Afri-Can Marine Minerals Corp. has completed a preliminary study of the feasibility of resuming mining during 2014 on mining lease 111, situated off the coast of Namibia, for which Afri-Can has an option to acquire an 80-per-cent interest from Diamond Fields Ltd. The prefeasibility study (PFS) is based on existing probable diamond reserves of 319,000 carats, which are estimated from portions of the indicated mineral resources that were press released on Oct. 1, 2013.
A National Instrument 43-101-compliant technical report covering the prefeasibility study has been filed on SEDAR and on the Afri-Can website.
PREFEASIBILITY STUDY HIGHLIGHTS
Afri-Can’s share of net present value (NPV) (after tax) $20.2-million (U.S.)
Afri-Can’s share of internal rate of return (IRR)
(after tax) 31%
Probable diamond reserves 319,000 carats
Average annual production 159,500 carats
Diamond price (projected average) $484 (U.S.) per carat
Initial mine life two years
Salient features of the prefeasibility study are as follows:
Estimated probable diamond reserves of 319,000 carats at an average grade
of 0.24 carat per square metre are based upon the economically
extractable portions of the indicated mineral resources only — and none
of the inferred resources — that were press released on Oct. 1,
2013. The economic cut-off grade for the project will be 0.126 carat per
square metre;Diamond prices are estimated based upon the last sales from ML 111 in
2008, escalated by the amount which Namibian diamonds have subsequently
risen, adjusted to take into account the different average diamond sizes
in each area of ML 111, which gives a weighted-average value of $484 per
carat;The most efficient mining method for ML 111 is the seabed crawler system.
The joint venture with International Mining and Dredging Holding Ltd.
(IMDH) announced on Dec. 5, 2013, will facilitate the charter of
the mining vessel Ya Toivo, which has an efficient seabed crawler
system;Vessel operating costs for the first three months are to be funded by
Afri-Can and are estimated from reported 2002 operating costs for the
same vessel, escalated by the South African inflation rate to 2014. The
estimated operating costs of the vessel and equipment are $122,000 per
day, which after the first three months of operations, are expected to be
financed from diamond sales revenue. The memorandum of understanding
between Afri-Can and IMDH announced on Dec. 5, 2013, provides for
the costs of preparing the vessel for the work to be covered by IMDH.
Afri-Can has no requirement for capital expenditure to acquire equipment.
Afri-Can is committed to fund the vessel’s operating costs of $3.7-million per month for a maximum of three months, by which time the
operations are expected to be cash flow positive;Afri-Can’s share of the total net earnings before interest and taxes for
the two years of initial mine life will amount to an estimated $20.4-million (due to corporate losses carry forward, taxes for the first two
years will be zero);It is anticipated, but not guaranteed, that additions will be made to the
probable reserves by sampling in areas of inferred resources, by reclassification of the reserves, because of favourable working attributes
or by exploration of areas which potentially contain undiscovered
deposits.
- Estimated probable diamond reserves of 319,000 carats at an average grade
of 0.24 carat per square metre are based upon the economically
extractable portions of the indicated mineral resources only — and none
of the inferred resources — that were press released on Oct. 1,
2013. The economic cut-off grade for the project will be 0.126 carat per
square metre;
- Diamond prices are estimated based upon the last sales from ML 111 in
2008, escalated by the amount which Namibian diamonds have subsequently
risen, adjusted to take into account the different average diamond sizes
in each area of ML 111, which gives a weighted-average value of $484 per
carat;
- The most efficient mining method for ML 111 is the seabed crawler system.
The joint venture with International Mining and Dredging Holding Ltd.
(IMDH) announced on Dec. 5, 2013, will facilitate the charter of
the mining vessel Ya Toivo, which has an efficient seabed crawler
system;
- Vessel operating costs for the first three months are to be funded by
Afri-Can and are estimated from reported 2002 operating costs for the
same vessel, escalated by the South African inflation rate to 2014. The
estimated operating costs of the vessel and equipment are $122,000 per
day, which after the first three months of operations, are expected to be
financed from diamond sales revenue. The memorandum of understanding
between Afri-Can and IMDH announced on Dec. 5, 2013, provides for
the costs of preparing the vessel for the work to be covered by IMDH.
