An Evaluation of the Muirton Diamond Project

AN EVALUATION OF THE MUIRTON DIAMOND PROJECT HERBERT DISTRICT, NORTHERN CAPE PROVINCE

By R.Cooke BSc.Hons. Pr.Sci.Nat.

Robert Cooke Mineral Consultants

Consulting Geologists

Table of Contents

1. INTRODUCTION

1. GEOLOGY

1. EXPLORATION RESULTS
   
2. Geophysical Survey
3. Drilling and Pitting
4. Estimated Size of Deposits

1. RESULTS OF TRIAL MINING

1. CONCLUSIONS AND RECOMMENDATIONS

1. INTRODUCTION

This report covers an evaluation of the diamond potential of the Muirton Project, situated on the farm Muirton which lies on the west bank of the Vaal River between Schmidtsdrift and Delportshoop, Northern Cape Province. The study was requested by Mr Carlos Aranjo of Regal Royal Developments (Pty) Limited and is based on a review of all prospecting and mining data and two site visits on 28 May and 29 September 1998.

1. GEOLOGY

Alluvial diamonds are found in gravel deposits associated with the ancient Vaal River drainage system. The gravels in this general area have been deposited on bedrock comprising andesitic lava of the Allanridge Formation (age about 2 600 million years), sedimentary beds comprising quartzite, dolomite, limestone and shale of the Black Reef and Schmidtsdrift Formations (age about 2 300 to 2 500 million years) and shales and tillite of the Dwyka Formation (age about 350 million years). In the Muirton area the bedrock consists mainly of shales of the Dwyka Formation.

Valleys coinciding with the present Vaal and Orange Rivers were formed by glaciers during Pre-Karoo times. Alluvial diamonds were subsequently deposited along these valleys during the Quaternary Period (age about 1 million years) when diamonds, eroded from kimberlite pipes and fissures, were transported by the ancient Vaal River drainage system.

At Muirton alluvial diamonds are associated with:

1. A palaeo channel (Deep Structure) formed in an ancient river channel. Exceptionally high-grade gravels are usually found in the deeper sections of such channels.

1. Terrace Deposits occurring on the flanks of ancient or recent river valleys. These are formed when the river finds a temporary base level. The thickness of the gravel varies widely from a single layer of pebbles to deposits filling major irregularities in the floor. The gravels consist mainly or large boulders or lava (Allanridge Formation) quartzite, and dolerite in a fine matrix of small pebbles and sand. Most or the gravels have been calcretized to varying degrees and clay is present in places.

1. Channel deposits in the present Vaal River which has a total length of 2 km on the Muirton property. Gravels are generally round in the deeper parts of the river and may be very rich locally. Areas of enrichment are usually associated with alluvial traps such as bedrock irregularities, rock bars, plunge pools and the presence or large boulders. These unstratified gravel deposits consist of well-rounded, compact boulders and pebbles of Ventersdorp (Allanridge Formation) lava, quartzite, silicified shale and agate set in a matrix of fine- to medium-grained river sand. These deposits on Muirton have been mined in the past. However, diamonds tend to be moved during floods and re-deposited in favourable alluvial traps. These areas could then be re-examined for diamond recovery.

1. EXPLORATION RESULTS

3.1Geophysical Survey

A detailed ground magnetic survey of the Muirton property was conducted by Dr. G.J. Greeff of Stellenbosch in February 1997.

Geomagnetic field values in nanoteslas were recorded at ten metre intervals along east-west lines at 100 m intervals Readings were also taken along two lines 100 m apart and parallel to the western boundary. A datum value of 27 900 nanoteslas was chosen as a base or reference in order to reduce the measured field values to more manageable readings.

The following is a summary of the main results or this survey:

1. The Deep Structure, located by boreholes AAB/56 and AB/6drilled to depths of 32 and 30 metres respectively, consistently gave lower than average magnetic readings. It was concluded that this low magnetic signature is probably caused by a blanketing effect exercised by the thick layers of non-magnetic coarse- and fine-grained river sand which lies within the depression.

1. An elongated anomaly of high magnetic readings was located in the eastern half of the property. The zone trends in a north-easterly direction and could be an indication of an as yet undiscovered kimberlite blow occurring along a kimberlite fissure.

