MEDIA RELEASE 12 September 2006
ELKEDRA ANNOUNCES SECOND DIAMOND SALE
Australian-based diamond company Elkedra Diamonds NL (ASX: EDN, AIM: EDN) today
announced the second sale of diamonds mined at its Chapada Diamond Project in
Brazil and an increase in diamond production of more than 100% for the month of
August.
The plant production for August of 1,774 carats (4,317 stones) was
independently valued at US$346 (A$460)) per carat and sold to the Leviev
Diamond Group. The largest stone recovered in the month was 13.61 carats and
was valued at US$2,000/carat. A further 15 stones (95.95 carats) were recovered
in the 5 to 10 carat size range averaging a value of US$1,693/carat.
[REVERT WEBSITE: www.elkedra.com.au]
Fig 1. Sample of diamonds produced during August 2006
The process plant treated 76,749 tonnes of run of mine gravel feed for the
month giving a grade of 0.056 carats per bank cubic metre (BCM) or 2.3 carats
per 100 tonnes. This compared to 32,953 tonnes treated in July for 837 carats
of recovered diamonds.
Elkedra's Executive Chairman, Mr Don Best said: "The results achieved for our
August production are particularly pleasing as the revenue generated from this
sale breaks even with the projects monthly operating costs. Having achieved the
break even point at such an early stage of the ramp up phase and just 2 months
after commencing 24 hour operations on site is another significant milestone
for the Company.
During the month the operations team have substantially improved plant
availability and the plant has been reliably running at around 60% throughput
capacity for extended periods. Some additional equipment is due for delivery to
site by the end of September to eliminate the identified throughput
bottlenecks. The cost of this additional equipment is approximately US$400,000
which will be funded from the Company's finance facilities.
The original reserve grade for the project forecasts around 2,500 carats of
diamond production per month and, based on production figures to date, this
should be comfortably achieved once the plant is fully ramped up to design
throughput capacity."
Elkedra has an off-take agreement for all its production with the Leviev
Diamond Group, the world's largest diamond cutter. The next sale to Leviev is
scheduled for the first week of October 2006 and monthly thereafter.
The Chapada Project is located within the Company's 285 km2 tenement package in
the state of Mato Grosso, 80 km north of the regional capital city of Cuiaba.
Chapada is set to produce predominantly gem quality diamonds at an initial
targeted production rate of more than 30,000 carats per annum
The initial scale of the project is based on a Probable Reserve of 5.4 million
BCM of gravels contained within the Quilombo' and adjacent Peba Lagoinha'
tenements. A 9-year mine life at the initial 30,000 carats per annum production
level has been forecast based on the reserve grade of 0.05 cts/BCM (2 cpht).
These two tenements cover 15 km2, representing a relatively small proportion of
Elkedra's total tenement area of 285 km2, which offer significant exploration
upside. Historical artisan mining activity has demonstrated the existence of
diamondiferous gravels within this expanded area.
The Company proposes to utilise its modern 200 tph processing plant to process
bulk samples excavated from its exploration areas which allows for fast
tracking exploration activities and expansion of the project reserves.
Elkedra's aim is to progressively increase production to over 100,000 cts/annum
and grow the Chapada reserves to sustain a plus 20 year mine life.
ENDS
Released by: On behalf of:
Jan Hope / Nicholas Read Mr Don Best
Jan Hope & Partners Executive Chairman
Telephone: (08) 9388-1474 Elkedra Diamonds NL
For further information contact
Sam Randazzo
Executive Director
Telephone: (08) 6380-2855
Web: www.elkedra.com.au
CHAPADA PROJECT - BACKGROUND
Located near the town of Chapada dos Guimarães in Mato Grosso State, the
Chapada tenements cover a total of around 285 km2 adjacent to existing
watercourses in the Casca Basin and are prospective for diamondiferous alluvial
gravel terraces. Mining activities will initially focus on the Quilombo and
Peba Lagoinha reserve areas which represent less than 10% of the Company's
total tenement holding in the region.
The region is an established tourism and agribusiness centre, with good
infrastructure and excellent access from Cuiaba, the regional capital centre.
Gem quality diamonds have been recovered in the area by local miners for over
50 years. In the early 1980's Rio Tinto plc (Rio) conducted substantial
exploration in the area including drilling and bulk sampling of the current
Chapada Project resource area. However, Rio was seeking to establish a larger
project including dredging of the lower portions of the Casca Basin which was
subsequently restricted by construction of a new dam.
The project contains probable reserves of 5.4 million BCM of drill delineated
gravels at a grade of 0.05 carats per bcm giving the project a 9-year life
based on processing 600,000 bcm per annum. Independent sales assessment
indicates an average diamond value of over US$400/carat.
The diamondiferous gravels, which average 1.3 metres in thickness, are located
beneath an average of 4.5 metres of sand overburden - with extraction using
conventional excavator and truck mining techniques. The gravel is clearly
visible, with no blasting required and minimal dilution expected.
The diamond recovery processing plant comprises screening, heavy media
separation, magnetic separation and X-ray sorting in a secure area. Magnetic
separation machines have been installed to remove the high limonite content of
the gravels, which impeded economic exploitation in the past using traditional
gravity techniques.
- ENDS -
The resource information on the Chapada Alluvial Diamond Project has been
prepared in accordance with the 2004 edition of the Australasian Code for
Reporting Exploration Results, Mineral Resources and Ore Reserves (the "JORC
Code"). The term "Probable Reserve" is used as per its definition in the JORC
Code (available at www.jorc.org). The information is based on data compiled by
and reported upon by Mr Hugh Durey of Hugh Durey & Associates Pty Ltd. Mr Durey
is a member of the Australasian Institute of Mining & Metallurgy and qualifies
as a Competent Person as defined in the JORC Code. Mr Durey consents to the
inclusion in this report of the matters in the form and context in which it
appears
END
