technical report for the droujba diamond project,...

Droujba Technical Report 1 | P a g e

TECHNICAL REPORT FOR THE DROUJBA DIAMOND PROJECT, GUINEA

Report Prepared for Stellar Diamonds Plc by CAE

Mining

Authors: Matthew Field Executive Consultant (Geology) MSc., PhD, FGS, Pri. Sci. Nat

Marius Van Niekerk Technical Services Manager BSc HONS (Geology), MSc (Mining)

Johannes Ferreira Consulting Geostatistician MSc. Pri. Sci. Nat

Effective Date: 26 March 2012


IMPORTANT NOTICE

This report was prepared as JORC-compliant (JORC, 2004) Technical Report for

Stellar Diamonds Plc by CAE Mining. The quality of information, conclusions

and estimates contained herein are consistent with the level of effort involved

in CAE services and based on: i) information available at the time of

preparation, ii) data supplied by outside sources and iii) the assumptions,

conditions and qualifications set forth in this report. This report is intended for

use by Stellar subject to terms and conditions of its contract with CAE. Any

other uses of this report by any third party is at that party’s sole risk.


CERTIFICATE OF QUALIFIED PERSON

Matthew Field, SACNASP REGISTERED MEMBER

I, Matthew Field, Ph.D., Pr. Sci. Nat., as an author of this report entitled “Technical report for the

Droujba Diamond Project, Guinea” prepared for Stellar Diamonds Plc, with an effective date of 26

March 2012, do hereby certify that:

I am a Principal Resource Geologist with AMEC Earth and Environmental, International House, Dover

Place, Ashford, Kent, TN23 1HU, United Kingdom. I was previously employed as an Executive

Consultant (Geology) by CAE Mining, Unit A, Underwood Business Park, Wookey Hole Road, Wells,

Somerset, BA5 1AF, United Kingdom. During the course of this project I changed my employment

from CAE Mining to AMEC.

I am a registered member (registration number 400060/08) of The South African Council for Natural

Scientific Professions (SACNASP), and a fellow of the Geological Society of London (fellowship

number 1016214). I am also a member of the Geological Society of South Africa and Society of

Economic Geologists.

I graduated from Rhodes University, Grahamstown, South Africa in 1984 with a BSc Honours degree

in Geology. In 1986 I graduated with an MSc degree in Geology from Rhodes University and in 2009 I

graduated with a Ph.D degree in Geology from the University of Bristol, Bristol, United Kingdom.

I have practiced my profession for over 28 years. In that time I have been directly involved in the

exploration, assessment and mining of diamond deposits. I have provided reviews and technical

assistance for exploration, geological modelling, data acquisition, sampling, sample preparation,

sample treatment, quality assurance and quality control, databases and reconciliation for diamond

deposits in a variety of locations worldwide.

As a result of my experience and qualifications, I am a Competent Person as defined by the JORC

code (JORC, 2004).

I am responsible for Sections 1 to 15 (inclusive), 15.1, and 19 to 24 (inclusive) of the Technical

Report.

I am independent of Stellar Diamonds Plc.

I have not previously been involved with the Droujba project.

I have read the JORC code and this report has been prepared in compliance with that code.

As of the effective date of this Technical Report, to the best of my knowledge, information and

belief, the sections of the technical report for which I am responsible contain all the scientific and

technical information that is required to be disclosed to make the technical report not misleading.


Signed:

Matthew Field Ph.D., Pr. Sci. Nat, SACNASP Registered Member


CERTIFICATE OF QUALIFIED PERSON

Johannes Ferreira, SACNASP REGISTERED MEMBER

I, Johannes Ferreira, MSc., Pr. Sci. Nat., as an author of this report entitled “Technical report for the

Droujba Diamond Project, Guinea” prepared for Stellar Diamonds Plc, with an effective date of 26

March 2012, do hereby certify that:

I am a director of Johan Ferreira & Associates, an independent company registered in England and

Wales at One New Street, Wells, Somerset, BA5 2LA in the United Kingdom, specialising in the

evaluation of primary diamond deposits. I am a registered member (400D47/06) of The South

African Council for Natural Scientific Professions (SACNASP) and share membership with the South

African Statistical Association and the Canadian Institute of Mining. I graduated from the University

of Pretoria with an MSc in Mathematical Statistics and obtained a DEA in Geostatistics at the Ecole

Des Mines De Paris in France. I am in the process of finalising the write-up of a PhD titled “Sampling

and Evaluation of Kimberlites Based on Micro diamond Sampling”, at the Ecole Des Mines. I have

practiced my profession for over 30 years. In that time I have been directly involved in the

estimation of all the main kimberlites in Botswana and South Africa. I have been involved in

sampling and analysis of sampling results for Victor, Snap Lake and Ghacho Kue in Canada as well as

many deposits which proved un-economic. During the last five years I have been a competent

person with SRK in Cardiff for the Grib project in Russia and the AK6 kimberlite in Botswana with

MSA in Johannesburg. As a result of my experience and qualifications, I am a Competent Person as

defined by the JORC code (JORC, 2004).

I am responsible for Sections 16.4, 16.5, 16.6 and 17 of the Technical Report.

I am independent of Stellar Diamonds Plc. And I have not previously been involved with the Droujba

project.

I have read the JORC code and this report has been prepared in compliance with that code.

As of the effective date of this Technical Report, to the best of my knowledge, information and

belief, the sections of the technical report for which I am responsible contain all the scientific and

technical information that is required to be disclosed to make the technical report not misleading.

Signed:

Johannes Ferreira MSc. Pr. Sci. Nat, SACNASP Registered Member


Contents

1. SUMMARY ..................................................................................................................................... 13

1.1 Conclusions ........................................................................................................................... 13

1.1.1 Principal Outcomes ....................................................................................................... 13

1.1.2 Property Description and Ownership ........................................................................... 14

1.1.3 Geology and Mineralisation .......................................................................................... 14

1.1.4 Exploration Work .......................................................................................................... 14

1.1.5 Mineral Resources ........................................................................................................ 15

2 INTRODUCTION AND TERMS OF REFERENCE................................................................................ 16

2.1 Scope of Works ..................................................................................................................... 16

2.2 Principal Sources of Information .......................................................................................... 16

2.3 Current Personal Inspection ................................................................................................. 16

2.4 Qualifications, Experience and Independence ..................................................................... 17

3 RELIANCE ON OTHER EXPERTS ...................................................................................................... 18

4 PROPERTY DESCRIPTION AND LOCATION ..................................................................................... 19

4.1 Area and Demarcation of License ......................................................................................... 19

4.1.1 Comments on the Licence Holding ............................................................................... 21

4.2 Surface Rights........................................................................................................................ 22

4.3 Mineral Resources ................................................................................................................ 22

4.4 Issuer’s Interests ................................................................................................................... 22

4.5 Environmental Liabilities ....................................................................................................... 23

4.6 Permits .................................................................................................................................. 23

5 ACCESSIBILITY, CLIMATE, LOCAL RESOURCES, INFRASTRUCTURE AND PHYSIOGRAPHY ............. 23

5.1 Access .................................................................................................................................... 24

5.2 Climate .................................................................................................................................. 24

5.3 Local Resources and Infrastructure ...................................................................................... 26

6 HISTORY ........................................................................................................................................ 26

7 GEOLOGICAL SETTING ................................................................................................................... 31

7.1 Regional Geology .................................................................................................................. 31

7.2 Local Geology ........................................................................................................................ 32

7.3 Property Geology .................................................................................................................. 33

7.4 Kimberlite Geology ............................................................................................................... 33

8 DEPOSIT TYPE ................................................................................................................................ 37


9 MINERALISATION .......................................................................................................................... 38

10 EXPLORATION ........................................................................................................................... 39

10.1 Exploration approach and methodology .............................................................................. 40

10.2 Geophysical Surveys.............................................................................................................. 40

11 DRILLING ................................................................................................................................... 41

12 SAMPLING METHOD AND APPROACH ...................................................................................... 44

12.1 Core sampling ....................................................................................................................... 44

12.1.1 Bulk Density and Moisture Content .............................................................................. 44

12.1.2 Micro-diamond sampling .............................................................................................. 44

13 SAMPLE PREPARTION, ANALYSES AND SECURITY..................................................................... 45

13.1 Micro-diamond Analysis ....................................................................................................... 45

13.2 Bulk Density .......................................................................................................................... 47

13.2.1 Core Measurements...................................................................................................... 47

13.2.2 Bulk Sample Measurements ......................................................................................... 48

13.3 Bulk Samples ......................................................................................................................... 49

13.3.1 Sample Excavation ........................................................................................................ 49

13.3.2 Sample Processing ........................................................................................................ 51

13.3.3 Security ......................................................................................................................... 53

13.3.4 Micro-Diamond Sampling ............................................................................................. 53

14 DATA VERIFICATION .................................................................................................................. 54

15 ADACENT PROPERTIES .............................................................................................................. 56

16 MINERAL RESOURCE ESTIMATES .............................................................................................. 56

16.1 Evaluation Databases ............................................................................................................ 56

16.1.1 Drill Hole Database ....................................................................................................... 56

16.1.2 Bulk Sample Database ................................................................................................... 57

16.1.3 Databases Conclusions .................................................................................................. 57

16.2 Wireframe Modelling ............................................................................................................ 57

16.3 Block model ........................................................................................................................... 58

16.4 Diamond Grade Estimation from Micro-Diamond Data ....................................................... 59

16.4.1 Approach and Sampling ................................................................................................ 59

16.4.2 Data ............................................................................................................................... 61

16.5 Data Analysis ......................................................................................................................... 63

16.5.1 Diamond size ................................................................................................................. 63


16.5.2 Diamond content .......................................................................................................... 66

16.6 Results ................................................................................................................................... 68

17 Diamond Value Estimation ....................................................................................................... 69

17.1 Approach ............................................................................................................................... 69

17.2 Data ....................................................................................................................................... 69

17.3 Value model .......................................................................................................................... 70

17.4 Summary ............................................................................................................................... 72

17.5 Confidence levels .................................................................................................................. 72

18 Conceptual Scoping Study ......................................................................................................... 73

18.1 Background and Assumptions ............................................................................................... 73

18.1.1 Methodology ................................................................................................................. 74

18.2 Results ................................................................................................................................... 75

19 Resource Classification ............................................................................................................. 77

19.1 Reasonable Potential ............................................................................................................ 77

19.2 Geological Continuity ............................................................................................................ 77

19.3 Continuity of Mineralisation ................................................................................................. 77

19.4 Resource Classification ......................................................................................................... 78

20 Mineral Resource Statement .................................................................................................... 78

21 OTHER RELEVANT INFORMATION ............................................................................................. 78

21.1 The Diamond Market ............................................................................................................ 78

21.2 16.2 Further Potential ........................................................................................................... 79

22 INTERPRETATION AND CONCLUSIONS ...................................................................................... 79

22.1 Geological Setting and Deposit Type .................................................................................... 79

22.2 Exploration ............................................................................................................................ 79

22.3 Drilling ................................................................................................................................... 80

22.4 Sample Preparation, Analysis and Security ........................................................................... 80

22.5 Data Verification ................................................................................................................... 80

22.6 Grade Estimation .................................................................................................................. 81

23 RECOMMENDATIONS................................................................................................................ 81

23.1 General .................................................................................................................................. 81

23.2 Scope of Works Phase 1 ........................................................................................................ 81

23.2.1 Geological Model .......................................................................................................... 82

23.2.2 Density .......................................................................................................................... 82


23.2.3 Grade ............................................................................................................................. 82

23.2.4 Diamond Value .............................................................................................................. 82

23.3 Budget and Decision Point – Phase-1 ................................................................................... 82

23.3.1 Budget ........................................................................................................................... 82

23.3.2 Decision Point ............................................................................................................... 83

24 Scope of Works for Phase-2 ...................................................................................................... 83

24.1 Budget and Decision Point – Phase-1 ................................................................................... 83

24.1.1 Budget ........................................................................................................................... 83

24.1.2 Decision Point ............................................................................................................... 84

25 REFERENCES .............................................................................................................................. 84

26 GLOSSARY OF TECHNICAL TERMS ............................................................................................. 86

Table of Figures

Figure 1: Map of Guinea showing the location of licenses held by Stellar Diamonds and its

subsidiaries. The location of the Droujba License is highlighted. ......................................................... 20

Figure 2: Detailed map showing the retained licence area applicable to the Droujba project. ........... 22

Figure 3: Rainfall figures (in mm) for Seredou (blue) , Macenta (yellow), Beyla (purple) and Kerouane

(turquoise) Guinea taken from Sutherland (2007). .............................................................................. 25

Figure 4: Temperature variations for the Macenta , Guinea, that are typical of the Droujba license

area. ...................................................................................................................................................... 26

Figure 5: Map showing location of kimberlites in the Droubja area after Sutherland (2007).............. 29

Figure 6: Photographs of core illustrating the main rock types present in the Droujba kimberlite pipe.

A & B represented country-rock breccias (CB), C&D are of kimberlite breccias (CBK) and D&F are of

coherent kimberlite (Kcm). ................................................................................................................... 35

Figure 7: Planview sections of the modelled Droujba Pipe. The elevation for each (in metres above

mean sea level) is shown top left. The grids are 50 x 50 m and north is at the top of each plan. The

different lithofacies on each section are illustrated as the different coloured zones. ......................... 36

Figure 8: Vertical cross section through the Droujba geological model that serves to illustrate the

geology of the deposit. The location of the section lines is shown on the planview in the bottom left

thumbnail sketch. The grid lines are 50 m apart in all sections............................................................ 36

Figure 9: Model of a kimberlite pipe from Mitchell (1986). The location of the root zone is indicated

near the base of the model and is the proposed level of exposure of the Droujba Pipe. .................... 38

Figure 10: Photograph of the Droujba open pit showing the four sample pits from which the bulk

samples were removed. The view is approximately from the west and each pit is approximately 10

metres long. .......................................................................................................................................... 39

Figure 11: Diagrams showing the drill holes drilled into the Droujba kimberlite by Stellar Diamonds

during 2010 and 2011. The diagram on the left is a 2D planview showing the full projection distance


of the holes. The diagram on the left is a 3D view showing the holes drilled and the Kcm litho-facies

in cyan and the outer CB in red. ........................................................................................................... 43

Figure 12: Histogram of core recovery percentages for the 2010-2011 drilling programme at Droujba.

.............................................................................................................................................................. 43

Figure 13: Panoramic view of the pit bottom at Droujba showing the positions of the four bulk

sample pits. The long axes of the pits are approximately 10 m, and the view is from the western

edge of the pit, i.e. facing roughly east. ............................................................................................... 49

Figure 14: Photographs of bulk sample pits at Droujba (a) excavation using a Volvo excavator, (b)

final pit outline. ..................................................................................................................................... 50

Figure 15: Droujba Sample Plant treatment flow diagram. .................................................................. 52

Figure 16: An example of a drill hole collar plinth and concrete-filled steel pipe marking the collar

position. ................................................................................................................................................ 55

Figure 17: The Droujba block model with all the definitions shown. The blocks are coloured by Zone

(Table 15). ............................................................................................................................................. 59

Figure 18: Comparison of Kcm and CBK micro-diamond size distributions. ......................................... 64

Figure 19: A comparison between SRC and SGS micro-diamond +150 micron recoveries. ................. 65

Figure 20: Micro- and bulk sample macro diamond size distributions ................................................. 66

Figure 21: Grade size representation of undiluted diamond content for Droujba Kcm kimberlite. .... 67

Figure 22: Diamond value with size and quality ................................................................................... 71

Figure 23: A West-East vertical cross section showing the block model coloured by kimberlite rock

type as well as the optimised pit shell outlines for the various scenarios discussed in the text. ........ 76

List of Tables

Table 1: Mineral resource statement for the Droujba kimberlite as at 26 March 2012. ..................... 16

Table 2: Co-ordinates for beacons that demarcated the Droujba License area as shown in Figure 1. All

co-ordinates are in UTM WGS 1984 using the Zone 29N datum. ........................................................ 19

Table 3: Resources for kimberlites in the Bounoudou area quoted by the Soviet Aid Mission (taken

from Sutherland, 2007). ........................................................................................................................ 29

Table 4: Summary table of drill hole information for holes drilled at Droujba .................................... 42

Table 5: Summary of consignments submitted for micro-diamond analysis from Droujba drill cores.

.............................................................................................................................................................. 44

Table 6: Summary of sample masses per litho-facies for Consignment GN04_2011_004. .................. 45

Table 7: Summary of sample masses per litho-facies for Consignment GN04_2011_005 ................... 45

Table 8: Quality control results for consignments processed by SRC Laboratories. QC1 tests are

recovery of -212+180 micron tracers introduced into the fusion process and QC2 for -300+250

micron tracers introduced into the chemical treatment process, see text for more details. .............. 47

Table 9: Summary of bulk densities and moisture content determination derived from drill cores. .. 48

Table 10: Average density and moisture content figures for the four bulk samples. .......................... 48

Table 11: Sample volumes and tonnages for the four Droujba bulk samples. ..................................... 51


Table 12: Details of micro-diamond samples submitted to SRC and SGS South Africa from the bulk

samples ................................................................................................................................................. 54

Table 13: Summary of the deviations in dip and azimuth angles from adequately surveyed holes at

Droujba. These deviations are measured from the planned or intended azimuth and dip angles for

these holes.. .......................................................................................................................................... 56

Table 14: Block model parameters for the Droujba block model. ........................................................ 58

Table 15: Values assigned to blocks in the Droujba block model. ........................................................ 58

Table 16: Summary of Micro diamond recoveries ................................................................................ 61

Table 17: Summary of Bulk Samples results ......................................................................................... 62

Table 18: Summary of waste measurements per lithology. ................................................................. 62

Table 19: Results of waste measurements conducted on the sidewalls of the bulk sample trenches 63

Table 20: Recovery factors applied to the different diamond sieves at the different bottom cut-offs

of 1.00 and 1.18 mm. ............................................................................................................................ 68

Table 21: Recoverable grade estimates per kimberlite zone. .............................................................. 68

Table 22: Valuation of macro-diamonds recovered from the 1st pass processing of bulk samples from

Droujba. These values were estimated by NDC of Antwerp................................................................. 70

Table 23: Diamond value by size class .................................................................................................. 72

Table 24: Recoverable grade and diamond value estimates. ............................................................... 72

Table 25: Mining and processing parameters used in the conceptual study. ...................................... 74

Table 26: Parameters tested in the different pit optimisation studies. ............................................... 74

Table 27: Mineral Resource Statement for the Droujba Pipe as at 26 march 2012. ............................ 78

Table 28: Budget estimate for Phase-1 surface bulk sampling, core drilling and LDD drilling of Droujba

Pipe. ...................................................................................................................................................... 83

Table 29: Budget estimate for Phase-2 surface bulk sampling and core drilling of Katcha Dyke......... 84


1. SUMMARY

1.1 Conclusions

1.1.1 Principal Outcomes

The principal outcomes of the work completed by Stellar Diamonds on the Droujba project to

include the following:

Successful drilling of the kimberlite to a depth of 400 m below surface and outlining a kimberlite composed of three principal geological zones called Kcm (coherent macrocrystic kimberlite), CBK (kimberlite contact breccias and CB (country-rock breccias)

Sampling of drill cores and bulk samples for micro-diamond analysis at the Saskatchewan Research Council (SRC) laboratory in Canada. These analyses produced a considerable quantity of micro-diamonds (2,073 from 968 kg of Kcm and 133 from 539 kg of CBK) that have been used to estimate the macro-diamond grades of the CBK and Kcm kimberlite zones.

The collection of bulk density and moisture content measurements from the drill cores that are spatially representative of the mineralised kimberlite.

The draining of Droujba open pit to permit the excavation of four bulk samples from exposed Kcm kimberlite. The four samples totalled 920 metric tonnes.

Processing of the 4 kimberlite bulk samples through a newly commissioned 5 tph DMS bulk sample plant to recover in excess of 500 carats of diamonds.

The diamonds were exported to Antwerp, Belgium where they were independently valued by Natural Diamond Corporation NV (NDC). A range of values between US$40/carat and US$48/carat was realised.

Diamond grade estimation was achieved by using a combination of macro- and micro- diamond recoveries for the Kcm kimberlite and using micro-diamonds for the CBK kimberlite. Grades were adjusted according to internal waste measurements and an average grade for each of the two kimberlite types has been determined. These grades are 70 cpht for the Kcm and 35 cpht for the CBK at a bottom cut-off size of 1.00 mm.

Diamond size frequencies from the macro- and micro-diamond recoveries were utilised to develop production scale size frequency distributions. These in turn were used to develop a production scale estimate of average value per carat which is determined only for the Kcm kimberlite and assumed for the CBK kimberlite, since no macro-diamonds have been recovered from the CBK to date. This $/ct figure is at a confidence of 90% level.

The geological data gathered from the drill cores were used to construct a wireframe geological model of the kimberlite, from which volumes for each of the kimberlite types have been calculated. Averaged bulk density values have been used to calculate tonnages for the various kimberlite types. Estimates of tonnages for the Kcm and CBK are 3,600,000 metric tonnes and 910,000 metric tonnes respectively. The combined tonnage is 4,510,000 metric tonnes, defined between the current surface and a depth of 360 m below general ground level.