3.2Drilling and Pitting

Percussion drilling was carried out in three phases, viz:

Phase I (July 1996)

Some 28boreholes were drilled for a total of 254 metres. The drilling was investigating potential gravel deposits on the entire property. Results obtained were as follows:

Borehole No. Depth in Metres Description

A10 - 0.5Clay and soil

0.5 - 4.5Calcrete

4,5 - 5.0Gravel

5.0 - +Clay and soil

A20 - 1.0Clay and soil

1.0 - 5.0Calcrete

5.0 - 6.0Gravel

6.0 - +Shale

A40 - 0.5Clay and soil

0.5 - 3.5Calcrete

3.5 - 7.5Gravel and clay

7.5 - +Shale

B10 - 2.0Clay and soil

2.0 - 4.0Calcrete

4.0 - +Shale

B40 - 2.0Clay and soil

2.0 - 3.0Calcrete

3.0 - +Shale

C50 - 4.0Clay and soil

4.0 - 6.0Calcrete

6.0 - 7.0Sand

7.0 - +Shale

C45 0 - 2.0Clay and soil

2.0 - 4.0Sand

4.0 - +Shale

D40 - 12.9Clay and soil

12.9 - 13.0Gravel

13.0 - +Shale

D50 – 11.7Clay and soil

11.7 - 12.0Gravel

12.0 - +Shale

D60 - 8.0Clay and soil

8.0 - +Shale

D70 - 8.0Clay and soil

8.0 - +Shale

AB20 - 1.0Clay and soil

1.0 - 5.5Calcrete

5.5 - 6.0Shale

ABS0 - 4.0Soil

4.0 - 5.0Gravel

5.0 - 10.0Sand

AB60 - 2.0Soil

2.0 - 5.0Calcrete

5.0 - 17.0Gravel

17.0 - 18.0Gravel and sand

18.0 - 30.0Sand

BC50 - 5.7Soil

5.7 - 6.0Gravel

6.0 - 8.0Shale

ABB60 - 5.0Soil

5.0 - 13.0Sand and Gravel

13.0 - 15.0Clay

ABB560 - 5.0Soil

5.0 - 8.0Calcrete and Gravel

8.0 - 11.0Sand

11.0 - 15.0Sand and Gravel

15.0 – 18.0Clay

18.0 - 27.0Sand and Gravel

ABB6670 - 5.0Soil

5.0 - 12.0Clay

AAB560 - 2.0Soil

2.0 - 5.0Sand and Gravel

5.0 - 10.0Calcrete and Gravel

10.0 -16.0Sand and gravel

16.0 - 32.0Sand

B5660 - 2.0Soil

2.0 - 6.0Caicrete and gravel

6.0 - 9.0Sand and gravel

9.0 - 10.0Clay and gravel

10.0 - 15.0Sand

CCD8890 - 2.0Soil

2.0 - 7.0Sand and gravel

7.0 - 13.0Sand and clay

13.0 - +Shale

This drilling programme revealed the presence or terrace gravels in boreholes

A1 (1.0 m), A2 (1.0 m), A4 (4.0 m), D4 (0.1 m). D5 (0.3 m) and BC5 (0.3 m).

These boreholes cover an area of 90 000 m2 and indicate an average thickness or

1.1 metres.

Gravels and sand layers associated with the Deep Structure were intersected in boreholes AB6 (25 m+), ABB6 (15 m+), ABB56 (22 m), AAB56 (30 m+) and B566 (13 m+). It is not possible to calculate the average gravel thickness as these beds are intercalated with layers of sand.

Phase II (March 1997)

Four boreholes were drilled to investigate the geomagnetic anomalies detected by Dr G.J. Greeff. A total or 192 metres was drilled on four boreholes. Results were as follows:

Borehole No. Depth in MetresDescription

10 - 9.0Soil and clay

9.0 - 40.0Shale

40.0 - 55.0Ventersdorp lava

20 - 10.0Soil and clay

10.0 - 40.0Shale (water)

40.0 +Ventersdorp

30 - 5.0Soil and calcrete

5.0 - 20.0Yellow clay

20.0 - 37.0Blue clay

37.0 - 55.0Powdery yellow clay

40 - 6.0Soil

6.0 - 8.0Calcrete

8.0 - 13.0Gravel and calcrete

13.0- 16.0Clay

16.0 - 25.0Clay and gravel

25.0 - 30.0Sand and Gravel (water)

30.0 - 42.0Clay, sand and gravel (water)

Boreholes 1 and 2, sited to examine the magnetic anomaly, failed to intersect kimberlite. It is most unlikely that vertical percussion drilling will intersect a vertically orientated and relatively narrow ( +- 1m) kimberlite fissure. This anomaly should be investigated by means of inclined diamond drilling.