Afri-Can has no requirement for capital expenditure to acquire equipment.
Afri-Can is committed to fund the vessel’s operating costs of $3.7-million per month for a maximum of three months, by which time the
operations are expected to be cash flow positive;
- Afri-Can’s share of the total net earnings before interest and taxes for
the two years of initial mine life will amount to an estimated $20.4-million (due to corporate losses carry forward, taxes for the first two
years will be zero);
- It is anticipated, but not guaranteed, that additions will be made to the
probable reserves by sampling in areas of inferred resources, by reclassification of the reserves, because of favourable working attributes
or by exploration of areas which potentially contain undiscovered
deposits.
Recommendations of the prefeasibility study:
Probable reserves can be economically mined, and it is recommended that
mining operations should commence as soon as practicable; Sampling should be undertaken in the areas of inferred resources to
generate more indicated resources and thus additional probable reserves;An exploration program should be drawn up with the objective of
generating new resources.
- Probable reserves can be economically mined, and it is recommended that
mining operations should commence as soon as practicable;
- Sampling should be undertaken in the areas of inferred resources to
generate more indicated resources and thus additional probable reserves;
- An exploration program should be drawn up with the objective of
generating new resources.
Pierre Leveille, president and chief executive officer of Afri-Can, stated that: “We are very pleased with this prefeasibility study. It confirms that ML 111 forms a strong basis for the start of a mining venture that will provide regular development and value for our shareholders. The DFI portfolio of mining leases complements EPL 3403 and offers very good development potential. We feel that we are sitting on a strong project in a very solid industry.”
Afri-Can’s immediate goal is to focus on ML 111’s existing reserves in order to resume production in the shortest time frame possible. Afri-Can’s technical team is currently designing a sampling program of up to 800 samples that will serve to establish mining blocks and mining grades as well as serve to increase some or all of the inferred resources to the indicated category. A detailed mine plan will be designed upon completion of the sampling program. It is anticipated, but not guaranteed, that it will be possible to reclassify portions of the new indicated resources as additional probable reserves. The schedule for this program will be communicated to the company’s investors once discussions with IMDH, as per the memorandum of understanding announced on Dec. 5, 2013, are finalized.
The independent PFS was compiled by Richard Foster, BSc (honours in geology), PrSciNat, for Afri-Can, with inputs from other specialized consultants under the management of Afri-Can. As per NI 43-101, Mr. Foster is independent from the corporation. Mr. Foster has over 40 years of direct experience in the marine diamond exploration and mining industry off the Namibian coast. He is the qualified person who has prepared the NI 43-101 report, reviewed this press release and is responsible for the technical part of this press release, and is the designated qualified person under the terms of NI 43-101.
About ML 111
Mining lease 111 lies between five and 20 kilometres north of Luderitz, covers 312 square kilometres, and lies in water depths up to 130 metres. ML 111 hosts at least three mineralized geological features. The ML was originally granted for a period of 15 years and is renewable on Dec. 4, 2015. A recent Afri-Can NI 43-101 report estimated the remaining diamond resources on ML 111 at 413,000 carats as indicated resources and 453,000 carats in the inferred category. The resources exist in the Marshall Fork, Staple basin/Conical beach and Diaz Reef areas. Diamond Fields International produced intermittently between 2001 and 2007 some 158,200 carats, mainly from the Marshall Fork area. Special stones recovered from Marshall Fork included a gem-quality 17.42 carat stone, a rare 5.26-carat light blue diamond which sold for $10,457 (U.S.) per carat, and a 2.45-carat pink gem diamond which sold for $16,771 (U.S.) per carat. DFI ceased production following the world financial crisis.