A block model has been constructed in which blocks have been classified by rock code. Each block in the model has been assigned an average grade and average US$50/ct value according to the figures provided above.

This block model has been used to develop a conceptual study to test whether the Droujba has a reasonable prospect of eventual economic extraction, a fundamental requirement for it to be classified as a mineral resource. To account for the unrepresentative diamond parcel that has been obtained from sampling to date, a factor of 1.6 has been applied to the average $/ct figures as a means of approximating diamond value from a future operating mine. This is line with practices applied at other kimberlite projects elsewhere.

The conceptual study shows that at an average cost of US$15/t and an average diamond value of US$80/ct, an open pit mine can be developed to a depth of 160 metres. Kimberlite at depth, below


380 mamsl (160 m below surface) has been demonstrated to have a reasonable potential for economic extraction as an underground mine as its contained value ($47/t) is greater than operating costs of reasonably comparable underground mining operations in South Africa ($15/t to $25/t)and a feasibility study being conducted in Sierra Leone ($37/t) .

This Inferred Mineral Resource is estimated to contain 3.1 million tonnes of Kcm kimberlite at a grade of 70 cpht and 860,000 tonnes of CBK kimberlite at a grade of 35 cpht, and a combined inventory of approximately 2.5 million carats.

1.1.2 Property Description and Ownership

Stellar’s Droujba project is located in south-eastern Guinea centred on the village of Bounoudou

which lies approximately 48 km east of the regional town of Macenta, and approximately 800 km

east of the capital, Conakry. The current exploration license is issued to West African Diamonds and

Friendship Diamonds, both of which are fully owned subsidiaries of Stellar Diamonds Plc.

1.1.3 Geology and Mineralisation

The licence area is underlain by Archaean-age rocks of the Man Craton that consist principally of

magmatic granites, granite-gneisses, amphibolites and rare, quartzites. The rocks are intruded by

dolerites of suspected Jurassic age and Cretaceous-age kimberlites. The kimberlites occur within a

well-defined structural corridor referred to as the the Bounoudou kimberlite zone. This zone trends

at approximately 290o and has been traced for a distance of around 5 km. It includes several

kimberlite dykes and the Droujba kimberlite pipe. One of dykes (Dyke 3, or the Katcha Dyke) and the

Droujba pipe have been proven to be diamondiferous. Only the Droujba pipe has been assessed in

this study.

1.1.4 Exploration Work

The Droujba pipe and the Katcha dyke were discovered by the Société Minière de Beyla (SMB) in the

late 1950’s. In the period 1961-1964 The Soviet Aid Mission excavated a pit into weathered

kimberlite material to a depth of approximately 20 metres and recovered diamonds at a grade of

around 6 carats/m3, including a 270 carat stone. Several other companies have held an interest in

Droujba since the years following the departure of the Soviet Aid Mission, but not much detail is

known about their activities.

Stellar Diamonds have adopted a typical modern exploration approach to developing the Droujba

project. This has involved a combination of core drilling and bulk sampling. Thirty one drill holes

have been successfully completed. This core has been logged to develop an understanding of the

internal geology of the body, to remove samples for bulk density and moisture content

measurement and to remove samples for micro-diamond analysis.

Once the open pit had been drained, four bulk sample trenches were excavated in weathered

kimberlite, each trench being approximately 10 m x 5 m x 2.5 m and yielded a calculated combined

tonnage of approximately 920 tonnes. These samples were processed through a newly erected 5 tph

DMS bulk sample plant and resulted in the recovery of 669.55 carats at an average dry grade of 72

cpht (+1.00 mm).

An initial export of 509.49 carats has been valued independently by NDC between US$40 and

US$48/ct.


A digital elevation model of the pit and surrounding terrain were constructed following a survey of

the area using a Trimble R3 differential GPS system.

1.1.5 Mineral Resources

The data collected during the exploration phase has been used to prepare a mineral resource

estimate for the Droujba pipe. Drill logs were used to construct a 3D wireframe geological model in

which the three main kimberlite types (Kcm, CBK and CB) were modelled separately. The wireframe

model was used to construct a block model, from which volumes were determined and tonnages

were calculated using average dry bulk density values.

A combination of the micro- and macro- diamond data collected from the Kcm kimberlite was used

to estimate a global grade for that kimberlite variety. Since no macro-diamonds have been

recovered from the CBK kimberlite, only the micro-diamond method was used to estimate the grade

of this unit.

The micro diamond methodology employed for diamond content assessment makes use of two

components obtained from sampling, namely diamond size and diamond concentration. Diamond

size is modelled on the basis of the sample size frequencies and a corresponding cumulative size

distribution in the form of a log-probability curve, while diamond concentration is represented by

the statistical distribution of stone counts in the 8 kg individual sample aliquots. The two

components are combined to simulate a large diamond parcel with these diamond content

characteristics. The parcel grade-size curve is modelled and used to quantify diamond content based

on the sampling data. The micro diamond methodology therefore relies completely on the

information provided by sampling and is now established in the industry as an acceptable means for

global diamond content assessment.

Both the Kcm and CBK kimberlite contain internal waste that has to be accounted for during grade

estimation since it cannot be removed by mining. Waste measurements collected for every metre of

core intersection was used to calculate average waste content per kimberlite type.

Diamond values obtained from the bulk samples are not likely to be fully representative of typical

larger production parcels that will be obtained from mining, particularly as sampling under

represents larger diamonds. To obtain an estimate of the likely value of a full production parcel the

modelled size frequency distribution has been used in combination with other kimberlite value

distributions to develop a diamond value model for Droujba for which an estimate of average

diamond value in all size classes can be obtained for revenue estimation.


Table 1: Mineral resource statement for the Droujba kimberlite as at 26 March 20121.

Lithology Upper Level mamsl)

Lower Level (mamsl)

Volume (m

3)

Dry Density (kg/m

3)

Tonnage Grade +1.00 mm (cpt)

Carats +1.00 mm

Classification

Kcm 540 380 650,000 2.63 1,700,000 0.70 1,190,000

Inferred Resource

CBK 540 380 100,000 2.39 240,000 0.35 84,000

Inferred Resource

Kcm 350 170 520,000 2.63 1,400,000 0.70 980,000

Inferred Resource

CBK 350 170 260,000 2.39 620,000 0.35 220,000

Inferred Resource

Total

1,530,000

3,340,000

2,474,000

2 INTRODUCTION AND TERMS OF REFERENCE

2.1 Scope of Works CAE Mining was commissioned by Stellar Diamonds Plc to produce an initial technical report on the

Droujba Diamond Project in the south-eastern Guinea, West Africa. The project is jointly owned by

West African Diamonds and Friendship Diamonds, wholly owned subsidiaries of Stellar Diamonds

Plc. Stellar Diamonds is listed on the AIM in London. The technical report includes a resource

estimate and has been prepared to the standards of the JORC Code (JORC, 2004) for reporting

exploration results, mineral resources and mineral reserves.

All monetary figures expressed in this report are in United States of America dollars (US$) unless

otherwise stated.

2.2 Principal Sources of Information CAE Mining has based its report on information provided by Stellar Diamond Plc and its associates,

as well as on reports prepared by Stellar for the Government of Guinea. Information was also

obtained from published literature and from the internet. All sources have been listed and appear in

the reference list at the end of this report. Previous drafts of this report were provided to Stellar

with written requests to identify any material errors or omissions prior to completion.

2.3 Current Personal Inspection A site visit was made to the Droujba site during the period 10-14 September 2011, by Dr Matthew

Field, PhD, Pr. Sci. Nat, FGS, a qualified person as defined by JORC. In addition Mr Robert Pierce, a

geologist with over 25 years of experience in diamond mining and exploration, and a contractor of

CAE Mining, spent several periods totalling 49 days (between 11 September 2011 and 4 February

2012) at Droujba observing and verifying the exploration activities being conducted by Stellar

Diamonds.

1 Figures in this table have been rounded in line with the low levels of confidence associate with an Inferred


2.4 Qualifications, Experience and Independence CAE Mining was created when CAE acquired the Datamine Group during 2010. This acquisition

resulted in the formation of a mining consulting group and the employment by CAE Mining of

several experienced executive consultants.

Dr Matthew Field is a resource geologist with 27 years’ experience, including 23 years with De Beers

(the world’s leading diamond miner) and 4 years as a consultant to the diamond mining and

exploration industry. He is a member of the Geological Society of South Africa, a Fellow of the

Geological Society of London and is registered with the South African Council for Natural Scientific

Professions (SACNASP) as a Professional Natural Scientist. Matthew has published widely on

kimberlite and diamond geology. Through a combination of his experience, qualifications and

professional registrations, Matthew is a qualified person according to the rules of the Joint Ore

Reserves Committee (JORC) of The Australian Institute of Mining and Metallurgy, Australian Institute

of Geoscientists and the Minerals Council of Australia.

Mr Johannes Ferreira is a professional geostatistitian with over 30 years’ experience in the

geostatistical modelling of diamond deposits worldwide, with 26 years’ experience with De Beers

before becoming a private consultant. He is a member of the Canadian Institute of Mining,

Metallurgy and Petroleum and is registered with SACNASP as a Professional Natural Scientist.

Through a combination of his qualification, experience and professional registration Johannes is a

qualified person according to the rules of the JORC code.

Mr Marius Van Niekerk has 18 years’ experience in mining which covers areas of exploration and

production geology, resource evaluation, grade control as well as extensive skills in mine

engineering. In his career he has worked for KUMBA, GMSI and Hatch and has been in various

managerial positions, ranging from Senior Production Geologist to Project Manager. Prior to joining

CAE-Datamine Marius was Operations Manager for two years at Mega Uranium Corporation

Cameroon and Principal Consultant at Snowden. In geology Marius’ experience covers Iron Ore,

Coal, Gold, Platinum and Uranium. In mining his experience covers Diamonds, Base metals, Iron Ore,

Coal, Gold and Platinum. Marius is a competent person in terms of SAMREC guidelines for Iron Ore

and Uranium in resource evaluation.

Mr Robert Pierce is a resource geologist with over 26 years’ experience in the exploration and

mining industry. This included roles as mine geologist on a Falconbridge base-metal mine in Namibia,

De Beers diamond exploration in South Africa, mine geologist in the Anglo American Gold Division

(Freddies Gold Mine and Free State Geduld Gold Mine), manager of the central treatment station at

De Beers Exploration, Senior Geologist at De Beers Namaqualand Mines, Project Geologist

contracted to De Beers Group Services UK Ltd and resident geologist at Namakwa Diamonds North

West Mines, South Africa. Robert brings considerable practical experience but is not registered as a

Professional Natural Scientist and is therefore not authorised as a “qualified person” in terms of the

JORC code. His contributions to this technical report are signed off by Matthew Field.

Mr Bruno Abilleira is a mining engineer, who since graduating in 2009 has been working for CAE-

Datamine South Africa as a mining systems consultant. He has participated in many projects

throughout Africa, visiting clients not only in South Africa but also in Botswana, Namibia, Tanzania


and the DRC. During those projects Bruno got exposed to a number of different commodities and

environments, covering Gold, Platinum, Diamonds, Uranium, Zinc, Nickel, Chrome, Iron Ore and

Copper in open pit, as well as underground operations. Bruno is not authorised as a “qualified

person“ in terms of the JORC code, and his contributions to this technical report are signed off by

Marius Van Niekerk.

Neither CAE Mining nor the authors of this report have or have had previously any material interest

in Stellar Diamonds Plc or the mineral properties in which Stellar Diamonds has an interest. Our

relationship with Stellar is solely one of professional association between client and independent

consultants. This report has been prepared in return for professional fees based on terms agreed

between Stellar and CAE Mining and payment of the fees is not contingent on the results of this

report.

3 RELIANCE ON OTHER EXPERTS Since its involvement in the project on 20 August 2011, CAE Mining’s representative on site, Mr

Robert Pierce, has verified and signed-off on project data that has been collected since that date as

an independent consultant and observer.

Stellar Diamonds Plc has warranted that a full disclosure of all material information in its possession

has been made to CAE Mining. Stellar Diamonds has agreed that neither it nor its associates will

make any claim against CAE Mining to recover any loss or damage suffered as a result of CAE

Mining’s reliance upon information provided by Stellar Diamond Plc for use in the preparation of this

report. Stellar has also indemnified CAE Mining against any claim arising out of the assignment to

prepare this report.

Stellar have made several previous competent per person’s reports available, from which

considerable information has been extracted for use in this report, particularly in sections 6 and 7.

Most notable is the reports by Sutherland (Sutherland, 2002, 2007).

CAE is in possession of a copy of the exploration licence issued jointly to West African Diamonds and

Friendship Diamonds Guinee SA by the Ministry of Mines, Energy of the Republic of Guinea, as well a

letter confirming the good standing of Stellar Diamonds regarding its payment of taxes and issuing of

work report. The licence is referred to in section 4.

Diamond values have been obtained from Natural Diamond Corporation NV of Antwerp who is an

independent diamond valuing companying appointed by Stellar Diamonds to value diamonds they

have recovered from various operations in West Africa. CAE accepts the values that have been

provided as fair. These values are used in section 17.

Stellar has reviewed draft copies of this report for factual errors. Any changes made as a result of

these reviews did not involve any alteration to the conclusions made. Hence the statements and

opinions expressed in this document are given in good faith and in the belief that such statements

and opinions are not false and misleading at the date of this report.


CAE Mining has assumed that all data and reports received from Stellar Diamonds reporting results

obtained prior to its involvement in the Droujba project are accurate and complete.

4 PROPERTY DESCRIPTION AND LOCATION The project area is located in south-eastern Guinea centred on the village of Gbonodou or

Bounoudou (both spellings are used) which lies approximately 48 km east of the regional town of

Macenta.

4.1 Area and Demarcation of License Mineral law in Guinea is in a state of transition and a New Mining Code has been drafted but not yet

gazetted. The current Mining Code of 1995 (Ministère des Mines et de la Géologie, 1995) is still

therefore in force. According to this Code mining authorisations, also referred to as “titles,”

“licenses,” or “permits” tailored to either industrial or artisanal miners fall into the categories of

reconnaissance, prospecting and exploration (USAID, 2008).

The current license was issued to West African Diamonds and Friendship Diamonds, both of which

are fully owned subsidiaries of Stellar Diamonds Plc. This arrangement follows a dispute over

holdings which have subsequently been settled by the acquisition of both parties by Stellar

Diamonds Plc.

The licence held by West African Diamonds and Friendship Diamonds is a prospecting permit. The

conditions of such a permit have been summarised by USAID (2008) as follows:

A prospecting permit confers on the holder exclusive rights to prospect within a designated zone (Article 26).

The area for which a prospecting permit may be issued cannot exceed 500 km2 for industrial prospecting, or 16

km2 for semi-industrial prospecting, unless special permission is granted (Article 27). This permit is awarded by

the Ministry of Mines on recommendation of the CPDM (Article 28). Prospecting permits are issued for a

maximum of three years for industrial prospecting and two years for semi-industrial prospecting (Article 29). An

industrial prospecting permit may be renewed twice for a period of two years each (Article 30). A semi-

industrial permit may be renewed only once for a period of one year (Article 30). Some investment

requirements apply to renewal. Article 33 provides some limited exceptions to the renewal deadlines. Holders

of prospecting permits may freely dispose of products extracted in the course of prospecting, provided they

declare them to the DNM (Article 32).

The location of the license is shown in Figure 1 and details of the license area are shown in Figure 2,

and the beacon co-ordinates that demarcate the license are presented in Table 2.

Table 2: Co-ordinates for beacons that demarcated the Droujba License area as shown in Figure 1. All co-ordinates are in UTM WGS 1984 using the Zone 29N datum.

Beacon ID

Latitude North Longitude West

A 8o36’00’’ 9o04’00’’

B 8o36’00’’ 9o02’00’’

C 8o32’50’’ 9o02’00’’

D 8o32’50’ 9o04’00’’


Figure 1: Map of Guinea showing the location of licenses held by Stellar Diamonds and its subsidiaries. The location of the Droujba License is highlighted.

CAE has a copy of the issued licence documentation that shows that the licence was issued on 3

February 2010 and is valid for a period of two years. Stellar submitted a declaration for renewal in

October 2011 and an application for renewal on 24 January 2012 that included a 50% reduction in

licence area as required by law. Stellar are still awaiting ministerial approval but have received a

letter from the Ministry of Mines, dated 19 March 2012 confirming the Company’s good standing

with regards to tax payments and work reports, and that the application will be favourably examined

as part of regional review of all licence holders country wide. Further, Stellar’s legal counsel has

provided CAE with evidence that the Mining Code for Guinea provides guarantees to licence holders

in the event that the Ministry fails to renew or provide renewals before expiry. The following

translation of the Code was provided:

Article 77: Renewal

An application for the renewal of an exploration licence must be submitted at least three months prior to the

date of expiry of the licence.

An application for the renewal of a mining licence or a mining concession must be submitted at least six months

prior to the date of expiry of the licence or concession.

Article 78: Extension

Subject to the renewal application of a mining title have been submitted in accordance with the provisions of

the Mining Code, in the event that, at the time of expiry of the said mining title, the Administration has not

issued yet a decision on the renewal application, the mining title shall automatically be extended until it is

formally renewed or until notification has been given to the holder of the mining title that their application has

been rejected.


In the event that:

(i) A renewal application has been submitted in accordance with the provisions of the Mining Code; (ii) The conditions for automatic renewal set out in articles 24, 33, 40 and 45 of the Mining Code have been met; and (iii) The obligations on relinquishment of licence area and reporting of geological results provided for under the Mining Code have been met;

where no decision has been issued on the said renewal application within three months of the expiry of the

mining title, the renewal application shall be deemed to have been tacitly accepted.

Article 79: Rejection of Renewal Application

In the event due notification has been given to a holder of a mining title that their renewal application has

been rejected, they shall be granted a period of six months, where the mining title is an exploration licence, or

twelve months, where the mining title is a mining licence or a mining concession, from the date the application

has been rejected, to vacate the property.

4.1.1 Comments on the Licence Holding

CAE believes that the transitional state of mining and prospecting licensing procedures in Guinea has

taken longer to resolve than was anticipated, and hence the delays that Stellar is experiencing in the

renewal of their licence for Droujba. Stellar Diamonds have however received sufficient guarantees

from the Ministry of Mines and Geology that since they are in good standing with the Ministry with

regards to meeting their regulatory requirements, this ameliorates risk.


Figure 2: Detailed map showing the retained licence area applicable to the Droujba project.

4.2 Surface Rights There are no distinctions between surface and mineral rights in the Guinea Mining Code. Any licence

holder has rights to surface access and there are no additional fees payable, save those negotiated

between the Company and the local Chiefdom.

4.3 Mineral Resources The Droujba Project comprises a single kimberlite pipe that comprises the mineral resource of

interest being considered in this report. In addition there is a known diamondiferous dyke system

that is called the “Katcha Dyke” which traverses the permit area along an easterly strike. Although

Stellar has drilled a number of holes into this dyke during 2011 it will not be included in the resource

statement at this point in time.

4.4 Issuer’s Interests The Droujba Project is owned as a Joint Venture between West African Diamonds Plc (WAD) and

Friendship Diamonds Guinee SA, both of which companies are owned wholly by Stellar Diamonds

Plc.


4.5 Environmental Liabilities According to the Mining Code of Guinea (1995) there is no requirement for an environmental impact

study to be delivered for an exploration licence. However, there is a general governance

requirement to conduct operations in an environmentally sensitive manner. Stellar has confirmed to

CAE that there are no environmental liabilities associated with the Droujba license and observation

of the operations by CAE concur that there are no significant environmental issues that are a cause

for concern.

The operations in the Droujba licence have been frequently visited by the Regional Mines Director

(Mr. Pelico Kourouma) and no adverse reports have been issued by him.

As has been detailed elsewhere in this report, The Soviet Aid Mission excavated an open pit into the

top of the kimberlite (see section 6 below) to a depth of approximately 20 m. This pit filled with

water and therefore to access the kimberlite for bulk sample excavation Stellar drained the pit,

pumping the water into a stream that flows into the Diani River. This water was clean and had no

adverse affect on the stream or the river. The process was witnessed by CAE’s on-site

representative. Silt and mud that had accumulated at the bottom of the pit has been removed and

stockpiled on unused ground close to the pit. This material is currently drying and will be levelled

before the onset of the next rainy season.

Kimberlite material that was removed from the open pit was processed through a DMS plant erected

on site. The effluent from this plant is re-circulated via three large sumps. The first sump is regularly

cleaned out by excavator and extracted material is stockpiled for later disposal. No plant water is

returned to the natural drainage system.

4.6 Permits The conditions of the Mining prospecting permit are summarised in section 4.1 above. No other

permits are required to conduct the exploration activities that are detailed in this report.

5 ACCESSIBILITY, CLIMATE, LOCAL RESOURCES, INFRASTRUCTURE

AND PHYSIOGRAPHY The Droujba permit lies within the valley of the River Diani, a large north-south flowing river which

drains into the Atlantic through Liberia. The valley is defined by steep escarpments to the west,

north and, in a more irregular fashion, to the east. To the west is the Ziama Mountain range in which

summits rise to over 1300 m. Northwards, the Ziama Mountains merge into a dissected upland with

summit altitudes between 800 m and 950 m. This upland is drained partly by the headwaters of the

Diani and partly by the headwaters of the Milo, a northwards flowing tributary of the River Niger.

