Historically, the alluvial mining operations on the Aredor concession in Guinea, West Africa, have yielded large 100-carat-plus stones at the rate of one per year, and fiscal 1999 was no different: Vancouver-based
The Aredor concession comprises 1,012 sq. km, including the drainages and tributaries of the Baoule River, 725 km east of the capital city of Conakry. It is accessible by road or air.
Trivalence owns an 85% interest in the concession, with the Guinean government holding the remainder.
For the fiscal year ended June 30, 1999, Trivalence recovered 25,270 carats of rough diamonds from the combined treatment of 675,327 tonnes of alluvial material, as well as tailings from previous operations. This represents a 43% increase over the 17,424 carats recovered in the previous year. In 1999, the company sold 21,280 carats, including the 146-carat stone, at six sights for a total of US$8.1 million, or an average of US$379.52 per carat. This compares with sales of 18,012 carats at an average of US$655.50 per carat for US$11.8 million in fiscal 1998. Included in these figures was the sale of a 70.1-carat diamond for US$2.7 million.
Sales in 1999 were affected by a decline in the world market price for rough diamonds (reported in the fall of 1998), and by an increase in the production of industrial-grade stones.
Production costs for the year ended June 30, 1999, were US$213.80 per carat, compared with US$328.85 per carat over the nine months ended June 30, 1998. The production costs include monthly equipment rent payments of US$30,000 to the Guinean government (a 10% mining tax is not included).
Trivalence reported a loss of $1.7 million (or 11 per share) for fiscal 1999, versus a net income of $2 million (13 per share) in 1998.
Trivalence uses three 4600 series Manitowoc draglines to mine primarily alluvial flat deposits. The ore is fed through a commercial 14-ft. pan plant and a dual 8-ft. prospecting pan plant. In addition, a third 14-ft. plant is used to treat existing tailings.
In February 1999, the twin 8-ft. plant was taken out of commission and re-tooled to double its processing capacity to 60 tonnes per hour. The plant was re-commissioned in August. The Aredor mine is now reported to have a total processing capacity of about 110,000 tonnes per month.
Last May, an existing sortex plant was brought back into production to treat oversize material (greater than 25 mm and less than 65 mm) that is too large for processing by the pan plants. The sortex plant “fluoresces” the diamonds as they pass on a conveyor belt and automatically rejects the stones into a locked steel box using a jet of compressed air. A sortex machine is also used on the 14-ft. commercial plant.
For the six months ended Dec. 31, 1999, Trivalence processed 353,410 tonnes of alluvial material to recover 17,940 carats of diamonds. In total, 12,589 carats were sold for US$4.6 million — an average of US$366 per carat. The company completed its first 2000 sale on Jan 24, selling 4,722.6 carats for US$1.7 million, equivalent to US$359 per carat. During the corresponding 6-month period of 1998, 10,487 carats were recovered from 326,403 tonnes of processed material.
Trivalence reported net income of $74,342 (or nil per share) for the 3-month period ended Sept. 30, 1999, compared with a loss of $1.6 million (11 per share) in the year-ago quarter. Cash flow from operations was about $1 million for the quarter ended Sept. 30, 1999, versus a negative cash flow of $1.5 million a year ago.
Trivalence acquired its interest in the Aredor concession in 1996 by acquiring all the shares of First City Mining, a privately owned Alberta company. First City had negotiated terms with the Guinean government to put the property back into production.
In 1934, he French company Soquinex began producing diamonds in the Aredor region, and continued, in conjunction with another company, Beyla, until 1960. The Guinean government then formed the national company EGED to exploit the diamonds in the Soquinex and Beyla concession, but this operation proved to be short-lived. The Russians followed, and reopened the Soquinex plant, which ran until 1973.
In 1981, the Aredor concession was taken over by Aredor Guinea, a 50-50 joint venture between the Guinean government and a group of Australian companies. Aredor Guinea spent US$56 million constructing a stationary heavy media cyclone diamond recovery plant, airstrip, and associated office and housing facilities. The original prospecting program on the Aredor concession had outlined an alluvial reserve of almost 2.1 million carats contained in 6.5 million cubic metres of gravel.
From 1983 to March 1994, Aredor Guinea recovered a total of 1.3 million carats, which commanded an average price of US$301 per carat. Production included nine large, high-quality diamonds, which sold for US$37.8 million. The three largest stones weighed 284.96, 255.61 and 181.77 carats, and returned US$26.7 million.
