DIAMOND NEWS ROUNDUP — United Reef, Trans Hex group form

Junior diamond explorer United Reef (TSE) will issue a convertible debenture to South African diamond miner Trans Hex Group for up to $4 million.

The debenture is convertible at the rate of one common share for every 75 cents converted. The companies will negotiate the conversion period and rate of interest in a formal agreement. If the debenture is fully converted, Trans Hex would hold a 13.6% interest in United Reef.

Trans Hex has been in the dia- mond mining business since 1965 and is the second-largest producer of rough diamonds in South Africa, after De Beers. Trans Hex’s marketing arm sells its rough diamonds independently of the Central Selling Organization, through its offices in Cape Town and Antwerp. The Antwerp office also manges the sale of Trans Hex’s Swaziland operation, as well as third-party production from Zimbabwe and Namibia. Trans Hex had net operating income of about $30 million at the end of 1994. Trans Hex will design, fabricate and provide new plant components and heavy- earth-moving equipment to upgrade United Reef’s Bamingui-Bangoran diamond operation in the Central African Republic.

Trans Hex will also make available its employees to assist with the installation and commissioning of the expanded plant and to train United Reef’s employees in the operation and maintenance of the plant. United Reef anticipates the plant will be upgraded within the next 60 days. Recent efforts at the Bamingui property outlined gravel resources containing 451,321 carats.

Elsewhere Overseas

* Eleven of 12 holes drilled on South African Minerals’ (ASE) Molopo project in Botswana have intersected kimberlite pipes. Of these, four were known pipes which were previously drilled by Falconbridge (TSE). Five of the seven new pipes were identified from recent airborne geophysical surveys, while the remaining two were targets previously identified by Falconbridge. The reverse-circulation holes are averaging about 150 metres in length, which allows them to penetrate the weathered epiclastic crater sediments into fresh pyroclastic or intrusive facies kimberlite. A 50-to-100-kg sample from each kimberlite will be analyzed for diamonds.

Drilling to date has tested only a portion of the 74 high-priority targets outlined on the Molopo licence. These new targets are in addition to the 35 known kimberlites, seven of which are diamondiferous.

The company expects to drill at least another 18 holes on the Molopo project, which will be followed by 10 holes at the Lekgodu project, 20 at Kokong and 10 at Mabuasehube.

* Sentinel Resources (VSE) has arranged a private placement of 3.5 million units at 60 cents each. A unit consists of one share and one warrant. Proceeds of $2.1 million will be used to buy two diamond recovery plants for the company’s South African projects.

* In Botswana, drilling is under way on the Makgadikgadi license block of Botswana Diamondfields (VSE). The program is designed to test a minimum of six targets outlined from an aeromagnetic survey. The first three holes encountered a horizon of kimberlite indicator minerals within a covering of geologically recent lake sediments. Soil sampling is drawing to a close on the Mopipi licence area, and results will be used to outline additional targets for drilling. Activity on the 4,200-sq.-km Okwa area includes a regional airborne magnetic survey. Data are being compiled to aid in soil sampling.

Alberta

* Drill-testing of five geophysical magnetic anomalies for kimberlite potential will begin shortly on the 90,000-hectare Horseshoe permit in the Peace River area.

The program is a joint venture for Horseshoe Gold Mining (ASE) and Ridgeway Petroleum (VSE). The claims adjoin extensive land holdings of Monopros. * Stream sediment-sampling on the 440,000-hectare Hinton property continues to return dia-monds for Montello Resources (ASE).

Ten microdiamonds (in addition to three grains of gold) were recovered from a recent 6.6-kg sample. The property consists of land packages held by Troymin Resources (ASE) and New Claymore Resources (VSE). Montello is earning a 60% interest from the former and a half interest from the latter.