EXPLORING FOR DIAMONDS AND THE NORTH — Potential African

When you think of diamond mining, South Africa comes immediately to mind, followed closely, perhaps, by a trio of other major southern Africa producer nations: Angola, Botswana and Namibia.

Further north on the African continent, Canadian junior exploration companies are testing the potential for diamond mining. The Central African Republic (CAR), Zaire, Ghana, Zimbabwe and Tanzania all have active diamond exploration areas.

Canadian juniors have also been attracted to South Africa, both inland and along the coast, and to Namibia.

Making a flashy entrance last year into the CAR was United Reef Petroleums (TSE), which acquired an option on an 80% interest in about 500 sq. km in the eastern part of the land-locked nation. The project encompasses the convergence of the Bamingui and Bangoran rivers and their tributaries. Currently processing placer diamond deposits in the area are local artisanal miners; Reef says it has the right to buy all the diamonds recovered by these miners on its property.

Sampling and process testing are under way, which the company hopes will lead to full production in 1994. A plant capable of processing at least 100,000 cubic metres of diamondiferous gravel per annum is envisaged. A capital cost of $6 million is estimated, to bring the project into production. A pair of juniors, Morgain Minerals (VSE) and Orcana Resources (VSE), has been negotiating with Reef for option agreements covering separate CAR concessions.

In the same part of the country, Sikaman Gold Resources (TSE) has acquired a 500-sq.-km diamond concession which it plans to develop jointly with Sherwood (NASDAQ). Also working on an option agreement in the area is Noront Resources (VSE).

In Zaire, which is a large industrial diamond producer and a major producer of high-quality diamonds, junior Wye Resources (CDN) has acquired a 50% interest in four concessions near the Angolan border. The area is known for its diamond placer mining.

The junior, which appointed a new president this summer, has established a 3-phase program to explore and mine the beds of the Kansadisadi River and its tributaries.

Earlier this year in Ghana, Nora Exploration (ME) applied for a 41.6-sq.-km gold and diamond concession (an alluvial placer deposit) northwest of the capital city, Accra. (It was also negotiating to acquire the majority interest in an alluvial gold concession.) Ghana’s history of commercial mining (gold and diamonds) extends back 120 years.

Active in Zimbabwe is Redaurum Red Lake Mines (TSE), which has closed an agreement to acquire an Australian company which owns half of the River Ranch mine (in production since early 1992). A new heavy media separation plant, capable of boosting output to 130,000 carats per year, is planned. Redaurum continues to explore its three Exclusive Prospecting Order (EPO) areas: River Ranch (the area surrounding the mine), Naunetsi and Chikomba. The company has received government approval for a fourth EPO, Mazowe. In southwestern Zimbabwe, near the border with Botswana, Southern Arizona Mining & Smelting (CDN) has negotiated an option deal with a private Ontario company, allowing the latter to earn a 45% interest in Southern Arizona’s Mangwe East project by funding exploration.

In Tanzania, Tan Range Exploration (ASE) has not only acquired diamond concessions but has plans to develop gold and heavy mineral sands deposits. Earlier this year the junior shipped diamond-washing equipment in preparation for grade evaluation at its concessions in northern Tanzania. Also in Tanzania, Pure Gold Resources (TSE) and Dual Resources (VSE) have acquired an option to earn a 40% interest in a pair of mining leases and three exploration licences from Tanzania Diamond Mines. A subsidiary of Tanzania will manage the project. (Tanzania has one operating diamond mine, the Williamson.)

New on the diamond scene this year is Diamond Fields Resources (VSE), which has connections to promoter Robert Friedland. The junior has turned its attention to Namibia, where it is eyeing the mining of ocean-bed diamond concessions off the Atlantic coast.

A Canadian junior with an interest in a South African company which is mining offshore concessions for diamonds along the continent’s southwestern shoreline is Menora Resources (ME). Toronto-based Menora recently boosted its interest in Ocean Diamond Mining Holdings to about 30%. Ocean Diamond uses a ship and special equipment to “vacuum” the sea floor.

Canadian Overseas Exploration (VSE) reported to its shareholders this summer that it is actively seeking funding to continue its participation in an offshore mining venture with Benguela Concessions, off the west coast of Namibia.

“The contiguous coasts of South Africa and Namibia host the world’s largest resource of alluvial diamonds,” wrote President James Stephenson. “These diamonds are sorted by natural agents and are consistent not only in quality, but in sizes.

“Over 90 million carats of diamonds have been recovered from this area. Most of the past production has come from onshore beach deposits, but it is now recognized that the future potential lies in the drowned beaches lying offshore.”

In South Africa, juniors SouthernEra Resources (TSE), Stow Resources (VSE) and Dryden Resource (VSE), along with Beckleigh Investments, have set up a diamond recovery plant and performed bulk-sampling at the Leicester kimberlite project, near Kimberley.

Reporting the acquisition this spring of an option to earn a 50% interest in a diamond project west of Johannesburg was Great Lakes Minerals (TSE). Also, North American Rare Metals (ME) has applied for a concession in South Africa.