DE KALK ALLUVIAL DIAMOND PROJECT (SOUTH AFRICA)

The De Kalk alluvial diamond project is located on the farm De Kalk 37, situated on the southern bank of the Orange River, in the Hopetown district of the Northern Cape Province, South Africa. The gravel deposits in the project area were previously mined by three separate companies at various stages. To date, total recorded production from the farm is estimated at 644cts.

The Company proposes to begin bulk sampling at the project in April 2008, based on a 150tph plant.

History of the De Kalk Project
The project is held by a subsidiary, Samadi (Douglas) Exploration (Proprietary) Limited (Samadi Douglas), which was granted a new-order prospecting right in the final quarter of 2005.

Samadi has to date carried out a preliminary geological mapping exercise on the project, involving two drilling programmes, totalling 368 boreholes. These boreholes were logged largely by Robert Cooke Mineral Consultants ("RCMC"), a geological consulting company. RCMC also carried out a modeling exercise using the information from the drilling programmes.

As well, Venmyn Rand (Pty) Ltd ("Venmyn") was recently commissioned to prepare an independent update of the De Kalk section of the June 2005 Samadi/Diamond Core Competent Persons Report. This update incorporates the results of these drilling programmes.

The Phase 1 drilling programme was carried out to broadly outline the areas underlain by gravel deposits. The Phase 2 infill drilling programme was carried out to provide detailed drilling information, for geological modeling of the gravel deposit to take place. The details of these two drilling programs are outlined in the table below:-


The drilling programmes identified four gravel deposits on De Kalk, namely, from the base of the sequence:-

• a Basal A gravel deposit, which occurs immediately above the bedrock formation;

• a Basal B gravel deposit, which either occurs immediately above the Basal A deposit, or above the bedrock but has a sand layer separating it from the bedrock;

• a Suspended gravel, which occurs near surface in between overburden sandy layers; and

• a poorly developed Rooikoppie gravel that occurs as a surface deflation deposit on portions of the project area. This gravel had been the focus of the previous mining activities.

The Basal A gravels, Basal B gravels and Suspended Gravels were modeled by RCMC using the computer software programme, Surfer(r) 8. Contour maps were produced illustrating the thickness of the individual gravel packages, the overburden thickness of each gravel package as well as the estimated stripping ratio of the gravels. Venmyn also carried out a similar modeling exercise using the same database used by RCMC, in order to verify the gravel tonnages calculated by RCMC.

It should be noted that the specific gravity ("SG ") for the gravel packages, has not been established via scientific methods, but rather been approximated from experience that RCMC has had with alluvial gravel deposits of a similar nature. Once a bulk sample has been taken, the SG's will be verified using scientific methods.

Both RCMC and Venmyn modeled the gravel deposits, which allowed for the independent calculation of gravel volumes contained in each of the three horizons. When the estimated SG of the gravels was factored in, a tonnage of between 10.9Mt (RCMC) and 12.1Mt (Venmyn) was calculated for De Kalk.

Both Venmyn and RCMC only modelled the gravels in the areas where drilling had taken place. It is expected that the gravels extend northwards, beyond the limit of the current drilling.

Gravel deposits of a similar nature are being mined adjacent to the project as well as in the general locality. RCMC are familiar with the mining in the area and report that these deposits generally carry grades of between 0.3cpht and 0.8cpht for the Basal gravels and 0.1cpht and 0.3cpht for the Suspended gravels. It can be assumed the gravels at De Kalk could carry similar grades. It must be stressed, however, that these grades are only assumed and have not been verified by bulk sampling or trial mining, which is expected to take place during the next phase of exploration on the project. Once the bulk sampling exercise has been carried out, it will be possible to estimate the grade of the deposit with some confidence.


Reports

De Kalk Geological Report - Venmyn July 2006 (PDF 11.22MB)

Figure 3: Locality plan of the Silverstreams, Uitdraai, Mushoek and De Kalk project areas

Figure 6: De Kalk geological overview