All of the conditions of the Offer have now been fulfilled and this completes the takeover of Erebus. Accordingly, MRC now has a relevant interest in 100% of the shares in Erebus. The Company shall now proceed to allot and issue the MRC shares and options to the Erebus shareholders, pursuant to and otherwise in accordance with the terms of the Offer.
As a result of completion of the takeover MRC now assumes full ownership and operational control of Erebus's principal asset, the Kariba Kono diamond tailings re-treatment project in Sierra Leone.
Background on Erebus and Kariba Kono
Erebus's principal activity through its 100% controlled Sierra Leone subsidiary, Kariba Kono (SL) Ltd, is diamond tailings dump re-treatment, diamond mining and mineral exploration in Sierra Leone.
The grant of exclusive rights to re-treat the No. 11 Oversize Tailings Dump and underlying diamondiferous gravels was negotiated with the Gbense Chiefdom in January 2004 and the lease was awarded to Kariba Kono by the Sierra Leone Ministry of Mineral Resources in July 2004 for the period of 10 years. The mining lease covers an area of 32 hectares.
An independent Competent Persons Report undertaken by CSA Group estimated the No. 11 Dump volume based on past production, being in the order of 4.7 million cubic metres (7.85 million tonnes) excluding the underlying gravels which is estimated at a further 70,300 tonnes.
The project is located close to Sefadu in the Kono district of eastern Sierra Leone where diamonds were first discovered in 1930 by a colonial geological survey team, led by J.D. Pollet. Sierra Leone's established diamond fields are concentrated in the Kono, Kenema and Bo districts. The Kono fields have been extensively exploited by licensed and illegal miners from the 1930's up to the present day. A number of diamond plants were established during the 1960s by Sierra Leone Selection Trust (SLST) to process alluvial diamonds, of which the No.11 Heavy Media Separation Plant was the largest, with the highest grade reserves.
Although the No. 11 Heavy Media Separation Plant was advanced for its time, investigation into the operating history of the plant after the fortuitous discovery of the 969.8 carat "Star of Sierra Leone" diamond indicated that the initial plant design was flawed and it is believed that the operating efficiency would have reduced with time, leading to the loss of diamonds to tailings.
Mining consultants, Mackay & Schnellmann, in a report commissioned by National Diamond Mining Company (NDMC), a majority Government owned enterprise, in 1972, recommended re-treatment of the No. 11 Oversize Tailings Dump to recover any diamonds greater than 45mm and to recover smaller stones due to their tabular shape which could have slid over the screens and passed out into the waste stone conveyor and thence to the No. 11 Oversize Tailings Dump. This re-treatment was never undertaken.
During their 1972 visit, the mill feed grade to No. 11 Heavy Media Separation Plant was reported by Mackay and Schnellmann as in excess of 75cts/100 tonnes.
Ownership of SLST's assets including the separation plant later reverted to the NDMC. Since its closure in 1992, the tailings dump has remained untreated and un-sampled, except for some small-scale illegal artisanal activity that has now ceased due to the implementation of appropriate security measures on the Lease site.
"While we plan to implement the same development plan for Kariba Kono as proposed by Erebus, the Company has conducted an initial review of the Project using South African independent consultants Promet Engineers, and is confident that the Project can be technically fine-tuned to enhance Project economics.
The company is investigating near term production development plans and will ultimately recommence full scale re-treatment of the tailings dump for diamonds and gold utilising a fully mobile module 300 tph processing facility together with a 50 tph DMS plant and a containerised X-ray recovery unit." Mr Caruso said.
The Company is currently commissioning a small scale plant to commence grade control and initial sampling of the No 11 dump.
The Company also holds a 50% interest in Mining Area No. 5 through Leonaust Mining Limited, with a right to purchase the remaining 50% on terms to be negotiated. Mining Area No.5 is within 1km of Dump No.11 and gives the Company further latitude to expand its diamond production within the Kono District.
About Mineral Commodities Ltd
Exploration for gold and other mineral resources and developing mineral recovery technologies.
Mineral Commodities Ltd