The Diani valley is separated from the northern uplands by an escarpment (to the north of Famoëla)

about 200 m high. Within the valley, interfluves are low and flat although occasional, isolated hills

rise above 550 m. The eastern margin of the valley is less clear than the western edge but is partly

defined by the southern end of the Chaîne Simandou as well as two groups of hills that reach over

800 m and are coincident with the outcrops of large dolerite sheets.


In the Diani valley around Bounoudou the vegetation is typically open grassland in which dense tree

cover only occurs as gallery forest along stream courses or on steep slopes. Southwards, however, at

about 08o 23' N, there is a rapid transition to rain forest, dense forest also covering the Ziama

Mountains.

5.1 Access The Droujba Project area is only accessible by road. The primary access route to the Bounoudou area

is from the south branching off from the Macenta to N’Zérékoré surfaced road at Seredou, some 820

km from Conakry (Figure 1). Thereafter an un-surfaced track leads through Kouankan to Bounoudou.

This last section is prone to flooding in the rainy season and the bridge of the river Diani has been

historically risky.

From the north it is generally possible to reach Bounoudou from the Kerouané to Beyla road via

Korela. None of these roads are surfaced.

By both approaches 4x4 vehicles are recommended throughout the year.

The nearest landing strip is at Macenta with a flying time from Conakry of around 1½ hours.

5.2 Climate The climate of SE Guinea is that of the seasonal wet-and-dry humid tropics. Figure 3 shows the

annual rainfall figures for the nearest weather stations at Seredou, Macenta, Beyla and Kerouané,

which are, respectively, 35 km SW, 48 km west, 45 km NE and 78 km north of Bounoudou. The

station at Seredou is sited on the western margin of the Diani valley at the foot of the Ziama

mountain range. Apart from a possible influence on the rainfall figures resulting from its proximity to

the mountains, the Seredou rainfall totals are likely to be most typical of the Diani valley. Regional

patterns of rainfall indicate that there is a general decline in rainfall totals from west to east across

the Diani valley, with a much lower south to north decline up the valley. Absolute and average

temperature ranges are indicated in Figure 4

All the stations show a pronounced rainy season which develops during May and June, with

maximum rainfall occurring in July, August and September. December to March is essentially dry

with only occasional thundery showers. On the basis of the Seredou figures annual rainfall in the

Diani valley of approximately 2,200 mm can be anticipated, with maximum and minimum annual

falls (based on a 28-year record) of 3,363 mm and 1,582 mm respectively. Rainfall intensity (severity

of downpours) varies relatively little throughout the year and less from station to station than does

total annual rainfall. The most intense 24-hr rainfall at Macenta was 110 mm and that at Beyla, 96

mm.

The temperature variation during the year is small, monthly mean maximum temperatures being 31-

32oC during the dry season and 27-28oC during the wet season. The corresponding monthly mean

minimum temperatures are 15-19oC and 19-20oC. The extreme temperatures experienced at

Macenta are 36-37oC and 10-11oC.

There is little wind, calm conditions being experienced on over 90% of days in almost all months.


Potential evapo-transpiration varies little during the year. This is due to the relative uniformity of

annual temperatures. Evapo-transpiration is at its lowest during the rainy season, when daytime

temperatures are at their lowest because of the cloud cover. At this time of the year rainfall

considerably exceeds evapo-transpiration resulting in a large water surplus. During the dry season,

however, a water deficit results from evapo-transpiration exceeding rainfall. The interaction of these

two variables means that there is a net annual runoff in the Diani valley of between 800 mm in the

east and 1000 mm in the western mountains.

Figure 3: Rainfall figures (in mm) for Seredou (blue) , Macenta (yellow), Beyla (purple) and Kerouane (turquoise) Guinea taken from Sutherland (2007).


Figure 4: Temperature variations for the Macenta , Guinea, that are typical of the Droujba license area.

5.3 Local Resources and Infrastructure The main source for imported goods is the capital Conakry that lies some 800 km west of Droujba,

but the regional centres of Macenta and N’Zérékoré have some stocks of essential supplies. The

Stellar camp at Droujba provides tented accommodation for staff. The camp is self sufficient,

electricity being supplied by an on-site generator and water is drawn from local streams and hand

dug wells. Satellite communications systems and local cellular telephone network provide adequate

communications capability.

6 HISTORY The following account of the diamond exploration and mining history of the area draws extensively

from a report prepared by Donald Sutherland in 2007 (Sutherland D. , 2007) for West African

Diamonds.

Diamond was first discovered in Guinea in the early 1930s and early prospecting concentrated on

the Makona and the Baoulé drainage basins resulting in the establishment of mines at Baradou,

Fénaria, Férédou and Banankoro in the 1930s and at Bouro in the 1940s. During this very early phase

of exploration, the Soguinex company (managed by Selection Trust of London) carried out a

reconnaissance of the lower Diani downstream of N'Zébéla and recovered a few small diamonds but

their major discoveries related to the above-mentioned mines and they did not follow-up the Diani

diamonds. However, in the late 1940s and the 1950s systematic prospecting was carried out in the

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15

20

25

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35

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upper Diani drainage basin. Then, the high-grade deposits around the village of Bounoudou were

discovered and brought into production by the Société Minière de Beyla (SMB). Over the time period

1952 to 1960, 642,836 carats were recovered from these working (Sutherland, 2007). A peak in

excess of 200,000 carats was reached in 1956, where after production declined to 13,300 carats in

1960.

Almost all the production was from along the Kolokoro and the Sabarokoni streams that drain the

Droujba kimberlite zone. The decline in SMB’s production after 1956 was due to the invasion of their

concession by illegal miners which is discussed in the following section.

During SMB’s mining operations the first kimberlite dykes were encountered along the upper

Kolokoro.

The quality of the diamonds from the Bounoudou area was poor, being valued in the 1950s at

US$3/carat, and the average diamond size was small, at approximately 0.17 carat/stone. A number

of large stones were recovered from the area, however, the biggest on record being over 270 carats

(Zoubarev & Pissemsky, 1963). The poor quality of the diamonds was counterbalanced by high

grades and shallow overburden. In 1952 the mined grade was approximately 6 carats/m3 declining to

around 3.5 carats/m3 in 1953, 2.2 carats/m3 in 1957 and 0.60 carats/m3 in 1960.

Zoubarev, in a personal communication to Stellar Diamonds, has confirmed that the 270 carat stone

referred to above was recovered from weathered kimberlite at Droujba.

By 1956, the area around Bounoudou had become the largest producer of diamonds in Guinea.

However, following the expulsion in that year of French nationals engaged in illicit diamond mining

in Sierra Leone (Van der Laan, 1965), the Guinean diamond fields were invaded by many thousands

of illegal miners. The Bounoudou mine was temporarily ‘rushed’ and outlying deposits such as at

Avili and Ouyégo were taken over. In March 1957 it was estimated that there were 1,500 clandestine

miners working on the Avili deposits with more arriving daily (Causse, 1957).

In 1957 the artisan workers were organised into a cooperative, BEKIMA (BEyla-KIssidougou-

MAcenta). By 1959 there were estimated to be over 41,000 diggers in the cooperative. Diamond

production at this time is extremely difficult to estimate but may have been of the order of 500,000

ct/year, almost all initially being smuggled via Liberia or Sierra Leone. In 1959 a diamond bourse was

opened in Kankan and officially exported over 1,000,000 carats, although some of these diamonds

are likely to have originated in Sierra Leone or Côte d'Ivoire.

In Guinea the law has irregularly alternated between legalising artisan diamond mining and trading

and outlawing it. Legal artisanal mining was permitted (in specific areas) from independence until

1964 and subsequently between 1969 and 1972, 1979 and 1983 and the subsequently to 1991.

Between these periods artisanal mining has been banned, although clandestine mining has actually

been continuous albeit the intensity of mining and the locations worked have been affected by the

extent to which law enforcement was applied.

The artisan activity over five decades has resulted in the working of many of the shallower deposits

found during the various phases of exploration in the Diani basin: Avili, Bounoudou, Ouyégo,


Bafatéia, Gourbarako. Additional intense clandestine activity has taken place farther South around

Kuankan in the tributaries of the Séia. No figures are available for the production from these

deposits but given that it is known that they are locally high grade and also taking into account the

extent of the deposits worked it can reasonably be assessed that the total must be at least in the

hundreds of thousands of carats and may well run into the millions of carats.

In recent years diamond exports from Guinea have been in the 250-400,000 carat range. It is

probable that a proportion of these diamonds has been derived from neighbouring countries but

observation in the field by Sutherland in recent years makes it clear that there is a substantial

continuing local production.

In 1960 the colonial diamond mining companies in Guinea were nationalised and became part of the

Entreprise Guinéen d'Exploitation du Diamant (EGED). Technical assistance was provided by the

Soviet Union in the form of aid both to run the mines and to carry out the most intensive and

systematic prospecting programme for diamonds in Guinea up to that time. After a brief closure, the

Bounoudou mine was brought back into production but encountered various operational problems.

Initially (in 1961) the plant was used to process samples that permitted the further definition of

resources. In 1962 there was no production from the Bounoudou area as the plant was upgraded to

a capacity of 160 m3/hr and X-ray equipment (apparently used for -2 mm size-fraction concentrate)

was installed. Routine production was then started in 1963 with production then being derived from

a combination of Kolokoro I (a colluvial and low terrace deposit at the eastern end of the upper

Kolokoro stream and astride kimberlite dyke 1), Kolokoro II (colluvial, eluvial and weathered

kimberlite deposits in and around Droujba) and tailings from the SMD plant.

It is difficult to derive accurate production figures from the Bounoudou area for the period after

1963 when the Soviet Aid Mission had departed and the plant was run by EGED. Reported total

EGED production (i.e. including production from their washplants at Banankoro, Fénaria, Férouba,

Tissinkoro and Ouroukoro as well as at Bounoudou) peaked at almost 56,000 ct in 1965 and declined

to less than 10,000 ct in 1967 before ceasing completely in the early 1970s (Department of Mines,

1984). It is apparent that total production from the Bounoudou area by formal mining during the

1960s and early 1970s can only have been some tens of thousands of carats. This is important in

considering the resources that were assessed for the Bounoudou region by the Soviet Aid Mission in

the early 1960s.

The Soviet Aid Mission carried out a considerable volume of prospecting work in the area (Zoubarev

and Pissemski, 1963). They re-discovered around 12 kimberlite dykes and a 'pipe' (Droujba) in the

Bounoudou area between the Diani and Somolo rivers as well as two kimberlite dykes in the Avili

area and one kimberlite dyke beside the Gourbarako stream, both these locations being on the west

bank of the Diani. Detailed prospecting was carried out on all the alluvial and eluvial/colluvial

deposits in the immediate area of Bounoudou and several areas were blocked out for mining.

Regional reconnaissance was also conducted throughout the upper Diani drainage basin with

detailed follow-up studies in those areas considered to be of greatest interest. A list of resources

(non-JORC compliant) were established as being considered potentially exploitable in what is now

the West African (WAD) licence area. These included kimberlite from Droujba and Dyke 3 (see Table

3 below). Dyke 3 is now called the Katcha dyke. The location of the kimberlites are shown in Figure 5


Table 3: Resources for kimberlites in the Bounoudou area quoted by the Soviet Aid Mission (taken from Sutherland, 2007).

Name Type Volume

(m3)

Grade

(ct/m3)

Resource

(ct)

Droujba Weathered kimberlite 92,240 1.50 138,802

Droujba Fresh kimberlite 47,880 1.57 75,233

Dyke 3 Weathered kimberlite 9,384 2.05 19,234

Figure 5: Map showing location of kimberlites in the Droubja area after Sutherland (2007).

In 1978 ADG commenced an exploration programme that was a joint venture between Diamond

Distributors Exploration (DDX, a subsidiary of Diamond Distributors Inc) and Harry Winston Inc, both

New York diamond trading companies. The project was initiated by D. Sutherland. Following a

review of existing information and an initial reconnaissance exercise, the Bounoudou area was

selected as “Priority Area B” for the joint venture (“Priority Area A” being along the river Baoule).

The JV re-located most of the known kimberlite occurrences in the region but the main initial target

was the alluvial deposits along the River Diani from where the Bounoudou kimberlite zone

intersected the river to 10 km downstream, south of the Avili confluence. To evaluate this reach ADG

carried out a drilling and sampling programme. Sample grades varied considerably along the Diani


but reached a maximum of almost 15 ct/m3 with an average of 0.31 ct/m3. A total resource of

around 2,000,000 carats was estimated along the section of the Diani. In 1981 the majority of the

diamonds recovered during the ADG programme were valued and a feasibility study into the mining

of the Diani alluvials was carried out (Comité Consultatif ADG, 1981). The Diani diamonds at that

time were valued at US$10/carat and it was concluded that the project was not likely to be

profitable and hence was abandoned. The bulk of the population of the diamonds recovered were of

poor quality but a small number of higher quality diamonds were present. For reasons of

conservatism (Sutherland, 2007) the diamond value of US$10/carat excluded better quality

diamonds. This provoked considerable discussion at the time (Lampietti, 1981).

Between October 1988 and May 1989 a team assembled by the consultancy Sidam-Minorex and

lead by Guy Lelogeay worked in the Bounoudou area as part of a wider Projet du Developement

Minier. The Bounoudou project had the dual objectives of providing an inventory of the areas being

currently mined by artisanal diggers and to stimulate exploration for primary diamond deposits

(Lelogeay, 1989). This team re-located many of the known deposits (primary and secondary), some

of which they regarded as ‘new discoveries’. They did, however, indicate the existence of an upper

terrace along the Diani, north of the bridge on the road between Kuankan and Bounoudou. They

also highlighted the occurrence of diamonds in the Somolo near Famoëla. Sutherland (2007)

considered that their figures for diamond grades, volumes of mineralised material present and

hence their estimates of ‘diamond resources’ in both primary and secondary deposits to be

exaggerated relative to the figures based on the more detailed geological and sampling work of the

Soviet Aid Mission and ADG.

The Hymex project started in 1988 when a group of private Swiss-based financiers acquired a

diamond exploration concession along the River Diani, including the whole area of the current WAD

concession. Their initial objective was to dredge the bed of the River Diani, which was considered

impossible by Sutherland (2007), given the small size of the river in this part of its drainage basin.

They then started sampling the zone of the Diani-Avili confluence by dragline trenching.

In the latter part of 2006 Hymex publicised their intention to mine the Droujba kimberlite body

using a washplant constructed for that purpose. No results are known from this exercise.

In May 2006, De Beers’ representative company Debsam took out a Permis de Recherches for three

areas along the Diani valley of which the southern permit included the known Droujba kimberlite.

Work, including the collection of a mini-bulk sample, was carried out over a 6 month period. In

December 2006, Debsam notified the Guinean Ministry of Mines that they were going to relinquish

the entire area; this being followed up in writing in February 2007. The focus of Debsam’s interest in

the Diani valley was primarily the Droujba kimberlite. De Beers’ collected several tons of weathered

kimberlite for microdiamond analysis. Historically the resource was estimated to contain 1,500,000

carats valued at US$ 50 / carat, at a relatively high grade of between 80 – 120 cpht, however the De

Beers work indicated a grade possibly as high as 200 cpht (Carr, 2008).

Mano River Resources through their newly formed Guinean subsidiary Friendship Diamonds Guinée

SA applied for a Diamants primaire (hard rock diamonds) licence over the same areas relinquished


by Debsam. These were acknowledged by the Ministry of Mines & Geology in May 2007. Mano River

Resources was the parent company of Stellar Diamond Plc.

7 GEOLOGICAL SETTING

7.1 Regional Geology Guinea forms part of the West African Craton, which also encompasses Sierra Leone, Liberia and

Cote d’Ivoire (McFarlane et al., 1981). Since the Archaean, the central part of the craton has been

subject to various tensional stresses as it has remained an essentially stable area whilst around its

margins there have been major tectonic events, such as the Pan-African orogenies (Venkatakrishnan

& Cluver, 1989).

The Leonean and Liberian thermo-tectonic events of the Archaean provided an initial structural

imprint to the craton. The Leonean event is associated with structures orientated sub-latitudinally,

and the Liberian event with structures orientated sub-meridionally (Venkatakrishnan & Cluver,

1989).

An approximate summary of major tectonic events and associated structures is given below:

Erburnian (middle Proterozoic) activity: major structures with NW-SE orientation were either formed or reactivated. The NW-SE orientated dolerite dykes in SE Guinea were intruded shortly after this event.

Devonian: reactivation of E-W fault systems together with intrusion of swarms of dolerite dykes orientated in this direction.

Cretaceous to Palaeogene: reactivation of NW-SE orientated faults together with activation of NE-SW faults. The dolerites and kimberlites are displaced by these movements.

The oldest rocks in Southeast Guinea are Proterozoic in age. Along with Phanerozoic aged rocks

these occur as intrusive dykes which are mainly of doleritic composition (Venkatakrishnan & Cluver,

1989).

Two ages of intrusive dykes are present in SE Guinea, with distinct orientations:

Sub-latitudinal: these are the dominant dyke orientation and intrusions are Phanerozoic in age (possibly Devonian or Triassic to Jurassic).

Northwest-Southeast: these are the minor dykes and intrusions are Proterozoic in age.

East-West orientations: E-W orientated dolerite dykes are also reported to occasionally occur in the Bounoudou area.

Kimberlite dykes are also widespread in SE Guinea (Meyer & Mahin, 1986; Sutherland, 2007; Skinner

et al., 2004). In general, the pipes are small (<6 ha) and all but one or two appear to be low grade

(<10 carats per hundred tonnes). The kimberlite dykes predominantly follow NE-SW, E-W and NW-SE

trends. Their diamond content can vary from barren or very low grade to high grade (i.e. >100 cpht).

Ages of the kimberlites that occur in the Bounoudou area are not well constrained, radiometric


dates range from 175 Ma to 153 Ma (Meyer & Mahin, 1986; Goujou, et al., 1999; Skinner et al.,

2004).

Tertiary and quaternary aged sediments are also found in Southeast Guinea and primarily occur on

slopes and valley bottoms. On certain interfluves, iron-cemented gravels up to 2 m thick occur,

consisting of rounded quartz and banded-ironstone pebbles and cobbles. They are considered to

have been more widespread historically, but have since been removed by erosion. These deposits

are thought to be Tertiary in age (Sutherland D. , 2007).

Alluvial sequences along the major rivers and larger tributaries consist of a basal gravel horizon up to

2 m thick. Gravels are overlain by fining upwards sequences of sands, silts and clays, which on upper

terraces are frequently truncated or completely eroded.

The ages of the alluvial deposits are differentiated according to their altitude, their degree of

preservation and the extent of lateritic alteration. The upper gravels are partially iron-cemented and

laterite profiles developed on them show clear pisolitic horizons. Lower terrace sediments are only

iron mottled and deposits underlying the river floodplains show little or no evidence of iron

precipitation. By analogy with neighbouring areas, the upper terrace gravels are likely to be Neogene

or Early to Middle Pleistocene in age and the alluvial deposits underlying the low terraces and

floodplains are Late Pleistocene and Holocene in age (Goujou, et al., 1999).

Slope deposits occur widely. These are composed of basal angular quartz and/or lateritic nodule

gravel and silty sand.

7.2 Local Geology Within the area of interest there is a set of kimberlite intrusions in what is termed the Bounoudou

kimberlite zone (Goujou, et al., 1999; Sutherland, 2007). This zone trends at approximately 290o and

has been traced for a distance of around 5 km between the rivers Diani and Somolo. The zone is

several hundreds of metres wide. The kimberlites within the zone are principally dykes, of which at

least 12 separate sub-parallel occurrences are known but there is also a larger body with a pipe-like

expression at the surface. This pipe-like body is called Droujba and is located in the upper Diani

valley, SE Guinea.

Additional dykes have been located in other areas, for example in the Ziama Mountains.

The Diani valley is dominated by Archaean granitoid rocks consisting principally of magmatic

granites, granite-gneisses with biotite or with amphibole and biotite, gneisses and plagiogneisses

with biotite, and, more rarely, quartzites (Goujou, et al., 1999; Sutherland, 2007). A major N-S

structure apparent along the Diani valley separates SSW-NNE trending basement rocks to the east,

which are predominantly gneissic, from basement rocks are more granitic to the west. The latter are

associated with the Macenta batholith, and trend predominantly sub-latitudinally. Within the

gneissic basement, small lenses (from 1-2 to several tens of metres wide) of amphibolites and

crystalline schist occur (Goujou, et al., 1999; Sutherland, 2007).


The amphibolitic lenses are relics of original basic igneous intrusions that, together with foliation in

the gneisses, are generally orientated SSW-NNE, implying association with the Archaean Liberian

thermo-tectonic event.

7.3 Property Geology The Droujba kimberlite lies on the watershed between the headwaters of the Kolokoro and

Sabarokoni streams, 2.5 km to the NW of Bounoudou village.

The basement rocks of granite-gneiss around Bounoudo have frequent amphibolitic lenses and

occasional dolerites and banded ironstones. Droujba is interpreted to lie within a zone of kimberlite

dyke intrusion that trends 290o extending over a distance of at least 5 km from the Dalla locality at

its western end close to the Diani alluvial cover, to the Somokoni/Bolamba confluence at its eastern

end near the river Somolo (Goujou, et al., 1999; Sutherland, 2007). This kimberlite dyke system has

been named the Katcha Dyke by Stellar.

