2012
Tania R Marshall Explorations Unlimited
Glenn A Norton Rockwell Diamonds Inc
GEOLOGICAL REPORT
ON THE KLIPDAM/HOLPAN ALLUVIAL DIAMOND MINE
(INCORPORATING THE KLIPDAM AND HOLPAN MINES AS WELL AS THE ERF 1 AND
ERF 2004 PROSPECTING PROPERTIES), BARKLY WEST DISTRICT,
NORTHERN CAPE PROVINCE,
REPUBLIC OF SOUTH AFRICA FOR
ROCKWELL DIAMONDS INC
Effective Date: 30 April, 2012
Signature Date: 14 June, 2012
ROCKWELL DIAMONDS INC, KLIPDAM/HOLPAN MINE April 30, 2012
Table of Contents Page
1 INTRODUCTION ...... 11
1.1 TERMS OF REFERENCE AND SCOPE OF WORK ...... 11 1.2 SOURCES OF INFORMATION ...... 12 1.3 UNITS AND CURRENCY ...... 13 1.4 FIELD INVOLVEMENT OF QUALIFIED PERSONS ...... 13 1.5 USE OF DATA ...... 13 2 RELIANCE ON OTHER EXPERTS ...... 14
2.1 LEGAL OPINION ...... 14 2.2 DIAMOND VALUATION ...... 14 3 PROPERTY DESCRIPTION AND LOCATION ...... 16
3.1 PROPERTY DESCRIPTION AND LOCATION ...... 16 3.2 PERMITS, CONTRACTS AND AGREEMENTS ...... 19 3.2.1 Royalty Payments ...... 19 3.2.2 Surface ownership / land use rights ...... 19 3.2.3 Mineral rights ...... 19 3.2.3.1 Mining Right ...... 20 3.2.3.2 Prospecting Rights...... 20 3.3 BEE COMPLIANCE ...... 20 3.4 ENVIRONMENTAL ...... 21 3.4.1 Environmental Rehabilitation ...... 21 3.4.2 Water permits ...... 22 3.5 SOCIAL RESPONSIBILITY ...... 23 3.5.1 Social and Labour Plans ...... 23 4 ACCESSIBILITY, CLIMATE, LOCAL RESOURCES, INFRASTRUCTURE AND PHYSIOGRAPHY ...... 24
4.1 TOPOGRAPHY, ELEVATION AND VEGETATION ...... 24 4.2 ACCESS AND INFRASTRUCTURE ...... 25 4.2.1 Water ...... 25 4.2.2 Power ...... 26 4.2.3 Communication ...... 26 4.2.4 Transportation ...... 26 4.2.5 Waste Disposal ...... 26 4.2.6 Tailings disposal ...... 26 4.2.7 Coarse dumps ...... 28 4.2.8 Fuel storage and supply ...... 28 4.2.9 Staff/Labour ...... 28 4.2.10 Sensitive landscapes ...... 29 4.2.11 Accommodation and offices ...... 29 4.2.12 Essential services ...... 30 4.3 CLIMATE ...... 30 5 HISTORY ...... 31
5.1 HISTORICAL ...... 31 5.2 PREVIOUS OWNERSHIP ...... 31 5.3 PREVIOUS EXPLORATION/DEVELOPMENT ...... 32 6 GEOLOGICAL SETTING AND MINERALISATION ...... 33
6.1 GENERAL GEOLOGY AND MINERAL DEPOSITS OF SOUTH AFRICA ...... 33 6.2 THE ALLUVIAL DIAMOND FIELDS OF THE MIDDLE VAAL RIVER ...... 34 6.2.1 Geochronology ...... 37 6.3 PROPERTY GEOLOGY (KLIPDAM/HOLPAN) ...... 37 6.3.1 Fluvial-alluvial Deposits ...... 38 Page 2
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6.3.2 Derived (Rooikoppie) Deposits ...... 39 6.4 PROPERTY GEOLOGY (ERFS 1 AND 2004) ...... 42 6.5 MINERALIZATION ...... 42 6.5.1 Nature of Mineralisation...... 42 6.5.2 Surrounding Rock Types/Regional Bedrock Geology ...... 44 6.5.3 Geological Controls ...... 45 6.6 MINERALISATION ON KLIPDAM/HOLPAN MINE ...... 46 7 DEPOSIT TYPES ...... 49
7.1 FLUVIAL-ALLUVIAL DEPOSITS ...... 49 7.1.1 Older gravels ...... 49 7.1.2 Younger gravels ...... 50 7.2 DERIVED (ROOIKOPPIE GRAVELS) ...... 51 7.2.1 Eluvial Rooikoppie Gravel ...... 52 7.2.2 Colluvial Rooikoppie Gravel ...... 53 8 EXPLORATION ...... 55
