re: are the diamonds commercially viable Listing: London AIM /...

re: are the diamonds commercially viable Listing: London AIM / ASX

Using
a 20 ton excavator 10m trenches have been dug with
sand being screened at Reefton’s nearby DMS plant.
Results so far have recovered 216 diamonds including
yellow diamonds at grades of 15.22 carats (worth
US$280 each). In order to improve processing
efficiency, additional industrial vacuums were
purchased. Rapid progress has been made towards
completing a study of the commercial viability of a 1m
ton per annum operation to process coastal sands and
gravel for diamond extraction.
Reefton acquired a further 90km length of the
Skeleton Coast (80% stake) taking its licence area to
310km. Diamond bearing rivers, the Kumene and
Angra-Fria drain onto Namibia’s Skeleton Coast. The
area is remote but accessible from air and road.
Reefton has full permits in place for commercial
production.
Reefton can differentiate itself from other junior
miners. It is simply processing surface sand and
gravel deposits, no expensive deep drilling, very
limited use of large plant & equipment. Potentially it
is only 18 months away from production. A total
capital requirement of £4.5m to get to commercial
production is very cheap. Once operating Reefton can
rely on very low labour costs (30%-40%) of Western
and a tax efficient environment (10% gross royalty on
sales). After moves towards local ownership in SA,
Namibia is the most favourable mining destination in
Southern Africa.
The trench bulk sampling underway is showing very
positive results with the October quarterly showing
216 diamonds with 50.4 carats. The processing
capabilities are limited to 10 tons per hr averaging 15
carats (US$280 per carat) per 100 tons. The hurdle to
resource definition is a 3-5m ton delineated deposit;
capable of supporting a 1m ton pa processing
operation. Revenue generation of US$25m-US$30m
could be achievable from at current diamond
recovery rates. At the current £5m valuation adding
back the likely £4.5m required spend the enterprise
could offer good returns for shareholders and attract
larger foreign partners.

GOOD LUCK ALL