7.4 Kimberlite Geology Previous work (see Sutherland, 2007) established that at Droujba the main kimberlite body coincides

with an elongate, diffuse dipole magnetic anomaly. Other geophysical methods have indicated the

possible existence of an associated buried body kimberlite body. The Soviet Aid Mission’s

interpretation of the geophysical results was that Droujba is composed of several separate

kimberlite bodies. The main body was found to be a kidney-shaped elongate ovoid of kimberlite in

an explosion breccia composed of local rock fragments of gneiss, amphiboloite and mylonite with

quartzose and chloritic breccias cement. The principal near-surface kimberlite body was interpreted

as a slab of about 150 to 170 m long by around 50 m wide, with a sub-crop area of around 8500 m2

(0.85 ha) and a thickness of around 15-20 m. The base of this body was apparently formed by a fault

which dipped at a shallow angle (11o) to the West. Within this main body the bulk of the kimberlite

was highly decomposed but at depth, below an undulating weathering front, harder kimberlite was

encountered which was above the interpreted basal fault. Brecciated country rock in places overlay

the kimberlite but also occurred below the fault.

A sample from Droujba was described by (Meyer & Mahin, 1986) as containing abundant

macrocrystic olivine, ilmenite and rare garnet set in a groundmass of phlogopite, spinel, calcite,

serpentine and minor perovskite. They inferred that the phlogopite crystallised later than the

groundmass spinels and ilmenite.

Skinner et al. (2004) described a single sample from Droujba which they classified as hypabyssal

facies kimberlite with abundant macrocrystic olivine and a groundmass dominated by phologopite.

The current study has provided considerably greater drill coverage, particularly at depth, of the

kimberlite and therefore an improved geological interpretation. The Droujba kimberlite pipe is now

considered to be the root zone of a typical kimberlite pipe that has been deeply eroded (Robey,

2011). Petrographic descriptions by (Skinner, 2011A and B) provide further evidence for this.

Logging of drill cores has indentified the existence of three main lithofacies, namely Coherent

Macrocrystic Kimberlite (Kcm), Kimberlite Contact Breccia (CBK) and Wallrock Breccia (CB). It is this

litho-facies sub-division that will be utilised in the resource statement presented in this report.


The Wallrock Breccia (CB) consists almost entirely of tightly packed clasts of mixed country-rock

lithologies (mainly granitic gneiss and amphibolites, but also occasional dolerite) which are set in a

granular matrix of ground-up rock fragments. There is little or no kimberlite-derived component in

these breccias (Figure 6 A & B). The breccia forms a collar around the kimberlite body (Figure 7 &

Figure 8). There is clear evidence for preferred orientation of elongate clasts (Figure 6B), and the

mixing of clast types demonstrates that it is not in-situ fractured rock, but rather breccia formed by

mass flow processes.

The kimberlite breccias (CBK) mostly occupy an intermediate position between the Kcm and CB

(Figure 7 & Figure 8) and could be considered a mixture between these end members. It is

composed of both mantle-derived xenocrysts of abundant olivine and lesser ilmenite, which

together with reasonably abundant country-rock clasts (ranging from 20 to 80 percent) are set in a

relatively uniform kimberlite groundmass (Figure 6). In some instances the country-rock clasts

appear to have accumulated into distinct layers.

The coherent amcrocrystic kimberlite (Kcm) would have previously been called hypabyssal

kimberlite. It’s characteristics are an abundance of mantle derived xenocrysts of olivine and lesser

ilmenite, set with abundant olivine phenocrysts in a relatively uniform groundmass (Figure 6F).

Country-rock clasts (xenoliths) are relatively uncommon, generally less than 15% (Figure 6E), but in

places distinct concentration of xenoliths are apparent. Initial work suggested that there may be two

separate Kcm intrusions, one to the north which was mined in the open pit by the Russian Aid

Mission in the 1960’s and another “blind intrusion” located to the south. Drilling during the 2011

programme however demonstrated that these two bodies are connected and so have consequently

been modelled as a single body (Figure 8).


Figure 6: Photographs of core illustrating the main rock types present in the Droujba kimberlite pipe. A & B represented country-rock breccias (CB), C&D are of kimberlite breccias (CBK) and D&F are of coherent kimberlite (Kcm).


Figure 7: Planview sections of the modelled Droujba Pipe. The elevation for each (in metres above mean sea level) is shown top left. The grids are 50 x 50 m and north is at the top of each plan. The different lithofacies on each section are illustrated as the different coloured zones.

Figure 8: Vertical cross section through the Droujba geological model that serves to illustrate the geology of the deposit. The location of the section lines is shown on the planview in the bottom left thumbnail sketch. The grid lines are 50 m apart in all sections.

525 485 445

405 305 205

Kcm

CBKCB

W E SW NE N S

W E

N

S

NE

SW

Kcm

CBKCB

Kcm

CBKCB


8 DEPOSIT TYPE Droujba is a typical kimberlite-hosted diamond deposit, or so-called “primary diamond deposit”. The

deposit model for this style of mineralisation has been well established and is summarized in recent

papers by Gurney et al., (2004), Kjarsgaard (2007) and Gurney et al., (2010).

In summary the majority of commercial diamonds are formed in the sub-continental mantle

lithosphere (SCML) over an extended time period ranging from the Archaean to the Neoproterozoic

(Gurney et al., 2010) or maybe even to the present day (Kjarsgaard, 2007) . The conditions for

diamond growth are best met in thick, old lithospheric mantle that have low geothermal gradients,

that most typically occur as the roots that underlie ancient continental nuclei, i.e. the Archaean

cratons. The Man Craton of West Africa is a typical craton of this type. The Archaean cratons and

surrounding mobile belts are the principal target areas for primary diamond deposit exploration.

Diamonds that have grown in the SCML are brought to the earth’s surface by deeply formed

magmas such as kimberlites and lamproites which rise up through the crust as dykes. In the near-

surface environment the kimberlites may erupt to produce distinctive volcanic features called pipes

or diatremes. A schematic model of a kimberlite pipe is presented in Figure 9. Subsequent erosion

after emplacement can remove part or all of the volcanic pipe and in the process can result in the

formation of secondary, alluvial or placer deposits at any location from close to the kimberlite to

hundreds of kilometres from their sources. Deep erosion can remove most or all of the upper

portions of a kimberlite system so that only the lower portion of the pipe and the feeder dykes

remain. This appears to be the case in the Droujba area of Guinea (Skinner et al., 2004), where the

Droujba pipe is considered to be a deeply eroded root zone of a kimbelite pipe (Robey, 2011).

Statistics of known kimberlites world-wide show that only a small minority actually contain any

diamonds (around 1 percent) and of these only about 40 have ever been successfully mined.


Figure 9: Model of a kimberlite pipe from Mitchell (1986). The location of the root zone is indicated near the base of the model and is the proposed level of exposure of the Droujba Pipe.

9 MINERALISATION The Droujba kimberlite pipe has been proven to be diamond-bearing through past exploration as

listed in section 6 above. The Russian Aid Mission recovered 39,790 carats from 44,000 cubic metres

of kimberlite excavated from 1963-1965 (Sutherland D. , 2007). They further calculated a resource of

300,000 carats at an average grade of 2.02 carats per cubic metre, at bottom screen size cut-off of

0.5 mm.

Drilling, core logging and micro-diamond analysis conducted by Stellar between late 2010 and early

2012 have confirmed the continuation of diamond-bearing kimberlite (in the Kcm and CBK litho-

facies noted above) to a maximum depth of 414 metres below the general ground surface, an

elevation of 117 metres above mean sea level. The kimberlite remains open at this depth. The

mineralised zone takes the form of a core of coherent kimberlite (Kcm – see Figure 7 and Figure 8)

surrounded by kimberlite-bearing breccias (CBK) located within a larger body of kimberlite-poor

breccias (CB). Mineralisation continuity has been demonstrated by analysing a spatially

representative set of samples taken from drill cores for micro-diamonds. Results are presented in

Table 16 below.


The occurrence of macro-diamonds and the relationship between macro- and micro- diamonds has

been confirmed by Stellar Diamonds through the excavation and processing of four bulk samples

totalling 919 dry tonnes taken from the in-pit exposure of the Kcm kimberlite (Figure 10). These pits

were excavated on the floor of the pit created by the Russian aid Mission in the 1960’s.

Complementary micro-diamond samples have been processed at two independent laboratories in

Canada (SRC) and South Africa (SGS).

Figure 10: Photograph of the Droujba open pit showing the four sample pits from which the bulk samples were removed. The view is approximately from the west and each pit is approximately 10 metres long.

10 EXPLORATION The Russian Aid Mission outlined the Droujba pipe and associated dykes by drilling 88 vertical holes

on 40 x 20 m or 20 x 10 m centres (Sutherland D. , 2007). Most of these holes were auger holes

drilled to a depth of 15-20 m, but a small number of cores were drilled, with the maximum depth

attained being 140 m. They also conducted magnetic, resistivity and gravity geophysical surveys

over the pipe. The work uncovered a complex main kimberlite body and associated dykes, the

largest dyke being Dyke 3 (Katcha). The main body was found to be a kidney-shaped elongate ovoid

of kimberlite in an explosion breccia composed of local rock fragments (gneiss, amphibolite,

mylonite with a quartzose and chloritic matrix). The principal near-surface kimberlite body was

interpreted to be a slab about 150-170 m along the longest axis and around 50 m wide across this

axis with a sub-crop body was apparently formed by a fault which dipped at a shallow angle (11o) to

the West. Within this main body the bulk of the kimberlite was highly decomposed but at depth,

below an undulating weathering front, harder kimberlite was encountered, above the interpreted

basal fault. Brecciated country rock in places overlay the kimberlite as well as occurring below the

fault. The volume of kimberlite in the main body was estimated at 150,000 m3, of which

approximately 50,000 m3 was ‘hard’ kimberlite.

The main body of kimberlite therefore was interpreted to have no continuity at depth. Two vertical

diamond drillholes within the perimeter of this body encountered, between 41 and 97 m depth, 3

and 4 thin kimberlite intersections ranging between 0.3 and 3.4 m in thickness, and were interpreted

as dykes (Sutherland D. , 2007).

De Beers’ geologists collected several tons of weathered kimberlite for microdiamond analysis.

Historically the resource is estimated to contain 1,500,000 carats valued at US$ 50 / carat, at a

relatively high grade of between 80 – 120 cpht, however the De Beers work indicated a grade

possibly as high as 200 cpht (Carr, 2008).


10.1 Exploration approach and methodology Stellar Diamonds has adopted a typical modern approach to the evaluation of kimberlite resources.

A core drilling programme was conducted to delineate the kimberlite pipe to a depth of 350 m

below surface. The drill cores have been to utilised to log the drill cores to gain an understanding of

the internal geology of the kimberlite (Robey, 2011), as well as for determining the density and

moisture content of the kimberlite and country rocks, and for the recovery of micro-diamonds from

a suite of samples that are representative of the different litho-facies identified in the drill cores.

The second phase of work was to excavate bulk samples with a combined mass of approximately

1000 metric tonnes for the recovery of macro-diamonds for diamond grade and value

determination, with an aim of obtaining at least 500 carats. These bulk samples were also sub-

sampled for micro-diamond analysis. This would establish the macro-micro diamond size and

concentration relationships from the same samples. Kimberlite was accessible at the bottom of the

open pit excavated by the Russian Aid Mission in the 1960’s. However, before this could be done the

pit had to be drained of water and mud that had accumulated at the bottom of the lake had to be

removed.

10.2 Geophysical Surveys As has been mentioned above, the Russian Aid Mission conducted several geophysical surveys to

delineate the Droujba kimberlite. According to Sutherland (2007) this met with little success because

of the high level of basement noise resulting from frequent dolerite intrusion, amphibolitic and

banded ironstone sequences in the basement rocks, magnetite-rich portions of the granite-gneisses

and near-surface laterite development. The consequence has been the generation of very large

numbers of false anomalies and the very poor magnetic signatures for even known kimberlites. In

some parts of the diamond fields rapid changes in relief result in uneven flight paths which also

complicated the quality of the gathered data. Helicopter surveys on more focussed areas have been

only marginally more successful.

West African Diamonds (prior to the takeover by Stellar) conducted a series of ground geophysical

surveys over the Droujba pipe and Katcha dyke during December 2007 (Munyawiri, 2008). A grid of

1000 x 1000m was laid over the main Droujba kimberlite body. The grid was designed and oriented

to take account of the shape and expected size of ore body as well as local geology based on

available information and ground observations made on site. Traverses were in a north-south

direction which took into account the strike and orientation of the Koiyang – Kolokoro dyke systems.

A suit of geophysical surveys each with its own unique parameters in terms of line and station

spacing were conducted. These methods included, Controlled Source Audio Magneto-tellurics

(CSAMT), Ground Magnetics, Electromagnetics (EM) and Gravity. Considerable difficulties were

encountered with virtually all the methods; however the ground magnetic results produced

consistent results. From these it was suggested that the Droujba pipe might be much larger than the

previous estimate of 0.85 Ha made by the Russian Aid Mission, and a southern extension of the

kimberlite at depth was indicated.


11 DRILLING Drilling conducted by Russian Aid Mission and other companies has been alluded to in the preceding

sections of this report. However, since very little detail of these campaigns is available, this drilling

will not be included in the discussion below.

In 2010 and 2011 Stellar Diamonds drilled a total of 41holes in the Droujba licence area. The vast

majority (31) of which were drilled into the Droujba kimberlite pipe. The other holes were drilled

into the Katcha Dyke and to test several geophysical anomalies that had been located to the north

and west of the Droujba Pipe that has since been proven to not be kimberlite.

The drilling has all been conventional wireline core drilling to recover NTW series core with a core

diameter of 56.1 mm, with short intersections at depth comprising BTW core with a core diameter of

41.6 mm. The drilling has been carried out by the contractors E Global Drilling using a Hydracore drill

rig. The contractors were also responsible for producing down-hole surveys of each hole, and utilised

an Ez-Trac Reflex survey tool for this purpose.

The layout of the drill holes are presented in two- and three-dimensional projections in Figure 11

below.

A summary of the drilling programme is presented in Table 4.

The drilling programme has been designed to delineate the Droujba pipe down to a depth of 350 m

below general ground level. Core recoveries have generally been excellent, averaging 95% (Figure

12), and all holes were completed to the designed depths.


Table 4: Summary table of drill hole information for holes drilled at Droujba

BHID XCOLLAR YCOLLAR ZCOLLAR LENGTH DIP AZMUTH

DK_DH001 494,143 948,125 539 169.85 -50 38

DK_DH002 494,211 948,233 541 196.40 -60 218

DK_DH003 494,085 948,244 541 241.20 -50 135

DK_DH004 494,241 948,127 537 230.00 -50 315

DK_DH005 494,232 948,126 537 229.10 -50 275

DK_DH006 494,241 948,127 537 97.20 -50 350

DK_DH007 494,089 948,221 540 202.10 -50 175

DK_DH008 494,084 948,233 541 167.50 -50 105

DK_DH009 494,097 948,187 539 101.50 -50 90

DK_DH010 494,159 948,147 539 142.00 -50 190

DK_DH011 494,159 948,147 539 103.00 -50 240

DK_DH012 494,159 948,147 539 154.50 -70 240

DK_DH013 494,090 948,168 538 160.50 -90 0

DK_DH016 494,083 948,115 533 205.00 -60 55

DK_DH017 494,095 948,114 534 256.00 -60 355

DK_DH018 494,134 948,135 533 119.50 -90 0

DK_DH019 494,236 948,207 541 200.00 -70 270

DK_DH020 494,089 948,191 539 201.80 -60 85

DK_DH021 494,149 948,134 539 190.00 -60 15

DK_DH022 494,235 948,227 543 414.30 -60 246

DK_DH023 494,028 948,109 537 406.50 -80 66

DK_DH024 494,132 948,072 528 330.00 -65 322

DK_DH025 494,058 948,122 529 324.00 -60 61

DK_DH026 494,079 948,226 540 202.50 -60 158

DK_DH035 494,077 948,196 532 350.00 -90 0

DK_DH036 494,077 948,196 532 215.00 -45 118

DK_DH037 494,085 948,123 530 400.00 -90 0

DK_DH038 494,246 948,125 537 400.00 -62 270

DK_DH039 494,243 948,207 541 360.00 -59 270

DK_DH040 494,161 948,187 520 200.00 -90 0

DK_DH041 494,111 948,134 531 414.00 -90 0


Figure 11: Diagrams showing the drill holes drilled into the Droujba kimberlite by Stellar Diamonds during 2010 and 2011. The diagram on the left is a 2D planview showing the full projection distance of the holes. The diagram on the left is a 3D view showing the holes drilled and the Kcm litho-facies in cyan and the outer CB in red.

Figure 12: Histogram of core recovery percentages for the 2010-2011 drilling programme at Droujba.

N

N

N

E

Z

50m

50m

0

500

1000

1500

2000

2500

3000

3500

0 20 40 60 80 100 120 140

Fre

qu

en

cy

Core Recovery %


12 SAMPLING METHOD AND APPROACH The sampling of the Droujba kimberlite approach has involved two key elements, core drilling to

obtain core for bulk density, moisture and micro-diamond analysis, and bulk sampling from near

surface pits to obtain macro-diamonds for grade and value determination.

12.1 Core sampling

12.1.1 Bulk Density and Moisture Content

Drill core was selected for density and moisture content measurement on the principle that at least

one sample should be taken for every 20 m vertical section traversed by each drill hole.

12.1.2 Micro-diamond sampling

Micro-diamond sampling has been conducted in several consignments as summarized in Table 5 . All

of the first five consignments were submitted as composite samples, i.e. discrete intervals were not

kept separate but combined according to rock type and therefore they were processed and reported

as single samples. Therefore the spatial resolution of the individual samples was lost.

Table 5: Summary of consignments submitted for micro-diamond analysis from Droujba drill cores.

Consignment No.

Date Submitted

Total Mass (kg)

Laboratory Lithology Type Source

GN04_2010_002 Dec-10 200 SRC Kcm Composite Holes DK_DH01, 02

GN04_2010_003 Dec-10 100 SRC CBK Composite Holes DK_DH01, 02

GN04_2011_001 Feb-11 67.6 SRC Kcm (Main)

Composite Holes DK_DH01, 02, DH03, DH04, DH05

GN04_2011_002 Feb-11 200 SRC Kcm (South)

Composite Holes DK_DH05, DH07, DH12, DH13

GN04_2011_003 May-11 268 SRC CBK Composite Holes DK_DH07, DH16, DH17

GN04_2011_004 Sep-11 314.6 SRC Kcm + CBK

Discrete Holes DK_DH03, DH04, DH05, DH07, DH08, DH09, DH10, DH17, DH20, DH22, DH23, DH24, DH25, DH26

GN04_2011_005 Nov-11 198.8 SRC Kcm + CBK

Discrete Holes DK_DH35, DH36, DH37, DH38, DH39, DH40, DH41

The first five consignments were sampled and submitted for treatment prior to the engagement of

CAE Mining in the project. These samples were taken with the objective of proving mineralisation

and therefore sections within the specified depth intervals that contained high concentrations or

pure country-rock clasts (barren waste) were excluded from the samples, and the intervals that were

excluded were not recorded. This can be considered to have introduced a bias into the data, and this

should be borne in mind when the micro-diamond results are considered for diamond size frequency

analysis and global grade estimates.

With the drilling of further holes during 2011, CAE Mining recommended that further samples

should be taken from the new and existing drill cores to ensure that a representative sample set was

available. The spatial representation was insured by sub-dividing the kimberlite body into 50 x 50 x

50 m blocks and ensuring that at least one sample of Kcm and CBK was taken in each block where

drill holes passed through such blocks, and that the rock type was present. It was also recommended

that each sample (of approximately 8 kg) be processed and reported separately. In the process of


sampling a record of any deliberately excluded country-rock clasts was kept. As a consequence a

further 44 samples weighing 314.6 kg were submitted to SRC in September 2011 as consignment

GN04_2011_004. A summary of the sample weight per litho-facies for this consignment is presented

in Table 6.

Table 6: Summary of sample masses per litho-facies for Consignment GN04_2011_004.

Litho-facies Sample Mass (kg)

CB 19.7

CBK 130.4

Kcm 164.5

Grand Total 314.6

A second consignment (GN04_2011_05) was submitted in November 2011 comprising 198.9 kg from

25 cores samples from holes DH035, 036, 037, 038, 039, 040 and 041. These samples were collected

and processed according to geological codes as described in Table 7.

Table 7: Summary of sample masses per litho-facies for Consignment GN04_2011_005

Litho-facies Sample Mass (kg)

CBK 63.4

Dyke 7.9

Kcm 127.6

Grand Total 198.9

This series of samples are considered more representative of the different litho-facies present, and

the sample size can be standardised to include any deliberately excluded waste rock present in the

individual sample intervals.

13 SAMPLE PREPARTION, ANALYSES AND SECURITY

13.1 Micro-diamond Analysis Once marked in the core boxes the samples were removed. Solid intervals of core were split using a

rock splitter, with half the core retained as a record of the sample. This was particularly applicable to

the Kcm samples. Broken core was not split, and all parts of such core were included in the sample.