The Aredor mine closed in 1994, owing to rising infrastructure costs, higher operating costs and decreasing revenue. Illegal mining had also become a problem. In an effort to combat the illicit practice, 200 sq. km on the perimeter of the concession were relinquished and made accessible to local miners.
There remained 481,000 carats in economic reserves when the mine closed. Trivalence re-evaluated the reserves based on using mobile recovery pan plants to exploit areas that were previously beyond the economic limits of the Aredor Guinea’s central plant. Trivalence has outlined a measured resource of 8.4 million tonnes grading 0.05 carat per tonne, equivalent to 438,000 carats at an average value of US$332 per carat. An additional 852,000 carats are contained in an indicated resource of 10.7 million tonnes averaging 0.08 carat per tonne at US$153 per carat.
When Trivalence acquired the Aredor concession, 11 kimberlite pipes and numerous kimberlite dykes and fissures had been identified. All are known to be diamondiferous, albeit uneconomic. In May 1997, the company hired Ottawa-based Sanders Geophysics to fly an aeromagnetic 13,162-line-km survey over the entire property. The survey defined 55 targets for ground follow-up.
K7 pipe
In February 1998, Trivalence drill-tested K7, the largest of the known kimberlite pipes. K7 has a surface area measuring 9.5 ha. Microdiamond analysis performed by Saskatchewan Research Council Laboratories yielded 159 microdiamonds from 78 kg of percussion drill sample. A further 4.9 tonnes of material returned only 15 macros (a macro, here, is defined as equal to, or exceeding, 0.8 mm in at least one dimension.)
Later, in the fall of 1998, Trivalence discovered a new kimberlite, dubbed K21. Crews collected approximately 3 tonnes of in situ kimberlite from several pits across the body. The material was hand-jigged to recover indicator minerals, along with seven diamonds weighing a total of 3.54 carats. The largest stone weighed 2 carats.
A 4,192-tonne bulk sample was collected from K21 and processed on-site in one of the pan plants. The company recovered 113 stones, including a 6.96-carat gem-quality diamond, and another weighing 5.79 carats. However, a follow-up 13-hole delineation drill program indicated that K21 is a small and uneconomic lens.
Trivalence announced another new kimberlite discovery in June 1999: the company pulled 77 metres of kimberlite from the K23 showing, 1 km west of K21, before the hole was stopped in kimberlite as a result of recovery problems. Micro analysis by Lakefield Research on 98.17 kg of percussion drill cuttings from the discovery hole revealed 11 macros and 164 micros (a macro, in this case, exceeds 0.5 mm in at least one dimension.)
Trivalence has since tested the K23 body with a total of 46 percussion drill holes, three-quarters of which intersected kimberlite. The K23 kimberlite extends over a distance of 309 metres in a northwest-southeasterly direction and 120 metres in a northeast-southwesterly direction. The body has an approximate surface area of 4.2 ha and remains open to the west and at depth. A further 89 macros and 603 micros have been recovered from an additional 288.4 kg of drill material collected from three other drill holes.
Stepout drilling on the western boundary of K23 is ongoing and will be followed by the taking a 10,000-tonne surface bulk-sample.
Palmietagat
Elsewhere in Africa, Trivalence holds a half-interest in the Palmietagat diamond project in South Africa, 70 km north of Pretoria. The company acquired the interest in the 20.8-sq.-km property last year for combined acquisition and mine development costs of US$1.7 million. The property hosts four kimberlite pipes and two kimberlite dykes. Previous work by De Beers Consolidated Mines identified a resource of 3.5 million tonnes averaging a grade of 0.44 carat per 100 tonnes to a depth of 110 metres. Trivalence will carry out test-mining at Palmietgat in an attempt to determine the value of the diamonds. The company has an option to buy the remaining half of the project.
Trivalence also holds four prospecting licences comprising 3,764 sq. km in the Kgalagadi district of Botswana. The land package hosts 18 known kimberlites, seven of which have proved to be diamondiferous. MPH Consulting has been contracted to conduct the initial exploration.
Trivalence has 15.3 million shares outstanding, or 22.3 million fully diluted. Working capital at Sept. 30, 1999, was $5 million; consolidated long-term debt, $8.7 million.
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