THE DIAMOND PAGE — Early startup planned at Tongo Fields project

Near-surface diamond production at the Tongo Fields project in Sierra Leone will enable Rex Diamond (RXD-T) to fund development of an underground mine at the site.

Rex will soon be producing diamonds from high-grade, narrow kimberlite fissures near the Tongo River. While the overlying alluvial diamondiferous gravels have been extensively mined, the fissures have been worked only to a depth of a few metres. Data accumulated by National Diamond Mining, the previous operator, indicate diluted mining grades of 0.8 carat per tonne on the Lando fissure and 0.42 carat on the Kundu fissure.

Rex will take a multi-phase approach to establishing an underground mine on the Lando and Kundu fissures, whose strike lengths stretch over 6,300 metres and 1,800 metres, respectively. Rex hopes to generate immediate cash flow from near-surface resources while, at the same time, gathering geotechnical information in preparation for underground mining.

In the first phase, Rex will use open-pit methods to expose the fissures down through weathered granite to competent country rock. The rock is expected to be intersected between 25 and 30 metres below surface. This phase should recover 240,000 carats, worth an estimated US$42 million.

The second phase will consist of near-surface underground mining, which will enable operators to gain access to the kimberlite through steep ramps to a depth of 65 metres from surface. This phase will run concurrently with surface mining and should yield another 300,000 carats, worth an estimated US$52.5 million.

Simultaneous with those programs, Rex will initiate deep drilling to confirm the continuity of the kimberlite fissures along strike and at depth.

Development plans for the underground mine will be based on those results, with startup projected for 1999.

Prince Harding, Sierra Leone’s minister of mineral resources, believes the project augurs well for the country’s mining sector. “The opening of the Tongo Fields underground mine represents an important milestone in the mining history of our country,” he says. “Plans for continuing investments by Rex in Sierra Leone at its various diamond concessions bode well for the overall strategy of the reconstruction of our resource industry.”

To fund further work, Rex and several brokerage firms will market a special warrant issue worth US$35 million. Terms of the financing, including prices, have yet to be announced, though the issue is expected to be marketed in North America and Europe over the next two months.

Rex operates three gem-quality fissure diamond mines in South Africa — the Ardo and Bellsbank — which have been operating for more than 40 years. They currently produce at a depth of 500 metres, with production costs estimated at US$25 per tonne. In addition, it operates sorting and marketing facilities in Antwerp, Belgium, and has numerous advanced exploration properties in South Africa and Sierra Leone.