It was found that CBK core tended to break and crumble when cut by the rock splitter, and therefore

most of these core samples were not split. After splitting the core samples were bagged and

packaged in sealable drums. These drums were transported to Conakry by Stellar personnel using

Stellar company vehicles. As part of the export process samples were securely transported to the

office of the Ministry of Mines in Conakry where they were examined by a government official

before being sealed and issued with an export permit then and shipped to Canada for analysis.

Stellar Diamonds have maintained a chain of custody of the samples to the point of export from

Guinea and SRC provide chain-of-custody acknowledgement receipts of the samples on arrival in


Canada and throughout processing in their laboratory. The same procedure was applied to samples

sent to SGS South Africa. All recovered diamonds are numbered and stored at the SRC facility before

being returned to Stellar Diamonds. There is no preparation of samples conducted before the

samples arrive at the laboratories. At the laboratories sample preparation is conducted entirely by

employees of the laboratories and there is no participation in the process by Stellar employees.

The analysis of smaller samples of kimberlite for the recovery of micro-diamonds, generally between

75 microns and 0.85 mm, and below the normal commercial size range, has become an industry

standard and several laboratories worldwide now offer this procedure as a commercial service to

the diamond exploration and mining industry. The procedure used by the Saskatchewan Research

Council (SRC) in Canada for the Droujba samples is known as caustic fusion. The process involves

fusing an 8 kg sample of kimberlite in a kiln containing caustic soda. The molten residue is then

poured through a stainless steel wire mesh at the required size (e.g. 75 microns) and is then

chemically treated to reduce the size of the residue. The residues are then examined for diamonds.

The key to the method is that the caustic fusion does not affect the diamonds in any way, but melts

most of the other common kimberlite minerals which are then discarded as the melt residue.

The quality of the process is monitored by assessing the recovery of tracers that are added during

both caustic fusion and chemical treatment of the residues. These “tracers” are synthetic cubo-

octahedral diamonds. Two sizes are used are used by SRC, 212 micron diamonds that are introduced

into the sample just before caustic fusion (so called QC1), and 425 micron diamonds that are

introduced just prior to chemical treatment (QC2). Only samples that were not spiked with QC1 are

spiked with QC2 diamonds and stringent processes are used to ensure and record which samples

have been spiked, and to reconcile the recoveries of these diamonds. The diamonds are well

described and characterised and can therefore be distinguished from other artificial diamonds that

may have entered the samples from drill bits, saw blades or external spiking. Records are also kept

of other artificial diamonds recovered from the samples, and are reported as “syndites”. If doubts

exist about whether some stones are natural or synthetic cathodoluminescence is used to

distinguish them. Recoveries of these tracers are reported per sample or per 8 kg aliquot. SRC is

ISO/IEC 17025/2005 compliant and is a Standards Council of Canada (SCC) accredited laboratory.

Recoveries efficiencies of the artificial control diamonds are reported by the laboratory as part of

their QA/QC process. The recoveries from the consignments for the processing of Droujba samples

are listed in Table 8 below.

The high recovery rates recorded in Table 8 provides assurance that the micro-diamond recovery

from the Droujba cores was efficient.

As a further test duplicate samples were taken from bulk samples (see section 12.1.2) and sent to

two separate laboratories, SRC in Canada and SGS South Africa, These results are compared in 16.5.1

and Figure 19. The size distributions for the two consignments (+0.150 mm) are near identical and

provide further confidence that the SRC results are trustworthy. There are differences in the -0.150

mm fraction, but these diamonds have not been used for modelling purposes because it is common

practice to cut the lower most sieve class because it has well established recovery inefficiencies

occur near the lowermost sieve.


Table 8: Quality control results for consignments processed by SRC Laboratories. QC1 tests are recovery of -212+180 micron tracers introduced into the fusion process and QC2 for -300+250 micron tracers introduced into the chemical treatment process, see text for more details.

Consignment QC1 Tracers Recovered

QC1 Tracers Introduced QC2 Tracers Recovered

QC2 Tracers Introduced

GN04_2010-02 187 187 130 130

GN04_2010-03 94 95 60 60

GN04_2011-01 57 57 48 48

GN04_2011-02 117 119 160 160

GN04_2011-03 250 253 198 198

GN04_2011-04 309 310 282 282

GN04_2011-05 184 184 155 156

Total 1198 1205 1033 1034

Percentage 99.4% 99.9%

13.2 Bulk Density

13.2.1 Core Measurements

The method applied was that a samples of solid, continuous core at least 15 cm long was removed

for each 20 m vertical interval. Each piece of core was squared off at each end using a rock saw so it

formed a perfect cylinder. The length and diameter of the cylinder was then measured at several

places on the core and an average length and diameter was calculated from which the volume of the

cylinder was then calculated. The core sample was weighed and this weight was recorded as the wet

mass of the core, and a wet density value was calculated. The core sample was then dried in an oven

at 110 degrees Celsius for 12 hours, after which it was allowed to cool and the mass was again

measured, and a “dry mass” was recorded. This dry mass was used to calculate the “dry density”.

The differences in mass between the wet and dry measurements are taken to represent the

moisture content of the samples, and are expressed as percentage. The length and diameter

measurements were made using digital callipers with an accuracy of 0.1 mm and the mass was

measured on a Sartorius M-prove AY5101 balance, with an accuracy of 0.1 gram.

The method is simple and repeatable, and the results are considered accurate. Potential sample bias

exists from the fact that the method relies on solid core recovery, and therefore zones of poor

recovery will not have reliable density measurements. Overall however core recovery has excellent

(Figure 12). Therefore this potential bias is considered minimal. No measurements were carried out

on weathered near-surface horizons and therefore the density and moisture measurements made

from drill cores do not represent these horizons. The results of the measurements conducted on

cores are presented in Table 9.


Table 9: Summary of bulk densities and moisture content determination derived from drill cores.

Lithology No. Samples Average SG (Wet) g/cc

Average Moisture %

Average SG (Dry) g/cc

Breccia 22 2.47 3.6% 2.38

CB 6 2.45 3.0% 2.38

CBK 16 2.48 3.9% 2.39

Kimberlite 18 2.72 3.4% 2.63

Kcm black 15 2.74 2.7% 2.67

Kcm brown 2 2.60 7.1% 2.41

Kcm grey 1 2.65 7.1% 2.46

Wall rock 11 2.76 2.8% 2.68

Amphibolite 2 2.95 3.4% 2.85

Amphibolite-gneiss 2 2.94 4.4% 2.81

Gneiss 4 2.64 3.4% 2.55

Granite-gneiss 1 2.69 1.0% 2.66

Pink granite-gneiss 2 2.64 0.4% 2.63

Total 51

13.2.2 Bulk Sample Measurements

The removal of bulk samples from the Droujba pit is described in detail below. Grab samples were

removed from these larger samples for the purpose of density and moisture content measurement.

The method used was the water-displacement method whereby soft rock cut out of the trench wall

was immersed in a cylinder of water and the volume before and after immersion was read from the

cylinder. The sample was then weighed to provide a wet mass and the sample was then dried in an

oven for 12 hours and re-weighed to provide a dry mass. Wet and dry densities and moisture

content were then calculated from the data. In each pit, four samples were taken. The results listed

in Table 10 below are the averages obtained for each bulk sample pit.

Table 10: Average density and moisture content figures for the four bulk samples.

Sample No Wet Density (g/cc)

Moisture % Dry Density (g/cc)

BS1 1.96 9.6% 2.10

BS2 1.87 9.1% 1.90

BS3 2.30 4.3% 2.20

BS4 2.20 4.2% 2.10

The higher moisture content and lower densities recorded are to be expected given the weathered

nature of the kimberlite in the open pit.


13.3 Bulk Samples

13.3.1 Sample Excavation

Bulk sample pits were excavated in the open pit at Droujba once the pit had been drained of water

and accumulated mud had been stripped to reveal weathered kimberlite. The pits were spaced out

along the exposed pit bottom as shown in Figure 13.

Figure 13: Panoramic view of the pit bottom at Droujba showing the positions of the four bulk sample pits. The long axes of the pits are approximately 10 m, and the view is from the western edge of the pit, i.e. facing roughly east.

The pits were excavated using a Volvo 36 ton excavator (Figure 14a), and as a consequence of the

soft weathered nature of the kimberlite, smooth edges and sides of the pit were excavated (Figure

14b), which eased volume calculation of the amount of removed kimberlite. The excavated

kimberlite loaded directly into an articulated dump truck and transported to the bulk sample plant

site where it was then dumped onto designated, cleaned sample pads. From here the material was

loaded directly into the front end of the bulk sample plant.


Figure 14: Photographs of bulk sample pits at Droujba (a) excavation using a Volvo excavator, (b) final pit outline.

Mapping of the bulk sample trenches in detail was used to calculate accurate volumes of material

excavated from the each pit. This was done in one metre strips down the length of each pit, and

these were them accumulated to derive a total volume. Density and moisture content

measurements were then conducted using the water-displacement method described above, and

these were combined to calculate the wet and dry tonnages for each sample. These are summarised

in Table 11 below.

a)

b)


Table 11: Sample volumes and tonnages for the four Droujba bulk samples.

Sample No Volume (m3)

Wet Mass (metric tonnes)

Dry Mass (metric tonnes)

BS1 163.88 321.21 290.34

BS2 93.43 174.72 156.67

BS3 121.02 278.34 266.40

BS4 97.15 213.73 204.86

Total 475.48 987.99 919.26

13.3.2 Sample Processing

The processing of these bulk samples was conducted through a 5 tonne per hour bulk sample plant

that was partly built in South Africa and transported and installed and commissioned at Droujba,

specifically for this project. The construction and commissioning have been signed off by ADP Metco,

who were contracted by Stellar. The plant is operated entirely by Stellar Diamonds employees and

contractors.

The flow sheet for this plant is provided in Figure 15. The essential components include initial size

reduction by jaw crushing so that the product is -50 mm, then scrubbing to remove the -1 mm slimes

fraction followed by cone crushing to produce a -12+1 mm material for the 1st Pass and -7+1 mm for

the 2nd Pass (see below for an explanation of 1st and 2nd passes). The product is fed to a DMS cyclone

where separation of particles is achieved at a set density of 2.5 kg/m3 in a dense media

(ferrosilicone). Those particles with a density of less than 2.5 kg/m3 (floats) are stockpiled for further

processing in the 2nd Pass. The dense particles (>2.5kg/m3) are then passed to a Flow-sort X-ray

diamond recovery machine, in which diamonds are extracted based on their fluorescence

characteristics. The concentrate from the Flow-sort (those materials that fluoresced and were

captured) are fed to a glove box where they are hand-sorted for diamonds. The reject materials from

the Flow-sort are passed over a grease table where the hydrophilic properties of diamonds will

cause any diamonds missed by the X-ray recovery system to adhere (stick) to the grease. After a

sample has been treated the grease is scraped off the grease table and placed in a boiler, where the

grease melts and a concentrate is created by sieving off the liquid grease leaving behind only solid

particles. This concentrate is then examined in a glove box for diamonds. The rejects (non-sticking

items) are added to the stockpile for further treatment in the 2nd Pass.

Each sample is fed through the plant twice, producing two sets of concentrates and diamond

recoveries that are referred as 1st Pass and 2nd Pass. During the first pass material is crushed to -12

mm and all -12+1 mm (excluding recovered diamonds) is accumulated and fed back into the cone-

crushers and then crushed to -7 mm to produce 2nd Pass concentrate and diamond recoveries. In the

2nd Pass the sample is treated in exactly the same way as the 1st Pass, that is after it has been

subjected to finer crushing by the cone crusher.


Figure 15: Droujba Sample Plant treatment flow diagram.

The production from each shift is kept separate and is sieved into size-classes. Numbers of stones

and carat weight per sieve-size data are captured manually in a note book. The diamonds are also

classified into gem, near-gem and industrial quality groups based on the Terrac system designed by

Rombouts. For each group the number of stones and carat weight per group are recorded. The

statistics for each shift’s production is recorded in a notebook and also written on a production

sheet that serves as the envelope into which the diamonds are placed. & they are then posted


through a one-way slot in the glove-box that gets them into the safe. These data are later captured

into spread sheets by the plant manager. The spread sheets are updated daily and issued as a Daily

Result Sheet.

13.3.3 Security

All of the final recovery of diamonds (from the Flow-sort onwards in Figure 15) is carried out within a

high security area (or Red Area) which is controlled by a dedicated security presence inside this

secured area during all plant operating hours. When the plant is not operating the red area is locked

and there are security patrols around and through the general treatment plant area. There is a Red

Area access register held by security at the red area entrance gate. All persons entering the red area

fill in their details (name, date, time entering, reason for visit, signature, and time of exit on

completion of visit).

All access to the diamond product area is by double or triple key systems. This includes access to the

Flow-Sort equipment room, sorting room, and the grease table room. Additionally, within the sorting

room there is a double key system for the glove-box and for the diamond storage safe. Inside the

sorting room there is another access control register to record visitors’ particulars.

The hand-sorting of the various concentrates is performed by the plant manager (a Stellar

employee) and/or the plant supervisor, but it is done in the presence of a government

representative who holds an official appointment letter from the Ministry of Mines. The

government representative observes all movement of concentrate containers into and out of the

glove-box, all sorting, all sieving and weighing of diamonds. The government representative

countersigns the production record sheet signifying that he is in agreement with number of

diamonds recovered and their carat weight.

As a further security precaution, no one person can gain access to any part of the Red Area

individually, as all entrances are equipped with double locks. Further, access to the diamond sorting

room is gained via a three padlocks system with keys held by security, the plant manager and the

government representative. To open the glove-box there are a further two locks with keys held by

plant manager and government representative. To open the production safe there are two locks

with keys held by plant manager and government representative. As a further security precaution

there are no duplicate keys to any of the above mentioned locks. All duplicate keys were destroyed

with all parties present. This means that no one party can gain a duplicate key to any other lock

without collusion with the other party.

13.3.4 Micro-Diamond Sampling

The bulk samples taken from the trenches were sampled for micro-diamond analysis. This would

permit a direct comparison of micro- and macro-diamond populations from the same sample. In

addition the availability of a large sample permitted submission of check samples to two different

laboratories for quality control purposes. The larger portion of these samples were sent to SRC in

Canada and the check samples to SGS South Africa in Johannesburg. Consignment details are

provided in Table 12 and the results are reported in section 16.4.


Table 12: Details of micro-diamond samples submitted to SRC and SGS South Africa from the bulk samples

Consignment No.

Date Submitted

Total Mass (kg)

Laboratory Lithology Type Source

GN04_2011_006 Nov-11 179.2 SRC Kcm Discrete Bulk sample GN04_2011_007 Nov-11 63.66 SGS Kcm Discrete Bulk sample

14 DATA VERIFICATION Data validation of all the data gathered by Stellar Diamonds has been undertaken by CAE Mining.

This data has been incorporated into an Access Database by CAE and many checks have been

conducted to ensure that the database entries match the original data sources. Original Stellar

information was all captured in Excel spread sheets. Errors have been found, particularly regarding

calculations of core losses and RQD’s in the drill log spreadsheets and in the calculation of densities

of bulk samples. Corrections have been made and the corrected data have been entered into the

database and used in the resource estimation conducted as part of this report.

In addition, maps of trenches and logs of drill holes have been checked and validated by CAE’s site

representative. Measurements of specific gravity and moisture content on both cores and bulk

samples have been checked and duplicate sample analyses have been conducted and found to be in

reasonable agreement.

Chain of custody compliance for samples sent to micro-diamond laboratories have been checked

and found to be in order. Duplicate sub-samples from bulk sample have been sent for analysis at a

different laboratory, and these results are discussed below in section 16.4.

Drill collars of all the holes drilled during the 2010 to 2011 period were located on the ground. The

collars are marked as concrete plinths erected next to a concrete-filled steel pipe showing the actual

location of the drill collar. The drill hole number, azimuth and inclination were written into the wet

concrete before it set. An example is shown in Figure 16. The positions of the collars were checked

with a hand held GPS. The accuracy of the handheld GPS was found to be poor and in excess of 6

metres for the Easting and Northing co-ordinates and greater than this for altitude. As a

consequence CAE recommended the use of a differential GPS system and that permanent base

station be established. Stellar subsequently purchased a Trimble R3 differential GPS system and has

set up a base station in the Droujba camp. Re-surveying of drill hole collars and sample site has been

completed and CAE Mining are confident that the surveys are of sufficient accuracy to support

resource estimation.


Figure 16: An example of a drill hole collar plinth and concrete-filled steel pipe marking the collar position.

Downhole surveys of drill holes have proved problematic at Droujba. A large number of the early

holes (DK-DH01 to 05 inclusive and 16) were not survey at all. The collars set up positions were used

and a straight line trajectory was assumed. A further set had only one survey point, usually near the

bottom of the hole. These holes were DK_DK06 to 13 inclusive and DK_DH18 to DH19. In these holes

the collar set up positions and the single survey point were joined by a straight line. The remaining

holes had multiple survey points, but these vary in depth intervals from a measurement every 5 m

(DK_DH21) to one every 100 m (DK_DH23). Only the last 6 holes (DK_DH36 to 41 inclusive) were

measured at a regular interval of 25 m. Many of the early attempts at taking multiple readings were

done through steel casing and therefore these surveys are in error and have been flagged as “bad” in

the database. All these factors place some uncertainty on the exact locations of the drill hole traces,

however, where full surveys have been measured the measured dip angles deviate up to a maximum

of 2.4o from the planned holes, and in angled holes measured azimuth angles vary up to a maximum

of 5.1o from their planned orientation. In vertical holes azimuth angles vary to a much greater

extent, but this is not unexpected as slight deviations can cause large changes in azimuth (Table 13).

As a consequence of this analysis, CAE believes that lack of surveying of the early holes places some

uncertainty on the positions of modelled geological contacts but that the magnitude of the errors

are acceptable for the estimation of an Inferred Mineral Resource.


Table 13: Summary of the deviations in dip and azimuth angles from adequately surveyed holes at Droujba. These deviations are measured from the planned or intended azimuth and dip angles for these holes..

BHID Planned Dip (degrees)

Max Deviation (degrees)

Min Deviation (degrees)

Planned Azimuth (degrees)

Max Deviation (degrees)

Min Deviation (degrees)

DH36 -45 1.00 -1.80 118 1.00 -1.80

DH37 -90 0.20 0.00 0 17.00 -51.10

DH38 -62 2.40 -0.90 270 0.10 -3.70

DH39 -59 0.10 0.10 270 -1.80 -3.00

DH40 -90 1.20 0.70 0 5.10 -3.00

DH41 -90 0.40 0.20 0 -0.10 -43.30

Macro-diamond valuation was conducted by Natural Diamond Corporation NV of Antwerp (NDC),

Belgium, and independent diamond valuation Company. CAE has a copy of the valuation certificates

issued by NDC, and can verify that these values have been used in the modelling of production scale

values used in the estimation of the resource presented in section 17.3.

15 ADACENT PROPERTIES The occurrence of alluvial diamond workings, run mostly by artisanal operators in the Diani River

valley have been mentioned in the history section above. There are no other kimberlite mining

operations in adjacent areas. Stellar holds two prospecting permits centred around the Droujba

permit and has conducted exploration in the recent past with positive indicator mineral results that

require further work.

16 MINERAL RESOURCE ESTIMATES

16.1 Evaluation Databases CAE has created two Access databases, one for drilling and another for bulk sampling, into which

data obtained from Stellar Diamonds (mostly in Excel spread sheets) has been entered.

16.1.1 Drill Hole Database

The drill hole database contains tables for drill hole collars in which both the original collar co-

ordinates recorded by handheld Garmin GPS and the more accurate measurements taken using the

Trimble R3 differential GP system have been entered.

Down hole surveys were entered in a dedicated table. Importantly a quality assessment field has

been added so that poor quality survey readings can be filtered out. The poor quality readings have

been retained in the database.

Several versions of lithological drill hole logs have been entered. One that records original logs from

Robey (2011), another recording the logs carried out at 1-metre intervals by Stellar geologists and a

third that was rationalised for geological modelling by Stellar management and CAE experts. The

latter set of logs is referred to “Lithology_CDSA” in the database.


Core recovery logs were entered from standard Stellar spread sheets that include the raw

measurements made for both core recovery percentages and for rock quality designation (RQD)

calculations.

Internal waste measurements are recorded in a table called “Waste_Model”. This table records

internal waste percentage estimates for every metre of core through the Kcm and CBK kimberlite

units.

A Mida_Sample table records details regarding the samples removed from the cores for micro-

diamond analysis, including (for more recent cores) any intervals deliberately omitted from samples.

It also records whether the cores were split.

In a separate table (Mida_Sample_Summary) the micro-diamond recoveries (stones and carats) per

sieve class and per sample have been entered. Individual diamond descriptions have been entered in

the Mida_Detail table.

Samples removed for density measurement have been entered into the SG_sample table where all

the raw data gathered for the calculations has been entered. The calculated moisture content and

wet and dry density values also appear in this table.

These data have been extensively crossed checked against the originals. Numerous errors have been

found and questioned and corrected where appropriate.

16.1.2 Bulk Sample Database

This database records all the data collected from the four bulk samples excavated at Droujba during

2011, as well processing related data and results. This includes measurements made in the sample

trenches for volume calculation, survey co-ordinates measured in the trenches using the Trimble R3

differential GPS, in-situ density measurements, stockpile density and moisture measurements,

sample plant processing data and macro-diamond recovery details.

