Bay, and the major’s specialized Megadrill technology, is primarily a reconnaissance sampling of two features: Gallovidia Reef, in the northern portion of the concession; and the perched Boat Bay gravels, in a large open bay. Some areas from phase 1 or 2 will also be resampled to allow for a comparison of sampling tool performance.
The phase 2 and 3 programs will cost about $7 million, less any diamond recoveries, which could be about $2 million.
Asked if there could be a joint venture formed or an outright sale of the concessions or the company, Johnson responds: “We haven’t ruled out any way to proceed, but it’s definitely going to make a mine. Right now, our base case is that we develop a ship and a tool and go into operation. It will be a highly robust economic operation and something we think can be readily financed.”
Diamond Fields is debt-free and has roughly $9 million in cash. Some $
6 million flowed into the company coffers in April, when Boulle acquired and then exercised 10 million warrants priced at US40 cents apiece. The sellers were three institutional shareholders which included New York-based Elliott Associates and San Francisco-based Snyder Capital.
The acquisition turned Boulle into Diamond Fields’ largest shareholder with 27%, and collectively, Boulle, Elliott and Snyder now hold 50-60% of Diamond Fields’ outstanding shares.
For his part, Friedland continues to own more than 4 million Diamond Fields shares, or a further 8% of the company.
Diamond Fields generates a small amount of diamond production from its shallow near-shore Namibian concessions by contracting out work on a commission basis to local divers who use simple screens and hoses for recovery.
The company has refurbished a small-scale diamond recovery plant in the town of Luderitz, though the plant has been closed through the winter season.
In the past 12 months, Diamond Fields has recovered about 1,000 carats from the contractors. Comments Johnson: “It never will be a real economic operation, obviously, at those rates. However, locally, it makes fantastic sense for us to carry on with it because it’s a small business opportunity: you get a boat and a dream, you hire up a couple of divers and you go out there. It’s feast or famine.”
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