THE DIAMOND PAGE — United Reef to continue work on African

Following the completion of a $1.8-million rights offering, United Reef (TSE) plans to resume work on its Bamingui-Bangoran diamond project in the Central African Republic.

The funds will be used to continue exploring the 4,000-sq.-km property and upgrade the existing processing plant.

“We hope to increase the throughput of the pilot plant to 300 cubic metres per day,” Ken Johnson, vice-president of exploration, told The Northern Miner. He said pilot testing will resume in February and the operation is expected to recover 16,000 carats by year-end.

Last year, exploration was focused on a 9-sq.-km portion along the Bamingui River. The study consisted of systematic sampling of gravels which lie in a “ribbon” along the flanks of the river.

During this 4-month program, 223 cubic metres (400 tonnes) of gravel were processed, yielding 121 diamonds with a combined weight of 45.64 carats. About 88% of the stones were gem-quality, the average value being US$182 per carat.

Based on limited sampling, geologically inferred gravel resources in the area of the Bamingui River are estimated at 297,015 bank cubic metres at a calculated grade of 0.27 carats per cubic metre.

Five other areas have been targeted for exploration in 1994 and preliminary results indicate these locales are geologically similar to the Bamingui River area.

Under the offering, rights were issued on Jan. 7 to all shareholders on record. Six rights plus 50 cents entitle the holder to buy one unit of the company, each unit consisting of one common share and half a warrant. A warrant allows the holder to buy one additional United Reef share for 80 cents on or before June 30, 1994, and thereafter (until Dec. 31, 1994) for $1. If all the warrants are exercised, an additional $1.5 million will be raised.

United Reef has negotiated a standby commitment with investment firm T. Hoare & Co. of London, England, whereby it will guarantee the purchase of any unsubscribed securities under the offering.

The company believes the results from both the pilot plant test and the exploration programs will justify a study to determine the feasibility of installing a heavy media plant capable of processing 100,000-300,000 cubic metres of gravel per year. The capital cost for a heavy media processing plant is estimated at $3 million. Economic forecasts by United Reef, based on initial test results and a processing rate of 200,000 cubic metres, project net annual revenues of $7.7 million per year.