diamond mining begins announcement

AGREEMENT SIGNED FOR IMMEDIATE DIAMOND MINING OPERATIONS – OFFSHORE NAMIBIA
Bonaparte Diamond Mines NL (“Bonaparte”) (ASX code: BON) has commenced the production of diamonds from its offshore Namibian lease areas after signing a mining agreement with Diamond Fields International Ltd (“DFI”).
DFI’s mining vessel "MV DF Discoverer" initiated mining operations in the Joint Operations area in the Diaz Prospect 1 (DP1) in ML111 off Luderitz, where Bonaparte has located an Indicated Resource of 63,000 carats (JORC compliant).
This Indicated Resource occurs within 7 discrete zones in DP1 at an average grade of 0.2 ct/m2 although Bonaparte’s independent consultant anticipates that grades achieved during mining could be up to 30% higher.
The diamondiferous gravels generally lie at shallow depths within average sediment thickness ranging from 0.5m to 2.5m allowing diamond production rates to be higher and costs lower than in other offshore diamond mining areas.
Project operator, DFI and Bonaparte have been negotiating a mining agreement for several weeks but DFI wished to move its mining vessel into the DP1 area immediately to enable it to take advantage of the high diamond grades identified during Bonaparte’s 2006 sampling programme.
DFI’s vessel is being supplied to the Joint Operations on the basis of DFI's cost of operation and Bonaparte does not have any capital expenditure obligations to move to the next stage of the diamond mining operation.
Mining operations will initially be conducted under the terms of a short form agreement which will be replaced by a more comprehensive agreement when completed.
In summary, as DFI have elected to operate, the Joint Operations will be conducted on a 70/30 basis which gives Bonaparte the right to 30% of the proceeds from the sale of any diamonds recovered during the operations in return for an obligation to pay 30% of the operating costs. The mining shall be undertaken under an agreed Mining Plan and detailed daily schedule of agreed operational costs. Until the full agreement is signed Bonaparte’s obligation to pay for its share of total costs is limited to AUD$350,000. The full agreement is expected to be completed within the next few weeks and will provide for other normal commercial terms governing mining operations.