These data has also been extensively interrogated and where errors have been found they have

been corrected.

16.1.3 Databases Conclusions

CAE believe that data that has been loaded in to the two databases has been extensively quality-

checked and is of a quality that can support the resource estimation procedures reported in this

document.

16.2 Wireframe Modelling The drill hole database referred to in section 16.1.2 was used to develop a three-dimensional

wireframe model of the Droujba kimberlite pipe using Datamine Studio 3 software. Each of the three

units, Kcm, CBK and CB were modelled separately, and the wireframe boundaries were forced to

adhere to and honour the lithological intersection points. In two cases (DK_DH009, 55.0-63.8 m, and

DK_DH036, 119.9-128.5 m) intervals of isolated CBK that occur within Kcm were not modelled as

separate units.


16.3 Block model The wireframe model was used as the basis for creating a block model. The block model details are

provided in Table 14. Blocks in the model have been assigned geological codes (using the “zone”

variable name) density values, grades and diamond values according to those listed in Table 15.

Table 14: Block model parameters for the Droujba block model.

East North Elevation (m)

Origin 494025 948040 170

Extent (m) 250 250 380

Block size (m) 10 10 10

Subblock size (m)

2.5 2.5 0.1

Blocks 25 25 38

Table 15: Values assigned to blocks in the Droujba block model.

Lithology Zone Density Grade +1.00 mm ct/t

$/ct

Kcm 1 2.63 0.7 50

CBK 4 2.39 0.35 50

CBK 5 2.45 0.01 50


Figure 17: The Droujba block model with all the definitions shown. The blocks are coloured by Zone (Table 15).

Figure 17 shows a three dimensional view of the block model

16.4 Diamond Grade Estimation from Micro-Diamond Data

16.4.1 Approach and Sampling

Diamond grade estimates have been conducted using a combination of macro- and micro- diamond

recoveries from bulk samples and drill cores to derive a global resource estimate that is applicable to

an inferred mineral resource where grade continuity does not have to be demonstrated, but can be

assumed.

The micro diamond methodology employed to do diamond content assessment makes use of two

components obtained from sampling, namely diamond size and diamond concentration. Diamond

size is modelled on the basis of the sample size frequencies and a corresponding cumulative size

distribution in the form of a log-probability curve, while diamond concentration is represented by

the statistical distribution of stone counts in the 25 kg (or other size) individual sample aliquots.

(Diamond concentration is expressed in terms of stones per 25 kg in this study as the average

sample weight for micro diamonds is approximately 23 kg.)

The two components are combined to simulate a large diamond parcel with these diamond content

characteristics. The parcel grade-size curve is modelled and used to quantify diamond content based

Block Model Origin

X: 494025

Y: 948040

Z: 170

Y: 250 m (25 blocks)

Z: 380 m (38 blocks)

CB (Red) Zone 5

Kcm (blue) Zone 1CBK (green) Zone 4


on the sampling data. It is not possible to eliminate subjectivity but this methodology minimises it as

far as can be reasonably expected.

Macro diamonds are required to confirm the diamond size distribution and will most likely always be

required for valuation purposes. Some limited mini-bulk sampling has been carried out at this

deposit since initial micro diamond sampling results seemed promising. Macro diamonds are

therefore available for diamond value modelling and provides further confidence to the micro

diamond sampling results, which rely on extrapolation into the commercial (macro) diamond size

range.

The advantage of micro diamond methodology is that it culminates in an estimate for total diamond

content, which is based on a firm diamond size distribution model. When macro diamond data is

available the diamond size distribution model is normally almost certainly determined. This allows

application of modifying factors to quantify the effects of small stone losses on recoverable diamond

grade, size and value. These losses are mostly due to bottom screening and diamond lockup in

tailings and the adjustment is carried out by applying modifying factors to the size distribution model

to emulate the losses in specific size classes.

The amount of sampling required is determined by the size of the body, geological complexity and

by diamond concentration. The basic focus of sampling in every situation is to capture the character

of a deposit as driven by deposit geology. Diamond content is directly related to lithology and every

sample must reflect a meaningful part of the deposit. To estimate diamond potential, the deposit is

broken down into similar zones and the economic potential of each zone is determined.

Micro diamond methodology relies completely on the information provided by sampling and is

established in the industry as an acceptable means for global diamond content assessment. Where

sufficient micro diamond data is available and with a deposit appropriately defined in terms of its

zonation, the methodology is applied to determine diamond content at a resource category of an

Inferred Mineral Resource.

Diamond concentration is expected to vary less between samples than between zones. Based on the

statistical distribution of sample stone counts (diamond concentration) for each zone and the

appropriate size distribution model an associated diamond content estimate is prepared per zone.

The final result takes the form of an individual grade and dollar per carat value per zone. If all the

zones have a common size distribution, then there will be a common Dollar per carat value for the

zone.

Sampling must be representative of the body to be assessed to reduce uncertainty. A representative

sample provides sufficient information to perform reliable size and concentration modelling per

zone and is drawn from all the material in the resource to be estimated. The larger and more

representative the samples, the more reliable are the respective diamond size and concentration

models and the higher the confidence in the respective estimates for diamond content.

The Droujba kimberlite deposit comprises of zones that differ mostly with respect to their degree of

dilution by non-kimberlitic material. The approach is thus to determine as far as possible the

undiluted diamond content and the level of dilution for each zone. With one size distribution the


zone will have the same Dollar per carat value, but due to their different levels of dilution each zone

will have a characteristic diluted diamond concentration.

16.4.2 Data

The resource is estimated on the basis of micro diamond sampling, bulk sampling and a meter by

meter assessment of dilution observed in drill core.

16.4.2.1 Micro diamonds

Micro diamond data comprises recovery from core and bulk sampling and recovery took place at the

SRC.

A total of 1.5 t of material was treated for micro diamond recovery. The material was collected from

core (1.3 t) and from bulk sampling material excavated for macro diamond recovery (242 kg). The

material selected from the bulk samples were further split into smaller amounts that were sent to

SGS South Africa as audit samples.

Recoveries are summarised in Table 16 which shows recovery per sample consignment, sample type

and zone.

Table 16: Summary of Micro diamond recoveries

Consignment number

Sample type Kimberlite facies Sample Weight kg

Stones +0.75mm

Stones / 25kg

+0.75mm

Stones +0.150mm

Stones / 25kg

+0.150mm

GN04-2011-01 Core KCM Main pipe 67.60 116 42.9 46 17.0


GN04-2011-02 Core KCM South Intrusion 136.55 346 63.3 121 22.2



Sub Total 730.07 1473 50.4 559 19.1

GN04-2011-06 Bulk BS 1 46.65 214 114.7 80 42.9

GN04-2011-06 Bulk BS 2 41.60 66 39.7 34 20.4

GN04-2011-06 Bulk BS 3 45.65 84 46.0 45 24.6

GN04-2011-06 Bulk BS 4 45.30 127 70.1 55 30.4

Sub Total 179.20 491 68.5 214 29.9

GN04-2011-07 Bulk Audit DDBS 01 15.94 29 45.5 19 29.8




Sub Total 63.66 109 42.8 72 28.3

Total KCM 972.93 2073 53.3 845 21.7

GN04-2010-03 Core CBK Main pipe 94.54 48 12.7 24 6.3

GN04-2011-03 Core CBK South Intrusion 268.24 52 4.8 30 2.8



Total CBK 544.33 133 6.1 65 3.0

Totals 1506.76 2206 910


16.4.2.2 Bulk sampling

A total of 919 dry tonnes of material was treated for macro diamonds and 7039 diamonds with total

weight of 669.55 carats were recovered at a grade of 0.73 carats per tonne. Final recovery results

are shown in

Table 17.

The bulk sample comprised Kcm material only and in this report it is assumed that the sample

contained minimum dilution.

One 13.8 carat and 12 stones in the +2 carat size category were recovered. Stones were sieved down

to +7 diamond sieve, with more than 5000 stones in the -7 sieve size category.

16.4.2.3 Kimberlite dilution

All available drill core that intersected the pipe was examined for non-kimberlitic inclusions to

quantify kimberlite dilution within the pipe. More than 3000 meters of core was examined and

average dilution was estimated for each 1-metre intersection per zone. The data are summarised in

Table 18.

Table 17: Summary of Bulk Samples results

Size No of weight Average

class Stones (carat) Weight cts

+10.8 1 13.80 13.8000

+2 Carats 12 38.35 3.1958

+21 0 0.00

+19 6 8.60 1.4333

+17 7 9.15 1.3071

+15 9 10.25 1.1141

+14 45 38.05 0.8456

+11 341 135.35 0.3969

+9 539 104.00 0.1929

+7 643 78.20 0.1216

-7 5436 233.80 0.0430

7039 669.55 0.0951

Table 18: Summary of waste measurements per lithology.

Lithology Meters Waste%

CB 86 99

CBK 740 62

Dyke 58 15

Kcm 2253 21

3137


Internal waste dilution measurements (based on 1 m x 1 m x 1 m quadrants) which were conducted

on the side walls of the sample trenches show that the bulk samples had variable waste content as

shown in Table 19.

Table 19: Results of waste measurements conducted on the sidewalls of the bulk sample trenches

Bulks Sample 1 Bulk Sample 2 Bulk Sample 3 Bulk Sample 4

% Xenoliths / Country rock




Quadrant 1 0.28 0.56 0.63 19.49

Quadrant 2 1.45 21.1 11.57 11.95

Quadrant 3 0.56 22.67 40.25 7.3

Quadrant 4 1.15 0.16 7.51 8.67

Quadrant 5 3.26 0.48 42.3 7.84

Quadrant 6 0.16 0.68 10.41 21.87

Overall Percentage 1.14 7.61 18.78 12.85

16.5 Data Analysis The two components that determine diamond content were analysed and combined by zone. From

the micro-diamond summary table (Table 16) the difference in diamond concentration between the

major zones is obvious. The Kcm and CBK differ mostly with respect to the degree of dilution that

occurred at emplacement. Differences that may be present in the distribution of diamond size are

not as easily observed in the Table 16.

Analysis was conducted with the aim of establishing diamond content in undiluted kimberlite

commencing with diamond size distribution analysis and concluding with application of a dilution

factor as assessed from drill core, per zone.

16.5.1 Diamond size

A comparison of micro-diamond size distribution for the Kcm and CBK kimberlites is shown in Figure

18.


Figure 18: Comparison of Kcm and CBK micro-diamond size distributions.

The comparison indicates a similar size distribution for the two zones, and places some credence on

the concept of one size distribution for all the zones in the deposit. The size plot is based on the low

number of stones from the CBK, which shows more variability as would be expected for the smaller

total sample size.

As part of the QA process (see section 14) audit micro-diamond samples taken from the bulk sample

were sent to a second laboratory (SGS South Africa). These samples originated from the Kcm zone. A

comparison of the size frequency distribution of the two samples sets are presented in Figure 19.

The size distributions of results from the two different laboratories are very similar when considering

+0.150 mm diamond recoveries.

Generally SGS did recover a larger number of micro-diamonds in the -0.150 mm size range, but

recovery of diamonds in this size ranges by both laboratories appear very erratic. It is normal

procedure for diamond content modelling to take account of less efficient recovery of stones in the

bottom size classes by applying a bottom truncation of sample diamond occurrences.

The smaller size of the SGS sample does not favour the recovery of the same number of larger micro

diamonds as seen in the graph, and this is the only material difference between the sample sets


(+0.150 mm). It can be concluded that diamond recovery at the two laboratories provide results that

can be treated with the same level of confidence for diamond content modelling.

Figure 19: A comparison between SRC and SGS micro-diamond +150 micron recoveries.

Data for Kcm was therefore used to develop a diamond size distribution model for the deposit. The

micro diamonds were depicted in the form of log-probability plots and the appropriate parameters

were obtained to emulate the corresponding diamond size distribution. A typical diamond parcel

was then generated on the basis of the size distribution parameters and plotted with the sample

results.

The size distributions for the Bulk Sample macro diamond recovery and the typical parcel diamonds

above +6 diamond sieve were plotted on the same graph as shown in Figure 20.

Correspondence between typical parcel and each of the two sets of samples indicates that the

diamond size distribution model accurately reflects the overall size distribution of the diamond

populations in the deposit.


Figure 20: Micro- and bulk sample macro diamond size distributions

The curves on the left side represent micro diamonds while macro diamonds are represented by the

shorter curves on the right hand side. Sampling data is represented by the blue curves in both cases.

The close correspondence between typical parcel and sampling data provides high confidence in the

diamond size distribution model for the deposit.

It should be noted that the size distribution model only reflects the statistical distribution of

diamond size and has nothing to do with diamond concentration. Diamond content is determined by

a combination of the two entities.

16.5.2 Diamond content

An undiluted diamond concentration of 29 stones per 25 kg (+0.150 mm) was calculated from the

sampling data, using core and bulk sample micro diamond sampling results.

Average dilution in the Bulk sample was estimated at 14%, while core data was assumed to contain

20% waste overall in accordance with the overall assessment of dilution for Kcm (Table 18). Sample

weights were adjusted to reflect undiluted kimberlite diamond concentration.

Another typical diamond parcel was generated by simulating 2million 25kg micro diamond samples.

Sample stone counts were drawn from a statistical distribution with a mean of 26 stones per 25 kg in


accordance with the adjusted micro diamond sample stone counts. The size of each simulated stone

was drawn in accordance with the modelled diamond size distribution. Such a typical parcel would

be expected to reflect the micro diamond sampling results exactly and as in the case of size

modelling, would be expected to also correspond with the macro diamonds recovered from bulk

sampling.

Grade size plots for samples and typical parcel were plotted in Figure 21, indicating close

correspondence between sampling and modelling.

Figure 21: Grade size representation of undiluted diamond content for Droujba Kcm kimberlite.

The red points represent Kcm micro diamonds above +0.150mm. The black points on the graph

reflect bulk sampling, with the two points below the model curve on the left, indicating (normal)

recovery losses in the bottom two size classes.

The close correspondence between the plots for the two sets of samples and the typical parcel curve

indicate coherence between micro and macro diamonds with respect to their representation of

diamond content for Kcm in the deposit.

The grade size model was used to determine diamond content above 1mm and 1.18mm.


The typical parcel was broken down into size classes to correspond with the size class configuration

used for the valuation of the bulk sample macro diamond parcel, but with the addition of classes

below +7 diamond sieve. This was done to accommodate recovery factors to emulate expected

normal losses due to screening and diamond lock in the size classes close to the bottom screen.

Recovery factors were applied to approximate a production grade and size distribution to be used

for average diamond value and revenue estimation. The factors that have been applied are shown

in Table 20.

Table 20: Recovery factors applied to the different diamond sieves at the different bottom cut-offs of 1.00 and 1.18 mm.

Diamond Sieve

Recovery Factor

+1.18 mm

Recovery Factor

+1.00 mm

+5 0.9 1 +3 0.7 0.9 +2 0.1 0.7 +1 0.0 0.1

16.6 Results Diamond grades calculated in the previous section reflects diamond content in undiluted kimberlite.

Consequently diamond content for the two zones (and a small number of dyke samples) were

calculated by applying the dilution factors calculated in the section on kimberlite dilution (Table 18).

Results are shown in Table 21.

Table 21: Recoverable grade estimates per kimberlite zone.

ZONE WASTE% Undiluted Grade (cts/100t) Diluted Grade (cts/100t)

+1.00mm +1.18mm +1.00mm +1.18mm

KCM 20% 87 74 70 60

CBK 60% 87 74 35 30

DYKE 15% 87 74 74 63

The accuracy of these grades relies on the accuracy of the waste determinations and the modifying

factors. The latter can only be established more accurately once the type of production treatment

and recovery process is fixed at a later stage in the project (i.e. feasibility).

For this deposit waste determination is important and should be complemented whenever further

drilling takes place.

The amount of sampling from core ensures that the sampling material represents deposit material

well enough to lead to grade estimates at an Inferred resource level to the depth to which micro

diamond samples were taken.


The function of the bulk sample was mainly to confirm the diamond size distribution derived from

micro diamonds and to provide macro diamonds for valuation and revenue estimation. The localised

position of the bulk samples limits their ability to influence zonal grade estimation, especially as only

Kcm was sampled. The fact that the bulk sample grades are of the same order of magnitude of the

grade as estimated by micro diamond sampling from the same facies is indicative of a reasonable

degree of continuity in diamond content in the Kcm.

17 Diamond Value Estimation

17.1 Approach Macro diamonds recovered from the bulk sample were valued in diamond size categories to

facilitate revenue modelling. To date, 506.46 carats have been exported to Antwerp for independent

valuation by Natural Diamond Corporation NV. The valuation results were used to determine an

average diamond value per size class ($/ct), but also these data were combined with the associated

diamond size distribution for the purpose of calculating an overall average diamond value. This

average value represents the average value that may be expected from a large diamond parcel from

the deposit, for example from a production period in an operating mine.

Although the bulk sample parcel may not be fully size representative, the focus is to determine a

value model that varies with diamond size. Experience shows that kimberlite-hosted diamond

deposits generally display consistent patterns in this regard. If the deposit under consideration

appears similar to a known kimberlite that kimberlite’s value distribution may be used as a guide to

model its revenue distribution per size class. This method is mostly applied to early stage projects

were small overall diamond parcels have been achieved, and can only be used to support an Inferred

Mineral Resource at best. Diamond value distributions are generally considered commercially

sensitive and therefore the kimberlites used for this exercise cannot be named for client

confidentiality reasons.

Once the diamond value distribution has been modelled average, diamond value is determined by

combining class value with class diamond content derived from the diamond size distribution model.

In this way it is possible to combine modelled value and diamond content, including size classes not

represented by sampling, to estimate an overall average diamond value.

17.2 Data Only diamonds recovered from the bulk sample prior during the 1st Pass2 of sample processing were

valued by NDC in March 2012 and the results are shown in Table 22. This parcel comprised a total of

509 carats when exported from Guinea. After cleaning, 506 carats remained for valuation. Cleaned

diamonds were valued according to the size categories listed in Table 22 and classified into gem and

industrial quality categories.

2 See section 13.3.2 for an explanation of 1

st and 2

nd Pass sample processing


Table 22: Valuation of macro-diamonds recovered from the 1st

pass processing of bulk samples from Droujba. These values were estimated by NDC of Antwerp.

Size class Carats Gem

Average price Gem

($/crt)

Total amount Gem ($)

Carats Indian +

Industrial

Av. price Indian + Industr. ($/crt)

Total amount Indian +

Industrial ($)

Total N° of

stones

Total Carats

Average price $/crt

Total Amount $

+10.80 Carats

0.00 0.0 13.81 40.00 552.4 1 13.81 40.00 552.4

+ 5 Carats

0.00 0.0 11.52 40.00 460.8 2 11.52 40.00 460.8

2.5 - 4 Carats

0.00 0.0 20.35 45.86 933.3 7 20.35 45.86 933.3

2 Carats 0.00 0.0 8.12 82.58 670.5 4 8.12 82.58 670.5

5 - 6 Grainers

0.00 0.0 20.79 47.94 996.7 14 20.79 47.94 996.7

4 Grainer

0.00 0.0 29.45 60.31 1,776.3 30 29.45 60.31 1,776.3

3 Grainer

0.00 0.0 23.31 81.09 1,890.3 32 23.31 81.09 1,890.3

2 Grainer

1.48 240.95 356.6 91.54 50.80 4,650.5 251 93.02 53.83 5,007.1

1 Grainer

3.92 243.35 953.9 104.49 44.63 4,663.0 589 108.41 51.81 5,616.9

-11 + 6 15.02 145.74 2,188.9 129.96 24.36 3,165.4 2143 144.98 36.93 5,354.4

-6 + 3 5.83 70.00 408.1 23.68 31.08 736.0 1028 29.51 38.77 1,144.1

-3 0.42 30.00 12.6 2.77 9.58 26.5 213 3.19 12.27 39.1

Total 26.67 $146.99 $3,920.2 479.79 $42.77 $20,521.7 4314 506.46 $48.26 $24,441.9

The average value of diamonds in the total parcel was valued by NDC at $48.25. NDC also provided a

low-side valuation of $40/ct. It is believed that addition of the remaining stones for valuation will

not change these values materially as all the stones with value lie in the small size classes anyway.

The parcel is composed of 27 carats of gem quality at an average value of $147 per carat, with the

remaining 480 carats in the Indian and Industrial category at an average value of $43 per carat. The

large proportion (95%) of Industrial and Indian goods is responsible for the low average value of the

parcel.

17.3 Value model The change in value for the two diamond categories were modelled individually and combined in

their parcel size class proportions. The individual class values and model curves are shown in Figure

22.


Figure 22: Diamond value with size and quality

Gem values and model values are depicted in blue. No gem stones larger than 2 carats are present in

the parcel and the value for larger stones was kept constant above this size.

Industrial diamond values and model are depicted in red. The trend above 3 grainer size is

downwards, but the model curve was modelled to increase gradually up to 10 carats.

The combined average and Industrial values are virtually the same in each size category due to the

small proportion Gem stones present. The percentage Gem stones assumed and observed are

depicted by the green line and squares, with the proportion Gem stones assumed at 2% for size

classes above 2 grainers. Percentage Gem stones are depicted against the secondary axis on the

right side of the graph.

