Dia Bras eyes Guinean diamonds (November 13, 2001)

Montreal-based junior Dia Bras Exploration (DIB-V) has signed a conditional letter of intent to enter into an option and joint venture agreement with Sagem, a private Guinean company, to earn a 60% interest in the 125-sq.-km Banankoro permit.

Dia Bras can earn its interest in the primary diamond exploration permit by paying C$50,000 and issuing 500,000 common shares to Sagem. Dia Bras must also spend $US1 million on exploration and development over two years, with $US300,000 committed in the first year.

Also under the agreement, Dia Bras can earn a half-interest in ten alluvial artisanal exploitation permits in the Aredor concession area by funding C$2 million in exploration and sampling over one year.

The deal is subject to regulatory approval.

The Banankoro permit was once part of the historic Aredor concession currently operated by Trivalence Mining (TMI-V). London-based Rio Tinto (RTP-N) can earn a 58% stake in Trivalence’s Aredor kimberlite project in Guinea, by spending US$6 million on exploration and paying a total of US$2 million over three years. A further 13% can be had by completing a feasibility study and paying an additional US$2.5 million. Rio Tinto can then boost its interest to 58% by electing to arrange Trivalence’s share of production financing. A final US$4-million payment will be due when a production decision is made.

Trivalence’s 85%-owned alluvial operations at Aredor are excluded from this deal. The Guinean government owns the remaining 15% of Aredor.

The Aredor concessions comprise 1,012 sq. km, including the drainages and tributaries of the Baoule River, 725 km east of the capital city of Conakry. For the fiscal year ended June 30, 2001, Trivalence recovered 35,126 carats of rough diamonds from the treatment of 781,399 tonnes of alluvial material, off 13.9% from the previous year. The decline is attributed to equipment failures and the mining of lower-grade material.

Alluvial diamond resources at the end of 2000 stood at an indicated 461,282 carats contained in 8.7 million tonnes. An additional inferred resource was estimated at 864,927 carats in 10.4 million tonnes.

Currently, Rio Tinto is taking a 500-tonne test sample of the multi-phase K23 kimberlite. The K-23 pipe lies less than 10 km from the Banankoro permit.