The Catalao project is located in the
state of Goiás, approximately 280 kilometres south of
Brazil’s capital city, Brasilia. The Catalão 1
kimberlite cluster covers a surface area of 0.75
hectares and is comprised of three pipe-like deposits
named Catalão 1A, 1B and 1C. These pipe-like deposits
are approximately 0.30, 0.25 and 0.20 hectares
respectively.
The kimberlite cluster was discovered
in the 1970s by a subsidiary of De Beers Consolidated
Mines Limited. Rio Tinto acquired an exploration license
covering an area surrounding the kimberlite in 1998 and
completed a detailed exploration program over the
following two years which included airborne and ground
geophysical surveys, core drilling and mini-bulk
sampling. Rio Tinto’s mini-bulk sampling program focused
on a surface exposure of the Catalão 1A pipe, where
three mini-bulk samples with a total weight of
approximately 3.6 tonnes resulted in the recovery of 52
diamonds with a total weight of 0.848 carats.
The 734.62 kilogram mini-bulk sample
from Catalão 1A was processed using the caustic fusion
process at Rio Tinto’s facility in Brazil. The 2.84
tonne mini-bulk sample from Catalão 1A was initially
treated at Rio Tinto’s facility in Brazil by scrubbing
and screening to liberate the diamonds and reduce the
volume of the sample. Following attrition, the >0.500 mm
fraction was passed through a bromoform solution to
produce a heavy mineral concentrate containing diamonds,
which were picked under the microscope.
Rio Tinto also completed a drilling
program comprising 16 core holes totalling 1,050 metres
to define the limits of the Catalão 1A, 1B and 1C bodies
to a maximum depth of 201 metres. A total of 5.14 tonnes
of kimberlite was processed for total diamond recovery
by caustic fusion resulting in the recovery of 145
diamonds with a total weight of 0.51 carats.
Terms of the Acquisition Agreement
Under the terms of the acquisition
agreement for the Catalão Property, Vaaldiam will hold
100% ownership of the Property, subject to Rio Tinto
retaining an option to acquire a 60% interest in any
kimberlite pipe that has been bulk sampled, resulting in
the recovery of at least 200 carats of commercial sized
diamonds. Rio Tinto would exercise this option by fully
funding a feasibility study relating to the kimberlite
and, should the feasibility study be successful, by
providing Vaaldiam with a non-recourse project loan to
finance Vaaldiam’s share of mine development costs,
thereby allowing Vaaldiam to retain a 40% equity
interest in cash flow from the mine without the need to
raise development equity funding. This non-recourse loan
would be repaid to Rio Tinto from a portion of
Vaaldiam’s share of cash flow from the deposit. Should
Rio Tinto not exercise its option then Vaaldiam would
continue to own 100% of that kimberlite deposit to be
dealt with at Vaaldiam’s sole discretion. Any alluvial
deposits developed on the property would be 100% owned
by Vaaldiam.
Vaaldiam plans to pursue an
aggressive evaluation program which includes definition
drilling to further define the known kimberlites on the
Property and the completion of an additional bulk
sampling program recovering approximately 150 tonnes of
kimberlite from the Catalão diamond bearing kimberlites.
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