Partners to accelerate Tirisano (May 24, 2004)

Partners Etruscan Resources (EET-T) and Mountain Lake Resources (MOA-V) have lined up a black empowerment company to help develop the Tirisano diamond mine in South Africa.

Mvelaphanda Exploration has agreed to fund an $8.2-million expansion of the processing plant on the Nooitgedacht 131 IP property, near Ventersdorp, to a capacity of 300 tonnes per hour. Mvelaphanda is also responsible for running the plant at a utilization rate of at least 72% for 30 days. In addition, the empowerment company must fund all working capital requirements at the mine during the option period.

Mvelaphanda has until July 31, 2005, to meet the requirements and earn a half-interest in Nooitgedacht.

Once the expanded plant is up and running, Mvelaphanda can earn a half-stake in two adjacent properties (Hartbeestlaagte 146 IP and Zwartrand 145 IP) by building a second, 600-tonne-per-hour processing plant for the nearby Blue Gum diamond deposit, 3 km south of Tirisano.

Mvelaphanda must also complete bulk sampling and feasibility study, including a valuation of the two properties. The company must spend an amount equal to half of each property’s valuation in order to take its half-interest. Based on current figures, Mvelaphanda’s expenditures would come to $38 million, including plant construction costs.

Thereafter, Mvelaphanda will set up a 50-50 joint venture with Etruscan Diamonds. Etruscan Diamonds is owned 51% by Etruscan Resources and 25% by Mountain Lake, with the remainder held by several private investors, including officers and directors of Etruscan. Mvelaphanda Exploration is split between South Africa’s Trans Hex Group and Mvelaphanda Resources.

Trans Hex will act as operator of the joint venture that will be managed by a committee consisting of an equal number of representatives from Etruscan Diamonds and Mvelaphanda Exploration.

Etruscan says the deal will allow it to focus its efforts on acquiring and developing other properties in the Ventersdorp district, where it holds 31 properties. The company recently identified several large targets via an airborne gravity survey designed to trace gravel runs over the entire 5,000-sq.-km district.

The agreement still requires board and regulatory approvals.

Late last year, an independent resource update at Tirisano pegged the deposit’s in situ indicated resource at 12.3 million cubic metres averaging 2.8 carats per 100 cubic metres, representing an 18% increase in volume from the previous estimate (T.N.M., Sept. 1-7/03).

The Empowerment Charter includes goals of 15% ownership by disadvantaged groups in mining ventures within five years and 26% ownership within 10 years.