The proportion of Gem stones is the main element that determines average value and with the

information at hand there is little else that can be done about value modelling. Another factor could

be the value of larger industrial stones, but the parcel does not provide evidence for any increase in

value for diamonds larger than 1 carat. It is possible that the deposit contains high valued large Gem

stones, but the data does not provide any evidence for such an expectation.


17.4 Summary Average diamond values based on the models described above are as shown in Table 23

Table 23: Diamond value by size class

Size class Sample $/ct

Model $/ct

+10.80 40 100 + 5 CTS 40 100 2.5 - 4 CTS 46 95 2 CTS 83 85 5 - 6 GRN 48 82 4 GRN 60 78 3 GRN 81 74 2 GRN 54 68 1 GRN 52 60 -11 37 48 -6 39 35 -3 12 14

A combination of diamond value and size models yields estimates for recoverable diamond content

and value at +1mm and +1.18mm as shown in Table 24.

Table 24: Recoverable grade and diamond value estimates.

ZONE Diluted Grade (carats/100t)

Dollar per Carat Dollar per Tonne

+1mm +1.18mm +1mm +1.18mm +1mm +1.18mm KCM 70 60 50 55 35 33

CBK 35 30 50 55 18 16

DYKE 74 63 50 55 37 35

There is little difference in estimated revenue per ton value between +1 and +1.18mm recovery as

the increase in Dollar per carat is offset by the decrease in grade.

17.5 Confidence levels Potential sources for upside or downside in grade and value are as follows:

Diamond grade

Diamond concentration is based on micro diamond sample stone counts. Given the number

of samples taken and the fact that these samples are representative of the kimberlite being

evaluated and the fact they display consistency in stone counts means that the calculated


grades are considered reasonable and therefore it is unlikely that further micro-diamond

sampling will greatly affect the calculated grade values.

Kimberlite dilution data for the Kcm are based on more than 3000 measurements of core.

The calculated average waste percentage of 20% is therefore considered representative. The

60% average waste content of CBK is also considered representative, and correlates well

with the lower micro diamond sample stone counts observed in samples from the zone.

The diamond size distribution is based on more than 800 micro diamonds and is confirmed

by macro diamonds from the bulk samples. This means that the diamond size distribution is

well defined and does not provide any potential for higher or lower diamond grade or values

if more sampling was to be undertaken.

Diamond value

If, with a larger more representative sample, the percentage gem quality stones above 2

carats turn out to be the same as the percentages observed in the smaller size classes, the

overall average diamond value at +1mm recovery could increase to $70 per carat and 42

Dollar per tonne for the Kcm.

Similarly, if the average value of Industrial quality stones were to keep increasing up to the 5

carat size category then the average Dollar per carat value at +1mm recovery could increase

to $70 and revenue to 39 Dollars per tonne for the Kcm.

The diamond size distribution does not leave any potential for higher average dollar per

carat value.

It seems highly unlikely for average diamond value to be more than 70 Dollars per carat at most and

49 Dollar per tonne for the Kcm.

It is concluded that the values and grades in Table 24 are the best estimates for diamond content

and value for this deposit based on current sampling information. If all the sampling material

represents the deposit appropriately then it is almost certain that average diamond value will lie

between 42 and 70 Dollars per carat for diamond recovery at a bottom cut-off of 1mm.

18 Conceptual Scoping Study

18.1 Background and Assumptions The mineral resource reporting codes such as JORC require that any mineral resource that is quoted

by a listed company must have “reasonable prospects for eventual economic extraction” (JORC,

2004). To meet this requirement CAE has completed a conceptual study to test whether the

exploitation of the resource would have a favourable economic outcome. It has to be stressed that

the data used has a low level of confidence and that the capital and working costs used in this study

have been drawn from reasonably comparable operations, where such data are available. No

detailed engineering or financial studies have been undertaken to justify the values that have been

used. The outcome of this analysis in no way reflects a potential financial outcome for Stellar

Diamonds plc, but rather whether Droujba has any potential for future economic extraction.


All kimberlite pipes that have been mined were initially mined as open cast operations, and it is

assumed here the Droujba pipe would similarly be mined by open cast methods.

18.1.1 Methodology

CAE Mining has employed NPV Scheduler software (CAE Mining, 2012) to create an optimised open

pit mine design. The block model, with the mineral resource parameters listed in Table 15 was used

to define a base case. The mining and processing parameters used are listed in Table 25 and are

based on similar operations elsewhere in tropical Africa.

Table 25: Mining and processing parameters used in the conceptual study.

Mining Parameters Values Unit

Overall Slope Angle 50 Degrees

Bench Height 10 Meters

Mining cost 4 US$/t

Mining dilution 5% Percent

Mining recovery 95% Percent

Royalty 0% Percent

Rehabilitation 0 US$/t

Processing Parameters

Values Unit

Processing Cost 5 US$/t ROM

Processing Cost 5 US$/ct

Processing Recovery 95% Percent

Plant capacity 300,000 t/year

To test the sensitivity of each of these parameters, and especially diamond value, several scenarios

were analysed in which six different values of mining costs, processing costs, pit slope angle and

diamond value were tested. The different values that were tested are listed in Table 26.

Table 26: Parameters tested in the different pit optimisation studies.

Scenario Mining Costs ($/t)

Processing. Cost ($/t)

Slope Angle (degrees)

Carat Price (US$/ct)

BC-60% 1.60 2.00 41.0 20.00

BC-40% 2.40 3.00 44.0 30.00

BC-20% 3.20 4.00 47.0 40.00

Base Case 4.00 5.00 50.0 50.00

BC+20% 4.80 6.00 53.0 60.00

BC+40% 5.60 7.00 56.0 70.00

BC+60% 6.40 8.00 59.0 80.00

The base case was only varied by adjusting one variable at a time, and six scenarios were generated

with mining costs of US1.60/t, US$2.40/t, US$3.20, US4.80/t, US$5.60/t and US6.40/t whilst the

other parameters were kept at the base case value. This was repeated for each parameter in turn.

It should be noted that no capital costs were included in any of these scenarios.


18.2 Results The base case scenario produces a positive result in which an open pit is developed that results in

the removal of approximately 1.4 million tonnes (Mt) of kimberlite. All the other scenarios also

produced positive results, i.e. they show a profit using the combinations of the variables that have

been specified in Table 25 and 26, but that exclude capital costs. The tonnage that can be profitably

mined varies from 225,000 tonnes for the base case (but with a diamond value of US$20/ct applied

to it) to a maximum of 2.2 Mt tonnes for the base case, with a reduced mining cost of US$1.60/t. The

minimum mining cost appears unrealistic for an operation in a remote area of West Africa.

According to the JORC Code (JORC, 2004) portions of a deposit that do not have reasonable

prospects for eventual economic extraction must not be included in a Mineral Resource. Thus the

ore that can be profitably extracted will form the tonnage, grade and carat figures that will be

declared as a Mineral Resource.

In the case of diamonds, the most sensitive parameter that influences the profitability of mining

blocks is the average value of the diamonds that are used in the pit optimisation process. It has been

demonstrated in section 17 that the value obtained from a sample of 500 carats is considered

unrepresentative of what might be expected from an operating mine. There is precedence in the

industry that factors have been applied to the average $/ct figures to account for this discrepancy.

Given the low number of carats that have been recovered and valued, a factor of 1.6 is

recommended. This equates to the pit optimisation scenario of the base case, but with a diamond

value of $80/ct being used. This pit accesses approximately 2.0 Mt of kimberlite, with the bottom of

the pit being located at a depth of approximately 160 metres. It is this portion of the resource that

can be regarded as having a reasonable potential for eventual economic extraction.

In order to test an extreme case a scenario was also conducted with an average diamond value of

US$200/ct. The resultant pit shell together with those of the base case and the 1.6 factored value

scenarios is illustrated in Figure 23.

These pit outlines clearly illustrate the influence of the narrowing of the Kcm as a constraint on

development of the open pit, even at unrealistically inflated $/ct figures. Examination of Figure 23

would suggest that the lower part of the Kcm, i.e. below 350 mamsl (210 m below general ground

level) may be amenable to underground mining as most of the defined material is Kcm, which with

the 1.6 factorised value of $80/ct would have an in-situ value of $56/t. Comparable underground

mining costs from the region e.g. for the block-caving mining method, are difficult to obtain. North

American kimberlite mines operate in the range of US$40-60/t and published figures from Petra

Diamonds mines in South Africa (Petra Diamonds plc, 2012) range between U$15-25/t. Studies

conducted at Koidu Mine in Sierra Leone (Rankine, 2007) for a block cave operation in that

kimberlite mine provide operating costs of US$38/tonne. If a figure of US$35/t is assumed, then it

can be argued that this lower portion of the Droujba Pipe has some potential for economic

extraction. However, the question of capital investment to establish such a mine has not been

factored into these values. The CBK zone has a much lower in-situ value per tonne ($28/t), however

since it comprises a relatively small portion of the deposit at these levels the combined value of the

two zone averages $47/t, which still exceeds the mining costs per tonne mentioned above.

Consequently this portion of the deposit can be added to a Mineral Resource on the basis that it has


reasonable potential of eventual economic extraction. A portion of the deposit between 380 and

350 mamsl has been excluded from the Mineral Resource on the grounds that the volume of Kcm

and CBK is too small relative to very low grade CB to pass the “reasonable potential” test.

In summary therefore the Kcm and CBK enclosed within the 1.6 factored pit shell and the Kcm and

CBK below 350 mamsl and to the bottom of the defined block model have reasonable prospect for

eventual economic extraction and can therefore be classified as Mineral Resources.

Figure 23: A West-East vertical cross section showing the block model coloured by kimberlite rock type as well as the optimised pit shell outlines for the various scenarios discussed in the text. The potential underground portion is also illustrated.

Base Case $50/ct)

Base Case

x1.6 ($80/ct)Extreme Case

($200/ct)

Kcm

CBK

CBPotential

Underground

Mine


19 Resource Classification For the purposes of resource classification the Mineral Resource for Droujba has been classified and

reported in compliance with the JORC code (JORC, 2004). To qualify as a resource, the mineralisation

under consideration must have reasonable prospects for eventual economic extraction. Other

important considerations that need to be taken into account are the amount and quality of sampling

data that provide information on the continuity of the geology and mineralisation of the deposit

under consideration.

19.1 Reasonable Potential To demonstrate this potential the CAE team has conducted a conceptual scoping study as detailed in

section 17.6 above. The positive outcome of the base case, i.e. the mining scenarios provides

evidence for a reasonable prospect of eventual economic extraction. In order to address the

unrepresentative size of the diamond parcel recovered to date a value factor of 1.6 has been applied

to the $/ct values to derive an optimistic open pit shell that is slightly larger than that defined by the

base case. The outcomes justify the declaration of the upper 160 m of the Droujba Pipe an Inferred

Mineral Resource. In addition the Kcm and CBK below 350 mamsl down to the bottom of the defined

block model are considered to have reasonable prospect for economic extraction on the basis of a

contained value per tonne that is higher than comparable mining costs for a block cave operation in

South Africa. This segment of the deposit also has a reasonable prospect of eventual economic

extraction, and can therefore also be declared an Inferred Resource.

19.2 Geological Continuity The drilling of Droujba has revealed the geological structure of a complex kimberlite root zone in

which a transition is seen between country-rock breccias containing no kimberlitic components (CB)

through breccias that have on average about 40% kimberlite (CBK) to coherent kimberlite with much

less (<15%) country rock (Kcm). During the early stages of exploration it was thought that the Kcm

occurred as two discrete, the Main Kcm located in the open pit, and Kcm2 (or Southern Blind

Intrusion- SBI) located at depth to the south. Drilling during the campaign however demonstrated

that these are continuous and that the Kcm has a curved geometry. This narrowing and offset of the

Kcm provides a constraint for the development of an open pit, and is a critical area with respect to

the definition of the Inferred Resource. CAE believes that the geological structure of the Droujba is

sufficiently constrained to support estimation at an Inferred Mineral Resource level of confidence.

This is particularly true in the uppermost 150 m of the body, although the area overlain by the open

pit was less well covered because the drilling was conducted whilst the pit was still filled with water.

19.3 Continuity of Mineralisation Continuity of mineralisation has been demonstrated by the recovery of micro-diamonds from a suite

of samples taken from the drill cores across the body. The similarity of the diamond size distributions

obtained from these samples to those obtained from bulk samples at surface provide further

evidence for continuity. CAE have ensured that the samples are spatially representative of both the

main grade-carrying kimberlites (CBK and Kcm) and that samples were taken within every 50 x 50 x

50 m block in the body. These samples when combined with the bulk samples of Kcm taken from the

surface are adequate to support grade estimation at an Inferred Mineral Resource level of

confidence.


The CIM (CIM, 2008) recommendations are that a minimum of 3000 carats are required to

confidently predict the diamond value (US$/carat) of any new diamond producer. It should be noted

that JORC has no equivalent guideline (JORC, 2004). That carat target is used by the major diamond

mining companies as an entry requirement for an Indicated Mineral Resource. It is CAE’s opinion

that the 500+ carats that have been recovered from the Droujba Pipe is just adequate for a resource

at the Inferred Mineral Resource confidence level, and this is confirmed by the need to model or

factorise diamond recoveries above 4 carats for production scale estimation in section 17. The

recovery of larger stones at Droujba is noteworthy, however to date all of these larger stones have

been of poorer quality (averaging $40/ct). The presence of better quality large stones cannot be

ruled out, but because the overall size of the sample is small it is not possible to predict their

presence or abundance. It could take a single high quality stone of this size to significantly change

the overall $/ct figure for the deposit. This is why it is important to recover a larger parcel of

diamonds for an Indicated Mineral Resource.

19.4 Resource Classification It is CAE’s opinion that the data that has been generated for the CBK and Kcm zones of the Droujba

Pipe, and from the arguments presented above, that the Droujba Pipe be classified as an Inferred

Mineral Resource according to the definitions of the JORC code (JORC, 2004).

20 Mineral Resource Statement The mineral resource defined for the Droujba Pipe is presented in Table 27.

Table 27: Mineral Resource Statement for the Droujba Pipe as at 26 march 2012.

Lithology Upper Level mamsl)

Lower Level (mamsl)

Volume (m

3)

Dry Density (kg/m

3)

Tonnage Grade +1.00 mm (cpt)

Carats +1.00 mm

Classification

Kcm 540 380 650,000 2.63 1,700,000 0.70 1,190,000

Inferred Resource

CBK 540 380 100,000 2.39 240,000 0.35 84,000

Inferred Resource

Kcm 350 170 520,000 2.63 1,400,000 0.70 980,000

Inferred Resource

CBK 350 170 260,000 2.39 620,000 0.35 220,000

Inferred Resource

Total

1,530,000

3,340,000

2,474,000

21 OTHER RELEVANT INFORMATION

21.1 The Diamond Market Following the severe drop off in value in the 2008-2009 financial crisis rough diamond prices have

recovered steadily and reached a peak around August 2011; since then they have been in slow

decline in response to global economic factors. All the major producers recognize an emerging


supply-demand gap as no new large producing mines have been discovered in the last two decades

and some existing large mines are moving to more costly underground, lower tonnage operations,

e.g. Argyle Mine in Australia. A further positive outlook for diamond producers is that the emerging

markets of China and India are beginning to drive demand, and it is predicted that the demand from

these two countries will challenge that of the USA by the end of current decade. This situation

provides an encouraging backdrop for any diamond project in the development stage.

21.2 16.2 Further Potential The Droujba Pipe has been drilled to a depth of approximately 414 m below surface and is still open

ended below this. If the defined part of the pipe is advanced to an Indicated Mineral Resource,

further tonnage potential should be explored below this, particularly if a large parcel of carats yields

diamond values that are significantly higher than those recovered to date and reasonable potential

for economic extraction can be demonstrated. It may be that this potential might best be accessed

via an underground mining operation and a trade-off study between deepening the open pit and

underground mine should be conducted. A portion of the deposit between 380 mamsl and 350

mamsl has been excluded from the declared Mineral Resource on the grounds that it has insufficient

tonnage of Kcm and CBK. This portion could contain approximately 400,000 carats. A better

understanding of the geology of this area could allow an expansion of the resource in this area. The

drilling of vertical drill holes on a regular grid to permit the drawing of well constrained vertical cross

sections is recommended.

The Katcha Dyke was shown by the Soviet Aid Mission to be diamondiferous (at a grade of around 2

ct/m3) and therefore this kimberlite dyke presents further potential on the Droujba property. This

dyke would likely be accessed via underground development, and so it may be advisable to link its

production to a future underground operation at Droujba Pipe.

22 INTERPRETATION AND CONCLUSIONS

22.1 Geological Setting and Deposit Type An understanding of the geology of the Droujba Pipe has been considerably advanced by the drilling

programme conducted during 2010 and 2011, and a geological model has been constructed that

reflects the geology of a typical kimberlite root, similar to those seen in many other kimberlites

worldwide, e.g. the archetypical Kimberley pipes of South Africa and the more recent discoveries at

Gahcho Kue and Renard in Canada. It is typical of kimberlites at these erosion levels to contain large

breccias bodies, and this is repeated at Droujba. Such breccias bodies contain large quantities of

waste rock derived from the surrounding country rocks, and clearly they have a negative impact on

the overall diamond grade of the kimberlite. The associated high-grade coherent kimberlite is

relatively small by comparison, but it this kimberlite that will be the focus of any future mining

activity. Further definition of this kimberlite is critical to the economic prospects of this deposit.

22.2 Exploration Stellar Diamonds have used a modern approach to evaluation o the Droujba Pipe at an early stage of

evaluation. A combination bulk sampling of exposures at surface, and core drilling are a prudent

staged approach. Drilling is critical to gain a clearer understanding of the geology of the pipe and to


provide kimberlite material for micro-diamond analysis. The recovery of over 500 carats of macro-

diamonds from the near surface has provided a first indication of the commercial value of the

diamonds. Sub-sampling of the surface trenches for micro-diamonds has enhanced the

understanding of the relationship between macro- and micro- diamonds and permitted the

continuation of mineralisation at depth to be assessed. The data derived from these exercises

support mineral resource estimation at an Inferred Mineral Resource level of confidence where

continuity of geology and mineralisation can be assumed rather than proven.

22.3 Drilling The drilling that has been conducted is appropriate for the objectives of the project to date. If the

project is to advance, large diameter drilling will be required to acquire macro-diamonds to support

the estimation of an Indicated Mineral Resource, in which continuity of mineralisation will have to

be demonstrated. Modern best practice is that all large diameter drilling is accompanied by vertical

cored holes for the purposes of guiding the sampling intervals in the large diameter holes. Such,

evenly-spaced cored holes frequently have a dramatic positive effect on the understanding of the

geology of the kimberlite body.

22.4 Sample Preparation, Analysis and Security The sampling methodology applied to drill cores during the early stages of the project, particularly

for micro-diamonds analysis, resulted in the compositing of samples over large areas of the

kimberlite body. Although these samples were constrained within the main kimberlite zones, they

may be considered somewhat biased because areas of internal waste were deliberately excluded

from the samples. In later consignments, this methodology was discontinued and waste was either

included in the samples or that which was excluded was recorded and accounted for during the

processing of the data.

The processing of micro-diamond samples followed well established procedures at the SRC

laboratory in Canada where standard QA/QC measures were also applied. An exercise to compare

recoveries from the SGS South Africa laboratory found close agreement between the two providing

further confidence in the results obtained to date.

The processing of bulk samples for macro-diamond recovery was conducted entirely by Stellar

Diamonds staff and contractors according to well defined procedures at a DMS bulk sample planted

installed at Droujba camp. These procedures included operating and security procedures which CAE

Mining’s site representative has verified. CAE is confident that results obtained from bulk sampling

are reasonable and that all reasonable measures were taken to avoid theft of diamonds from the

samples. The role of a government representative and multiple lock-out procedures provide

assurance that every attempt has been made to recover all diamonds from these samples.

22.5 Data Verification Data collected from the various elements of the Droujba evaluation programme have been

extensively reviewed and corrected where errors have been found. CAE is satisfied that the data are

of sufficient quality to support grade and value estimation at an Inferred Mineral Resource level of

confidence.


22.6 Grade Estimation The grade estimation procedure that has been applied to the Droujba Pipe has been used

extensively in the diamond industry for global resource estimates at an Inferred Mineral Resource

level of confidence. The grade and diamond value estimates are the responsibility of Mr Johan

Ferreira an expert with over 30 years of experience at applying these techniques.

Diamond value estimates are based upon an adequate parcel of diamonds (500 carats) to support an

Inferred Mineral Resource. Samples will seldom yield sufficient diamonds to fully describe a typical

production parcel, and therefore a modelled size frequency has been used to predict the frequency

of larger stones from production. A range of possible values has been indicated, reflecting the

underlying the uncertainty in the modelling process, but this is considered adequate to support the

estimation of an Inferred Mineral Resource. Value estimation is the greatest risk element associated

with this project.

23 RECOMMENDATIONS

23.1 General CAE recommends two phases of work to develop the Droujba project. The first (Phase-1) describes

activities that will be needed to advance the Droujba Pipe to an Indicated Mineral Resource.

Obtaining a larger parcel of diamonds for valuation is a critical element. If an improvement in the

overall $/ct value (to or above $80/ct) could have a significant impact on the viability of the project.