Boreholes 3 and 4 were located in the area characterised by low magnetic values. Both boreholes confirmed the presence or gravels in a Deep Structure but failed to reach bedrock.

Phase III (May 1998)

Sixteen boreholes were drilled, with a total depth of 365 metres, to further examine the trial mining areas. Results were as follows:

Borehole No. Depth in MetresDescription

BBC561.0 - 3.0Sand and soil

3.0 - 5.0Sand and clay

5.0 - 7.0Coarse-grained sand

7.0 - 9.0Sand and gravel

9.0 - 11.0Clay

11.0 - 14.0Sand (water)

14.0 - 40.0Gravel

40.0 - 42.0Shale (?)

BBC5561.0 - 3.0Gravel

3.0 - 4.0Gravel and clay

4.0 - 5.0Sand and gravel

5.0 - 6.0Sand

6.0 - 8.0Gravel and clay

8.0 - 40.0Gravel

40.0Shale (?) (water)

BBC5560 - 2.0Gravel

2.0 - 3.0Gravel and sand

3.0 - 6.0Gravel and clay

6.0 - 8.0Gravel and sand

8.0 - 10.0Clay

10.0 - 40.0Gravel (water at 21 m)

B560 - 20.0Sand

BBCS00 - 1.0Soil

1.0 - 4.0Calcrete

4.0 - 5.0Calcrete and gravel

5.0 - 7.0Gravel and sand

7.0 - 15.0Shale

BBC5S0 - 1.0Soil

1.0 - 5.0Calcrete

5.0 - 6.0Calcrete and gravel

6.0 - 7.0Gravel and sand

7-0 - 9.0Sand

9.0 - 23.0Sand and gravel

23.0 - 25.0Shale

BBCS60 - 5.0Soil

5.0 - 15.0Shale

BES0 - 1.0Gravel

1.0 - 2.0Gravel and sand

2.0 - 3.0Sand

3.0 - 4.0Gravel and sand

4.0 - 6.0Shale

BB5540 - 5.0Shale

BBC5660 - 4.0Soil

4.0 - 5.0Sand and calcrete

5.0 - 6.0Calcrete

6.0 - 13.0Sand

13.0 - 14.0Gravel and sand

14.0 - 20.0Gravel, clay and sand

20.0 - 21.0Gravel and sand

21.0 - 24.0Sand

24.0 - 25.0Shale

BC5660 - 4.0Soil

4.0 - 8.0Calcrete and sand

8.0 - 13.0Clay and sand

13.0 - 15.0Gravel. and sand

15.0 - 21.0Shale

B50 - 3.0Calcrete and gravel

3.0 - 4.0Gravel

4.0 - 6.0Sand gravel and calcrete

6.0 - 12.0Gravel and sand

12.0 - 15.0Grave!, clay and sand

15.0 - 23.0Gravel and sand (water)

23.0 - 43.0Gravel and sand

B4550 - 4.0Soil and calcrete

4.0 - 9.0Gravel and sand

9.0 - 14.0Fine gravel and sand

14.0 - 27.0Sand

ABB450 - 10.0Soil and gravel

10 - 12.0Gravel and clay

120 - 13.0Sand

AB450 - 2.0Sand

2.0 - 7.0Sand and gravel

7.0 - 13.0Sand

AAB450 - 1.0Soil

1.0 - 2.0Gravel

2.0 - 5.0Sand and gravel

5.0 - 11.0Gravel and calcrete

11.0 - 12.0Gravel and sand

12.0 - 14.0Clay

All boreholes located in the Deep Structure displayed a series of sandy gravels, gravels, sand and clay. The bedrock where intersected consisted of shale, but a number of boreholes did not reach the floor of the deposit. The depth or tile gravel-bearing sequence ranges from 12 m to more than 40 m below surface. This drilling further confirmed the presence of the Deep Structure, but it failed to clearly establish the nature of the gravel deposit. Unconsolidated sand seriously hampered the efficiency of recovering representative samples from such deep Intersections.

