New diamond pipes found in Angola

Moydow Mines president and chief executive officer Brian Kiernan said his company had completed airborne geophysical surveys over the Saurimo region in northern Angola in which 70 deposits were identified. In a Press statement, Kiernan said the airborne surveys were followed up by a ground geophysical survey, comprising magnetics and gravity work which was initiated in mid-January 2006. The area in which the 70 deposits were identified has been code-named the “Dala Project” by Moydow, and is bordered by BHP/Petra Diamonds’ Alto Cuilo to the west, while Muriege Diamond Properties borders it on the eastern side. “A promising target area was identified in the northern portion of the Dala concession,” read the Press statement signed by Kiernan. Moydow discovered kimberlite pipes, a major source of diamonds, after alluvial diamond deposits which have been the mainstay of Angola’s diamond production to date. Kimberlite deposits often produce minerals that have crystallised directly from kimberlitic magma (molten kimberlitic rock). These minerals ‘ which include picroilmenite, titanium, magnesium-rich chromite, chrome diopside, magnesium-rich olivine and pyorpe garnets varieties ‘ are the strongest pointer of the presence of diamonds, and hence are known as diamond indicator minerals. Being more abundant than diamond, geologists look for these “indicators” in the regions they suspect may host diamond-bearing alluvial. The Angolan Dala Project first yielded diamonds in a number of its sampling pits during the course of an extensive sampling programme conducted over 40 years ago by Portuguese state mining concern, Diamang. The sampling programme revealed significant concentrations of kimberlitic indicator minerals, with little evidence of abrasion, thus suggesting that there was a nearby primary source of diamonds. However, geologists have noted that erosion by Angola’s numerous river systems has resulted in a wide dispersion of diamonds with economically viable grades found as far as hundreds of kilometres from known sources. The recent discovery will boost Angola’s diamond output significantly, particularly so when one considers the country’s earnings from diamonds. Angola is well-established as one of the major diamond fields of the world, both in terms of historical production, which has cumulatively totalled 60 million carats, and in terms of quality and size of estimated diamond resources. Mining contributes 12 percent of Angola’s Gross Domestic Product (GDP), excluding the oil sector. Diamonds are responsible for over 98 percent of government’s earnings from the mining sector. Angola currently produces about 15 million carats of gold, with production having gone up by 200 percent from the 2003 figure of five million carats. Revenue from the sector exceeds US$1 billion, and its vast unexplored diamond minefields have proved too lucrative to numerous diamond mining companies to resist. Mining conglomerates have descended on Angola like vultures since 1997, when the first prospects of peace seemed to materialise, and the Angolan government has had 17 000 technical and financial requests for kimberlite and alluvial diamond mining projects for the period 1997 to 2003. Over 70 of those requests had been approved by 2003, and the latest addition maybe the Moydow project, which has already reached an advanced stage. Fourteen diamond mines were given the greenlight to start operating in 2004, and although it is not quite clear how many mining concerns were granted approval to commence operations in 2005, it is understood that they exceed the 2004 figure. While there has been some dithering in the negotiations between Angola and South African diamond mining giant, De Beers, the country is already playing host to Russian diamond monopoly Alrosa, which has established itself as major player in the sector. The De Beers saga was precipitated by new diamond mining and investment legislation introduced in Angola that requires all foreign diamond mining companies to work directly or indirectly with ENDIAMA, the state diamond company. The legislation allows companies to have external control of foreign exchange earnings and the right to market their diamonds with ENDIAMA. ENDIAMA must have a 51 percent stake in all new kimberlite projects and the largest share in alluvial projects. Incentives offered to companies include royalties of 12.5 percent on exports, corporate profits tax of 30 percent, a dividend tax of 5 percent and accelerated depreciation on capital investments.

March 2006
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