Firestone Diamonds - Oena Mine, Namaqualand, South Africa

Oena Mine, Namaqualand, South Africa

Firestone acquired an 87.5% interest in the Oena Mine in February 2000, and is in the process of re-establishing mining operations at the mine. The Oena mining lease covers an area of 8,800 hectares and extends for 17 kilometres along the banks of the lower Orange River. The Orange River played a very significant role in the creation of the alluvial diamond deposits on the west coast of Southern Africa. First, it was the largest and most important river which transported diamonds to the west coast. Second, it carried diamonds of a size and quality considered equal to best in the world, with average values of between $700 and $900 per carat. Asam Minerals, Firestone's geological consulting affiliate, carried out the first prospecting activities on the lower reaches of the Orange River in the late 1960s, and was responsible for the discovery and development of the first mines on the lower Orange River at Octha and Baken.

Octha is estimated to have produced 700,000 carats (140 kg), with a current value of $500 million. Baken, which is considered to be one of the premier alluvial diamond mines in the world, is the flagship of Trans Hex, South Africa's second largest diamond producer, and has been producing for over 30 years. Baken currently produces approximately 50,000 carats (10 kg) per annum, with a gross value of about $40 million. De Beers' Auchas Mine is located opposite Baken on the Namibian side of the Orange River and currently produces 25,000 carats (5 kg) per annum. The Oena Mine is located approximately 17 kilometres upstream of Baken. Upstream of Oena, Global Diamond Resources, a United States listed company, is developing a mine at Grasdrif. Trans Hex is carrying out a feasibility study at their Northbank project, located on the Namibian side of the river opposite Grasdrif.

Previous mining operations at Oena in the early 1990s were small scale and focused on two remnant deposits of high grade Miocene-age gravels, known as proto Orange gravels. Between 1991 and 1995, Oena produced approximately 30,000 carats (6 kg), worth about $24 million at current prices. The average stone size was approximately 2 carats (400 mg), and in 1993 production was sold for an average of $880 per carat. The largest stone recovered was 79 carats (16 g). As prices of large, high quality stones have increased significantly since then, the current market value of these diamonds is estimated to be in the region of $1,000 per carat. By 1995 the proto Orange gravels at Oena were mined out, following which mining operations were suspended.

Firestone intends to re-establish mining operations at the mine to exploit the substantial resource of more recent gravel terraces, known as meso Orange gravels, which remain on the mine. Geological and topographical mapping, aerial photo analysis, and drilling have been undertaken on the meso terraces, on the basis of which the total gravel resource is estimated to be approximately 40 million tonnes.

Sampling on the meso terraces has produced grades between 0.6 and 1.25 carats/100 tonnes (1.2 and 2.5 mg/t), with localised high grade areas of between 5 to 10 carats/100 tonnes (1 to 2 g/t). Over 330 carats (66 g) were recovered from small scale subcontracting operations at Oena in 1999, which were sold at an average price of $880 per carat. The largest stones recovered were 48 carats (9.6 g), 16.28 carats (3.256 g), and a 10.81 carat (2.162 g) D flawless stone which sold for $5,000 per carat.

Oena has the significant advantage that much of the original mine infrastructure is still in place, allowing production to begin almost immediately. Key elements of the infrastructure include mining equipment, more than 1,300 m² of accommodation, office space and workshops, fresh water supply, telephone line, 1,300 metre runway, and gravel treatment plant and sorting building.

Oena also has significant exploration potential, as it is believed that high grade proto Orange gravels have been preserved beneath the meso Orange gravels in certain locations at the mine.