A number of pits were dug in an effort to further examine the trial mining area and to prospect the soil covered area in the north-western part of the property.

3.3 Estimated Size of Deposits

The following is a description of the potential size and expected grades of the various deposits on Muirton. Detailed information for calculating definite and accurate ore reserves is not available.

Deep Structure

The Deep Structure has not yet been accurately outlined because drilling failed to reach bedrock. However, it k estimated that this structure could be 750 m long and 220 m wide. If it is assumed that the total average thickness of the gravel is 4 m (2.5 m upper gravels and 1.5 m lower gravels) and the relative density of the rock is 2.2, the expected tonnage’s of gravels are:

Upper gravels :750 m x 200 m x 2.5 m x 2.2

825 000 tons

Lower gravels:750 m x 150 m x 1.5 m x 2.2

371 250 tons

Terrace Deposits

Pitting and drilling has shown that the Terrace Deposits are widely present on the farm. They occur under a soil/clay/calcrete layer of various thickness and the gravel is generally or) average about one metre thick. It is estimated that a further area of 100 000 m2 is underlain by these gravels. The size of the deposit is therefore about 220 000 tons of gravel if it is assumed that the relative density of the gravel is 2,2.

RESULTS OF TRIAL MINING

Trial mining on Muirton was carried out from January to September 1998 using one 14 foot rotary pan plant. During this period the recovery plant was operated only for about 6 months due to a breakdown of the screening plant in June-July. The following results were obtained from the processing of 81 284 tons of gravel:

Diamonds
Tonnage Treated / Recovered / Grade
Type of Gravels / (tons) / (Carats) / CPHT
Upper Gravels / 56,800 / 205 / 0.36
Lower Gravels / 24,484 / 415 / 1.36

Abovementioned upper gravels consist of gravels found in the upper layers of the Deep Structure and some material from the Terrace Deposits. The lower gravels were mined from near the base of the Deep Structure.

The 620 carats were sold for R1 300 000 at an average price of R2 096 per carat. The following stones larger than 5 carats were included in this parcel: 70.8, 20.2, 18.6, 17.8, 10.5, 9.7, 8.5, 8.5, 7.86, 7.4, 5.9 and 5.3.

CONCLUSIONS AND RECOMMENDATIONS

The Muirton property has considerable potential for the recovery of high quality gem diamonds, the main target being the Deep Structure. The following is a summary of the estimated tonnages and expected grades or the various deposits.

Type of / Potential / Indicated Grade / Diamond Value
Deposit / Gravel Tonnage / Carats / 100 tons / Rand / Carat
Terrace / 220,000 / 0.3 - 1.0 / R1500 - R2000
Deep Structure
Upper Gravels / 825,000 / 0.3 -1.0 / R1500 - R2000
Lower Gravels / 371,250 / 1.5 - 2.5 / R2000 - R3000

It is important that these potential deposits are properly investigated before commencing with commercial mining. The following prospecting work is recommended:

Deep Structure:

A detailed programme of reverse circulation drilling to accurately outline the gravel deposit and with the emphasis on investigating the lower gravels. Normal percussion drilling should not be used on such a relatively deep deposit that contains unconsolidated sand within the gravel sequence.

Terrace Deposits:

Percussion drilling to fully examine the extent and nature of these gravels on the farm. More attention should also be given to the zone immediately west of the Vaal River.

The strong linear magnetic feature occurring along the eastern part of the property could be an indication of the presence or a kimberlite fissure with possible blows. Inclined diamond (core) drilling will be required to properly investigate this possibility. It is recommended that an initial drilling programme should consist of three 75 metre inclined boreholes.

R.Cooke

BSc.Hons. Pri.Sci.Nat.

P.O. Box 10

Rondebosch

7701

Tel: +27-21-686-8443

Fax: +27-21-685-4316