DiamondWorks to return to Koidu

With pro-government forces now in control of the area surrounding the Koidu diamond concession in eastern Sierra Leone, DiamondWorks (DMW-T) is planning its return.

At an annual meeting held recently in Toronto, DiamondWorks president Bruce Walsham said that in early June the company will be sending a team of specialists to Koidu to determine the extent of the damage inflicted during the country’s civil war and to devise a plan for the resumption of operations.

Walsham had recently returned from a trip to the capital, Freetown, to meet with President Ahmed Tejan Kabbah, who was returned to power in early March with the help of a Nigerian-led coalition of West African troops.

“Kabbah gave me a great big welcome, simply because I was the first businessman to come back to Sierra Leone,” said Walsham. “He made it quite clear that they wanted a different style of company to work in Sierra Leone, and said he knew that we had supported the local people through thick and thin.”

Last summer, Kabbah was forced into exile after a military junta executed a coup d’tat. At the time, DiamondWorks was in the process of collecting a 20,000-tonne bulk sample from the Koidu mine’s two kimberlite pipes as part of a feasibility study. The company ceased mining operations at Koidu but maintained a security force, including two of its own people, to protect about US$10 million worth of equipment. However, the company was forced to withdraw the group in February, since which time some earth-moving equipment has been damaged and the mine workings have flooded.

The two pipes at Koidu are estimated to hold proven and probable reserves of 7.58 million tonnes grading 0.35 carat per tonne, for 2.67 million contained carats. A further 5.34 million tonnes at a slightly higher grade lie in the inferred category.

The pipes’ diamonds have been valued at about US$200 per carat.

Meanwhile, at Yetwene in Angola, DiamondWorks is on the verge of putting its second alluvial diamond mine into production. When the project hits full stride, Yetwene is expected to produce about 8,500 carats per month.

At the company’s producing Luo mine, situated 100 km south of Yetwene, several gem-quality diamonds exceeding 30 carats have been recovered, and production is ongoing at a rate of 6,000 carats per month. A 16,700-carat parcel of Luo diamonds recovered between Feb. 9 and April 25 has been sent to Antwerp, Belgium for sale. Past sales of Luo diamonds have averaged about US$230 to US$240 per carat.

Walsham also reported that DiamondWorks has recently drilled the Camatchia and Camagico kimberlite pipes — the two largest of the five Luo pipes — and that results are expected shortly.

He said that the company’s Luarica and GT diamond project areas, situated east of Yetwene, are being evaluated by DiamondWorks personnel now that the area has recently come into the hands of friendly forces.

In other news, DiamondWorks has acquired an option to buy 100% of the past-producing Monastery diamond mine in South Africa’s Orange Free State.

For the year ended Nov. 30, 1997, DiamondWorks posted a net loss of US$15.8 million (or 23 cents per share) on revenue of US$5.4 million. This compares with a net loss of US$11.8 million (46 cents per share) on negligible revenue during the previous fiscal year.