The second phase is to acquire data to estimate the Katcha dyke to an Inferred Mineral Resource,

and therefore expand the resource base for the project.

23.2 Scope of Works Phase 1 The diamond value estimation exercise that has been conducted as part of this study has clearly

demonstrated the deficiencies of a parcel of around 500 carats for diamond valuation. It is

recommended that further bulk samples are taken from the open pit so that sufficient carats are

obtained to support the estimation of an Indicate Mineral Resource. Following the CIM

recommendation (CIM, 2008) this should be a minimum of 3000 carats. If the average grade of 70

cpht is assumed a further 3600 tonnes of Kcm will be required to reach the target of 3000 +carats. It

is important that new trenches should attempt to access both the CBK and Kcm. The former have

not yet been sampled for macro diamonds and it has been assumed so far that it will have the same

diamond characteristics as the Kcm. This assumption needs to be tested because a higher average

size or different qualities could altered the in-situ $/t of this zone. It is recommended that this

should be done by excavating six trenches from which approximately 600 dry tonnes are removed. It

may be necessary to expand the current open pit to achieve this objective. It is important that these

trenches are spaced out across the pit to test for spatial variation in grade and value, and to expose

more of the kimberlite so that an improved geological model can be constructed.

Secondly, continuity of mineralisation with depth has to be demonstrated by taking sufficient

samples to support to macro-diamond grade estimation, so that a block estimate can be achieved

using geostatistical procedures. This is best achieved by drilling large diameter (18 inch) drill holes

(LDD) on a regularly spaced grid across the whole kimberlite. The spacing of these holes should


ideally be on a 50 m by 50 m regular grid. Samples should be bulked according a set bench elevation

plan of 10 m or 12 m and sample intervals should be calculated to pre-determined elevations before

the drilling commences. The drilling method applied should ideally be a reverse-flood air assist

technique that minimises the probabilities of diamond damage. Drill bit selection is also important in

this regard. Ideally a contractor would be appointed that has previous experience in LDD drilling of

kimberlites.

It is best practice to precede the drilling of LDD holes by drilling vertical core holes in close proximity

to where the LDD will be drilled. These cores are important because they provide a more accurate

record of the geology in the hole, they can be sampled for bulk density measurements which will be

used to calculate sample and resource tonnages and they can be sampled for micro-diamond

analysis.

The key elements that will be addressed by this programme are as follows:

23.2.1 Geological Model

Experience has shown that drilling of grids of vertical holes greatly enhances the understanding of

the geology of kimberlite pipe deposits as it permits the drawing of vertical cross sections that are

better informed than those drawn from diverging or converging angled holes. It is also important

that exposures in the new trenches are mapped so that upper parts of the geological model are

better constrained.

23.2.2 Density

The gathering of regular bulk density samples, both in the trenches and down the drill holes is an

important part of the dataset needed to support the estimation of an Indicated Mineral Resource. At

least one sample should be taken for each bench (10 or 12 m) from each drill core, and a suite of at

least 30 samples should be measured in each of the sample trenches.

23.2.3 Grade

Grade estimation will be conducted primarily on macro-diamond recoveries of the samples taken

from the trenches and the LDD holes. The current procedures used in the Bulk Sample Plant should

be adequate to ensure efficient diamond recovery and security; however, it is recommended that

more formal QA/QC procedures are implemented to measure whether these procedures are being

followed. In particular a sample tracking system should be devised to assure sample integrity, and a

formal reporting procedure should be introduced to record process efficiency testing.

23.2.4 Diamond Value

The main objective is to recover a minimum of 3000 carats form the Droujba Pipe.

23.3 Budget and Decision Point – Phase-1

23.3.1 Budget

A budget estimate for Phase-1 is provided in Table 28.


Table 28: Budget estimate for Phase-1 surface bulk sampling, core drilling and LDD drilling of Droujba Pipe.

Item US$

Surface Bulk Sampling & Processing

150,000

LDD Drilling Costs 1,400,000

Core drilling 600,000

Expatriate Labour & Management 300,000

Local labour & other local costs 500,000

Total 2,950,000

23.3.2 Decision Point

At the conclusion of Phase-1 a decision should be taken whether the data collected during the

programme can support the classification of the upper 350 m of the Droujba Pipe as an Indicated

Mineral Resource.

24 Scope of Works for Phase-2 This scope is recommended to investigate the Katcha Dyke to establish whether can meet the

requirements to be classified as an Inferred Mineral Resource and therefore expand the resource

base at Droujba.

The programme recommended follows the procedures that have been successfully implemented at

Stellar’s Tongo Project in Sierra Leone. There, a combination of surface bulk samples to obtain a

large parcel of diamonds (around 1200 carats) and a drilling programme to outline the dykes at

depth has proved successful. Both the bulk samples and the drill cores are sampled for micro-

diamond analysis. This combination of datasets permits the estimation of an Inferred Mineral

Resource.

The recommended plan is to excavate surface trenches to remove approximately 500 dry tonnes of

kimberlite, ideally form several locations along the 2 km strike length of the dykes. Five, 100 tonne

samples would be ideal. The total carat recovery is expected to be around 300 carats (given the

current knowledge of grade). This may be just sufficient to support an Inferred Mineral Resource.

Drilling of angled holes to outline the dyke to a depth of approximately 150 m, with sets of holes

aimed at the 50 m, 100m and 150 m depth horizons should be undertaken. Intersections of

kimberlite in the cores should be used for micro-diamond analysis.

24.1 Budget and Decision Point – Phase-1

24.1.1 Budget

A budget estimate for Phase-1 is provided in Table 29.


Table 29: Budget estimate for Phase-2 surface bulk sampling and core drilling of Katcha Dyke.

Item US$

Surface Bulk Sampling & Processing 55,000

Core drilling 350,000

Micro-diamond analysis 50,000

Expatriate labour & management 130,000

Local labour & other local costs 110,000

Total 695,000

24.1.2 Decision Point

At the conclusion of this programme the data collected should be sufficient to support the

classification of the Katcha Dyke as an Inferred Mineral Resource, provided that it meets the

requirements for “reasonable potential for eventual economic extraction”.

25 REFERENCES

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26 GLOSSARY OF TECHNICAL TERMS aeromagnetic survey Surveys flown by helicopter or fixed wing aircraft to measure

the magnetic susceptibility of rocks at or near the earth’s

surface. Kimberlite may be detected by these surveys.

alkaline rock an igneous rock containing an excess of sodium and or

potassium

alluvial Transported and deposited in a river system, e.g. diamonds

eroded from kimberlites and deposited in river gravel.

Archaean The oldest rocks of the Precambrian era, older than about 2

500 Ma.

artisanal Adjective to describe mining by workers operating without

substantial capital, technical skills or training.

basalt A common volcanic rock, dark and fine grained, relatively low

in silica. May form very extensive lava flows.

basement The igneous and metamorphic crust of the earth, underlying

sedimentary deposits.

bedrock the first hard and solid rock underlying soil or unconsolidated

overburden


breccia A coarse grained rock made up of large angular fragments,

sometimes of various rock types. In kimberlite geology, often

the filling of a kimberlite pipe made up of country rock

fragments enveloped in kimberlite. The fragments may be

transported within the pipe (an intrusive breccia) or essentially

in-situ (an intrusion breccia)..

brecciated Adjective applied to an intensely fractured body of rock.

bulk sample a large sample, at least a hundred tonnes, usually excavated

mechanically

carat Standard unit of diamond weight, 1 carat = 0.2 grams

carbonate A rock, usually of sedimentary origin, composed primarily of

calcium, magnesium or iron and CO3. Essential component of

limestones and marbles.

caustic fusion A laboratory method of recovering microdiamonds (and other

resistant minerals) from kimberlite by means of fusing the rock

with sodium hydroxide, which destroys the silicate phases and

leaves a small residue of resistate, in which will be found any

diamonds present.

CIM Canadian Institute of Mining, Metallurgy and Petroleum

core drilling Method of obtaining cylindrical core of rock by drilling with a

diamond set or diamond impregnated bit. For drilling of

diamond deposits bits with synthetic rather than natural

diamonds are used, to avoid possible contamination.

chrome diopside A calcium, magnesium silicate, Ca(Mg,Fe,Cr)(Si,Al)2O6, with a

high proportion of chromium substitution in the lattice, which

is a common indicator mineral for diamond.

chromite An oxide of chromium, (Mg,Fe)Cr2O4, some varieties of which

can occur in kimberlite.

colluvium Sediment transported downslope by gravity; usually proximal

to its source.

conglomerate A rock type composed predominantly of rounded pebbles,

cobbles or boulders deposited by the action of water.

craton Large, and usually ancient, stable mass of the earth’s crust

comprised of various crustal blocks amalgamated by tectonic

processes. A cratonic nucleus is an older, core region


embedded within a larger craton.

Cretaceous Applied to the third and final period of the Mesozoic era, 141

Ma to 65 Ma ago.

cpht Carats per hundred tonnes. A common way of expressing the

grade of diamonds in a deposit.

Ct Abbreviation for carat

ct/m3 carats per cubic meter. A common way of expressing the grade

of diamonds in a deposit, sometimes favoured because it does

not require an estimation of rock density.

dense media separation a process where a suspension of dense powder (ferrosilicon in

diamond plants) in water is used to form a type of ‘heavier

liquid’ to separate mineral particles in a sink-float process.

diamond drilling synonymous with core drilling

diatreme A volcanic vent created by gaseous magma sourced from the

mantle. A common mode of occurrence of kimberlite and

often referred to as a pipe.

DMS Dense Media Separation. A technique to produce a diamond

bearing concentrate.

DMS yield The proportion of material reporting to the concentrate from a

DMS process. Expressed as a percentage.

dyke A vertical or near vertical sheet of igneous rock, the widths of

which may range from centimeters to hundreds of meters.

One of the typical modes of occurrence of kimberlite, in the

case of which widths are usually narrow, less than 2 m.

EIA Environmental Impact Assessment.

eluvium Sediment derived from the physical and/or chemical

decomposition of the underlying bedrock.

EMP Environmental Management Plan.

facies The sum of the lithological (and palaeontological) characters of

a particular rock. In the case of kimberlite there are usually

four facies recognized – hypabyssal, diatreme, crater and

transitional. Specific facies may also be identified with


particular characteristics.

fault A fracture or fracture zone, along which displacement of

opposing sides has occurred.

G9 A type of red to purple pyrope garnet often found in both

diamond bearing and non diamond bearing kimberlite.

G10 A type of lilac-coloured pyrope garnet often associated with

diamond bearing kimberlite.

Ga Giga years (1 Ga = 1,000 million years)

garnet A silicate mineral with many varieties. Specific compositions

can be related to depths and pressures of formation, eg

pyrope garnets are chrome rich and are common in kimberlite,

and are a kimberlite indicator mineral.

geophysical surveys Instrumental surveys measuring small variations in the earth’s

magnetic field, gravity field electrical conductivity or other

proprties related to local variations in rock type. Widely used

to discover kimberlite pipes. Magnetic and some electrical

methods can be carried out from an aircraft, whereas gravity

surveys are most commonly conducted using ground based

surveys.

gneiss A coarse grained, banded, high grade metamorphic rock.

gravity survey A geophysical survey technique which detects variations in the

earth’s gravity field due to variations in the specific gravity of

the underlying rock. Can used to detect kimberlite, which may

have higher or lower specific gravity than surrounding rocks.

Grainer (GRN) Term used to describe some size categories of diamonds

particularly by diamond valuers. A grainer is a a quarter of a

carat, a “four grainer of 4 GRN” is a stoen of 1 carat.

GPS Global Positioning System. A satellite based navigation system

able to give real time positions to approx ±5 m in X and Y using

simple hand held instruments.

grease table A device for recovering diamonds in a treatment plant using

grease, to which the diamonds preferentially adhere due to

their hydrophobic properties.


ha Hectare = 10,000 m2. A common unit for expressing the

surface area of a kimberlite pipe.

hypabyssal An adjective for an igneous rock, e.g. kimberlite, which has

crystallized from a melt within the earth’s crust, but at

relatively shallow depth.

ilmenite An iron, magnesium and titanium oxide ((Fe,Mg)TiO3). The

magnesium-rich ilmenite in kimberlite is called picro-ilmenite.

Indicated Resource (Indicated

Mineral Resource)

An ‘Indicated Mineral Resource’ is that part of a Mineral Resource for which tonnage, densities, shape, physical characteristics, grade and mineral content can be estimated with a reasonable level of confidence. It is based on exploration, sampling and testing information gathered through appropriate techniques from locations such as outcrops, trenches, pits, workings and drill holes. The locations are too widely or inappropriately spaced to confirm geological and/or grade continuity but are spaced closely enough for continuity to be assumed. (JORC

definition).

indicator minerals A suite of resistant minerals with an origin and mode of

occurrence similar to diamond, that can be indicative of the

presence of primary diamond deposits.

Inferred Resource (Inferred

Mineral Resource)

An ‘Inferred Mineral Resource’ is that part of a Mineral Resource for which tonnage, grade and mineral content can be estimated with a low level of confidence. It is inferred from geological evidence and assumed but not verified geological and/or grade continuity. It is based on information gathered through appropriate techniques from locations such as outcrops, trenches, pits, workings and drill holes which may be limited or of uncertain quality and reliability (JORC definition).

isotope dating A method of dating rocks by quantifying the relative ratio of

isotopes.

joints Regular planar fractures or fracture sets in massive rocks,

usually created by unloading, along which no relative

displacement has occurred.

Jurassic Second period of the Mesozoic Era, 190 to 141 Ma ago

kimberlite An alkaline ultramafic igneous rock that is generated at great

depths in the earth and emplaced at the surface in pipes

(diatremes), dykes or sills. The principal source of primary


diamonds.

KIM Kimberlite Indicator Mineral: pyrope garnet, eclogitic garnet,

picro-ilmenite, chromite and chrome diopside. These are

distinctive resistive minerals which occur in kimberlite in much

higher concentrations than diamond, and which can be found

in streams and soils and traced back to their kimberlite source,

thus acting as pathfinders for diamond. The chemical

compositions of garnet, ilmenite and chromite are related to

the diamond potential of their source kimberlites, thus their

mineral chemistry can provide an initial, non quantitative,

grade prognosis.

kriging A mathematical technique which uses spatial statistics to

calculate estimations of mineral resources.

LDD Large diameter drilling. Drilling of non-cored holes of diameter

>15 "

lamproite A peralkaline volcanic or subvolcanic rock of mafic to

ultramafic composition. Rarely, lamproite contains diamonds

in economic quantities.

laser raman technology Method of diamond extraction using diamond’s property of

emiting raman wavelength radiation when bombarded with a

laser beam.

lineament A significant linear feature of the earth’s crust.

lithosphere Mass of the mantle attached to the base of the crust that has a

geological history related to that of the overlying crust, and

that is cold and rigid relative to the deeper parts of the mantle.

loam sampling Sampling the soil profile to recover resistant minerals. In the

case of diamond exploration, loam sampling is intended to

recover kimberlite indicator minerals.

luminescence intensity(li) Measure of the fluorescence of diamond when bombarded

with X-rays. The fluorescence is caused by impurities or

crystallographic dislocations in the diamond.

Ma Million years.

mafic Descriptive of rocks composed dominantly of magnesium and

iron rock-forming silicates.


magmatic Rock formed from crystallization of molten magma; an igneous

rock. A descriptive of some kimberlite types which have

crystallized without exploding.

mamsl Metres above mean sea level, a commonly used abbreviation

for denoting absolute elevation

magnetic survey A geophysical survey which measures variations in the earth’s

magnetic field caused by differences in the magnetic

susceptibilities of underlying rock. Kimberlite may be detected

by this method, as its susceptibility may be higher or lower

than surrounding rock types.

mantle The layer of the earth between the crust and the core. The

upper mantle, which lies between depths of 50 and 650km

beneath continents, is the principal region where diamonds

are created and stored in the earth.

Measured Resource (Measured

Mineral Resource)

A ‘Measured Mineral Resource’ is that part of a Mineral Resource for which tonnage, densities, shape, physical characteristics, grade and mineral content can be estimated with a high level of confidence. It is based on detailed and reliable exploration, sampling and testing information gathered through appropriate techniques from locations such as outcrops, trenches, pits, workings and drill holes. The locations are spaced closely enough to confirm geological and grade continuity (JORC definition).

metamorphism Alteration of rock and changes in mineral composition, most

generally due to increase in pressure and/or temperature.

macrodiamond Definitions vary, but a diamond which would be recovered in a

full scale mine plant. Now generally taken as >0.85 mm in size.

microdiamond A diamond <0.85 mm in size, although definitions vary. Usually

considered to be of no commercial value and too small to be

recovered in a full scale mining operation.

MiDA Abbreviation for “microdiamond analysis”

mobile belt An elongate belt in the earth’s crust, usually occurring at the

collision zone between two crustal blocks, within which major

deformation, igneous activity and metamorphism has

occurred.

Ore dressing Another term for mineral processing. The process of

recovering the valuable minerals from an ore.


orogeny A deformation and/or magmatic event in the earth’s crust,

usually caused by collision between tectonic plates.

Palaeozoic An era of geologic time between the Late Precambrian and the

Mesozoic era, 545 Ma to 251 Ma ago.

petrography The description and classification of rocks.

Percussion drilling Drilling by means of an air hammer which breaks the rock into

chips which are brought to surface by air circulation.

Precambrian Pertaining to all rocks formed before Cambrian time (older

than 545 Ma).

Probable Ore Reserve (Probable

Mineral Reserve)

A ‘Probable Ore Reserve’ is the economically mineable part of an Indicated, and in some circumstances, a Measured Mineral Resource. It includes diluting materials and allowances for losses which may occur when the material is mined. Appropriate assessments and studies have been carried out, and include consideration of and modification by realistically assumed mining, metallurgical, economic, marketing, legal, environmental, social and governmental factors These assessments demonstrate at the time of reporting that extraction could reasonably be justified (JORC

definition).

Proven Ore Reserve (Proven

Mineral Reserve)

A ‘Proved Ore Reserve’ is the economically mineable part of a Measured Mineral Resource. It includes diluting materials and allowances for losses which may occur when the material is mined. Appropriate assessments and studies have been carried out, and include consideration of and modification by realistically assumed mining, metallurgical, economic, marketing, legal, environmental, social and governmental factors. These assessments demonstrate at the time of reporting that extraction could reasonably be justified (JORC

definition).

Proterozoic An era of geological time spanning the period from 2 500 Ma

to 545 Ma before present.

pipe When referring to kimberlite, a synonym of diatreme.

PL Prospecting Licence

pyrope garnet A ruby-coloured garnet, Mg3Al2(SiO4)3, common in deep-

seated ultramafic intrusive rocks and common as a xenocryst

in kimberlite.


RC drilling Reverse circulation drilling. A percussion drilling technique in

which the sample is brought to surface by air and/or water

through the centre of the drill pipe. Used when accurate

sampling is required as the method minimizes cross

contamination of samples.

schist A crystalline metamorphic rock having a foliated or parallel

structure due to the recrystallisation of constituent minerals.

SAMREC The South African code for the reporting of exploration results

committee

slimes The term for a mixture of undersize material and water which

is removed from crushed ore during processing.

spinel A group of oxide minerals of various compositions,

(Mg,Fe,Mn)(Al,Fe,Cr)2O4, commonly occurring as an accessory

in basic igneous rocks.

stream sediment sampling The collection of samples of stream sediment with, in diamond

exploration, the intention of looking for kimberlite indicator

minerals or diamonds.

Stone (stn) A term used in the industry to describe a diamond. “Average

stone size” is used to describe average diamond size etc.

strike Horizontal direction or trend of a geological structure.

Tertiary (System) The rocks formed between the end of the Cretaceous at 65 Ma

and the start of the Quarternary at 1.7 Ma.

tonne A metric tonne, 1,000 kg

tectonic Pertaining to the forces involved in, or the resulting structures

of, movement in the earth’s crust.

trommel A rotating cylindrical screen used to separate materials by size.

type II diamond Very pure type of diamond containing very little nitrogen. Type

II diamonds tend to have higher values than other stones, but

have much lower luminescence under X-rays, which makes

them more difficult to recover using X-ray technology.

volcaniclastic Rock formed by exploding magma in a volcano. Volcaniclastic

kimberlite is common in kimberlite pipes.

ultramafic Igneous rocks consisting essentially of ferromagnesian


minerals with trace quartz and feldspar.

variogram In spatial statistics, a graph which relates the variance of the

difference in value between pairs of samples to the distance

between them. Allows the weighting of a sample value in

terms of its distance from the point where an estimate of

sample value is required.

xenocryst Applies to mineral crystals in igneous rocks that are foreign to

the body of rock in which they occur. Very common in

kimberlite, with diamond being an example.

X-ray machine Diamond recovery technology utilizing the fact that diamonds

fluoresce and to some degree phosphoresce when exposed to

X-Ray radiation. Light emitted from diamonds which have been

excited by X-rays is detected and converted into electrical

signals. Such signals (after suitable amplification and

processing) trigger an ejection device which physically

separates the diamond from the rest of material fed through

such a sorting machine.

xenolith A piece of another pre-existing rock within an igneous

intrusion. Very common in kimberites.

technical report for the droujba diamond project,...

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