I recently began to question where CVI was going, especially...

I recently began to question where CVI was going, especially with the recent “Angolan Diamond Announcement”, whereby :-

1. Endiama (the national diamond company of Angola) … will guarantee for the first four years a minimum net income to Canzar of US$12.5 million per annum.
2. Endiama have confirmed that if any of the nominated kimberlites are not commercially viable, they will be replaced with other commercially viable kimberlites

I mean, while CVI waits for action on the main game of oil and gold and copper … out come the diamonds! ... Where does it stop! ... It’s like getting “6 steak knives” thrown into a deal … and wait for it … with a "4 year replacement value guarantee” !!! ..... please!

Anyway, I did a bit of “googling” and out came New Millenium Resources Ltd (NML), formerly listed on the LSE (AIM), with Head Office … of all places … Perth in WA.

Their last month’s Shareholder Update essentially details the rise and fall of a diamond venture in Angola …. A venture, which for all intents and purposes should have been a company maker, but turned into, well, you could almost say, a company breaker!!!

And it puts into context the recent “Diamond” announcement by CVI.

This article raises many, many questions, relating to :-

1.The constant mention of uncontrollable forces (read what you may into that)!
2.The continuous intervention and harassment of the locals ... and the actions of “big bully” ENDIAMA!
3.The fact that NO new foreign company has been able to mine diamonds since the end of the civil war … and 26 have tried since 2002!
4.The 3 kimberlite concessions offered to CVI … Q? Are they the ones that are currently “owned” by NML?
5.The absolute lack of any buying interest around London and Europe of NML’s Angolan diamond concessions, plant & equipment!

And yes, you guessed right … NML had plant & equipment and were actually mining the stuff!

I must admit, I admire Mark Smythe … he appears to be a classic deal-maker, a real doer and a real go-getter … but are these Angolans stringing him into an endless maze of long and winding roads that leads to nowhere but empty promises, down-payments, and a never ending stream of share-placements!

Maybe NML just got it completely wrong!
Maybe NML did not know how to control the “uncontrollable forces” in Angola!
But what about the other 26 foreign companies! … Did they also get it wrong?

The one concession I have with CVI is that :-

1.CVI ‘s main game is oil and gold and copper … maybe a different game is played in Angola with these resources compared to diamonds
2.CVI has interests in potential company making operations in Cameroon and other countries; thereby de-risking the Angolan factor

Anyway, read it straight form the NML Shareholder Update of 18 December 2007 in :-

http://www.new-millennium.com.au/co_news.php

Or below is an extract of the full announcement.

ANGOLA ALLUVIAL DIAMOND PROJECT
The Company’s acquisition of alluvial exploration concession C9 in Angola commenced with great promise in 2003. We were able to set up a camp and deliver substantial mining equipment to the site located at Lapi near Saurimo in north eastern Angola. We had good experienced staff and a well funded operation. Production commenced in April 2005.

From the moment we commenced production we experienced continuous intervention and harassment from various local parties culminating in an order from ENDIAMA to cease operations. In frustration the then CEO John Cross resigned in October 2005. Shane Healy, then CFO, was pressed into the role of acting CEO.

There have been approximately 26 foreign entities which have entered Angola since cessation of hostilities in 2002 with a view to mine alluvial diamonds. All have been unsuccessful. To date there is no diamond producer in Angola who was not there either prior to or during the civil war. All new entrants have either wound down operations or withdrawn from the country completely. A combination of uncontrollable forces has made it impossible to mine alluvial diamonds profitably in Angola.
The singular success in Angola has been Petra Diamonds. Petra entered Angola during the civil war and is therefore not a new entrant. It is worth mentioning however that Petra is producing no diamonds commercially out of Angola. Petra’s success has been a kimberlite (hard rock) diamond concession which it is exploring in joint venture with BHP.

KIMBERLITE DIAMOND DECISION
During 2004 the market became aware of the difference between alluvial and kimberlite diamonds. The market also became aware that none of the big 4 diamond producers have significant alluvial deposits. All are kimberlite. With the market’s lack of interest in alluvial diamond miners, the Company moved to secure an interest in a kimberlite concession.

Our first approach was to seek a license to explore the kimberlite which we knew existed on our C9 concession. C9 abuts the largest, and only, kimberlite diamond producer in Angola, Catoca. Catoca is Russian, owned by Alrosa, one of the big 4 diamond producers. Through uncontrollable forces, we were prohibited from exploring any of the kimberlite areas. Catoca had in fact entered our concession, with government authority, and carried out extensive drilling on C9 whilst we were exploring for alluvials.

After Catoca's drilling programme, pressure was put on us to abandon the concession. Access became difficult, deliveries went missing and our Angolan partners became impossibly demanding and obstructive. We made representations to the government and to our Angolan partners, without success. The writing was on the wall, we had to look elsewhere for a kimberlite interest.

KIMBERITE ACQUISITION
The Company acquired a 20% interest in three kimberlite concessions in March of 2006. The acquisition cost was high due to the de-listing of the Company’s shares from the AIM and the high demand for kimberlite concessions in Angola. We were not the only company which had knowledge of the kimberlite imperative.
Prior to acquisition, the board sought an independent geologist’s opinion as to the value of the Company’s 20% interest in the three concessions. Our geologists reported that our interest was valued at approximately US$20 million (£11m). The acquisition was achieved by the issue of almost 1 billion NML shares valued at £5m. We issued shares in a company (NML) which had no listing, no assets except past losses and US$2m worth of used plant and equipment in Angola.
Our interest in the three kimberlite concessions in Angola is a free carry. We have neither management control nor requirement to contribute proportionately to the project exploration costs. To date the Company still holds these assets; however the projects stand idle due to problems in Angola, not the least of which is lack of funding, which puts at risk these concessions.

DE-LISTING FROM AIM
The Company’s shares were delisted from AIM in March 2006 after the Nomad resigned unilaterally. The crux of the resignation issue, though unstated, has to do with the issue of stock to acquire the kimberlite assets. We believe we have grounds for legal action against the Nomad and broker.
We believe it is the shareholders’ desire that there be liquidity in the shares and that the shares be listed on a public market/exchange. We have sought another listing since that date, however the Company’s balance sheet (historic losses) has proven a difficult problem to overcome.
An alternative to listing is to be acquired by or a reverse takeover of a listed company. To achieve this, the company has to be attractive to a potential suitor. NML must have something that a suitor wants. After a year flogging the diamond assets around London and Europe it became clear that the market no longer had an interest in Angola. With this knowledge we proceeded to look for an acquisition which was not in Angola and not diamonds but still in mining.

TAKEOVER OF NML
Contemporaneously, we have been in discussions with a US registered corporation, to acquire New Millennium (NML) for a share swap. Based on the DRC copper assets, our diamond interests and our mining plant and equipment in Angola. The US entity was prepared to offer US$26m in stock for NML. This would return to shareholders approximately US$0.02 per share.

ASSETS
The Company has three material assets. A 20% indirect interest in three kimberlite diamond concessions in Angola; mining plant and equipment in Angola and shares in Hudson Resources of Canada. Your board has moved to liquidate all these assets. There has been no interest in the assets located in Angola. We have been successful in liquidating part of our holdings in Hudson Resources. These funds have been employed in audit accounting costs in the compilation of the statutory reports and sundry creditors.