8.1 REMOTE SENSING (SATELLITE IMAGERY / AERIAL PHOTO INTERPRETATION) ...... 55 8.2 GEOPHYSICS ...... 55 9 DRILLING ...... 56
9.1 LOCATION ...... 57 9.2 RESULTS ...... 58 9.3 REPRESENTATIVENESS ...... 60 10 SAMPLING PREPARATION ANALYSIS AND SECURITY ...... 61
10.1 SAMPLE SECURITY ...... 61 10.2 TRACER TESTING QA/QC ...... 62 11 DATA VERIFICATION ...... 63 12 MINERAL PROCESSING AND METALLURGICAL TESTING ...... 65
12.1 BULK- SAMPLING ...... 65 12.1.1 Location ...... 65 12.1.2 Mining/Excavation Methodology ...... 67 12.1.3 Sample Processing and Final Recovery ...... 68 12.1.3.1 Rotary Pan Plant on Klipdam...... 69 12.1.3.2 DMS Plant on Holpan ...... 70 12.1.3.3 Final Recovery ...... 73 12.1.4 Drilling, sampling and recovery factors ...... 74 12.1.5 Sample Quality ...... 76 12.1.6 Representativeness ...... 76 12.2 TRIAL-MINING...... 76 12.2.1 Results ...... 77 12.2.1.1 Grades ...... 77 12.2.1.2 Values...... 81 12.2.1.3 Diamond Size Distribution...... 82 12.3 REPRESENTATIVENESS ...... 84 13 MINERAL RESOURCE ESTIMATE ...... 85
13.1 PREVIOUS RESOURCE ESTIMATES ...... 86 13.1.1 De Decker & Associates Resource Evaluation Report (2006) ...... 86 13.1.2 Explorations Unlimited (March 2007, November 2007, May 2008) ...... 87 13.1.3 Explorations Unlimited (December, 2009) ...... 89 13.1.4 Explorations Unlimited (November, 2010)...... 89 13.2 CURRENT (2012) RESOURCE ESTIMATION ...... 90 13.2.1 Key Assumptions ...... 90 13.2.2 Volume ...... 91
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13.2.2.1 Specific Density ...... 92 13.2.3 Diamond Grade ...... 92 13.2.3.1 Cut-off Grades ...... 93 13.2.4 Diamond Value ...... 93 13.2.5 Resource Statement ...... 93 13.2.6 Resource Reconciliation ...... 94 13.2.7 Prospecting and Mining risks ...... 95 13.2.8 Specific Mining risks ...... 96 13.2.8.1 In South Africa ...... 97 14 MINERAL RESERVE ESTIMATION ...... 98 15 ADJACENT PROPERTIES ...... 100
15.1 SLYPKLIP NORTH ...... 103 16 OTHER RELEVANT DATA AND INFORMATION ...... 105
16.1 EXPLORATION TARGETS ...... 105 16.2 SOUTH AFRICAN ECONOMY ...... 105 16.2.1 The Mining Industry ...... 105 16.2.2 South Africa’s Mineral Legislative Environment ...... 106 16.2.2.1 Mineral Policy ...... 106 16.2.2.2 Mineral and Petroleum Resource Development Act 28 of 2002 (“MPRDA”) ...... 107 16.2.2.3 Broad Based Black Economic Empowerment (BBBEE) and the Mining Charter ...... 107 16.2.2.4 The Minerals and Petroleum Resources Royalty Bill ...... 108 16.2.2.5 The Diamond Amendment Bill ...... 109 16.2.2.6 Diamond Export Levy Bill 2007 ...... 110 16.2.2.7 Precious Metals Bill and the Beneficiation Strategy ...... 110 16.2.2.8 Kimberley Process ...... 111 17 CONCLUSIONS ...... 112 18 REFERENCES ...... 114 DATE AND SIGNATURE PAGE ...... 117 19 CERTIFICATE OF AUTHORS ...... 118
19.1 TANIA RUTH MARSHALL ...... 118 19.2 GLENN ALAN NORTON ...... 120
Figures Figure 3.1: Location of the Klipdam/Holpan Project in the Northern Cape Province ...... 16 Figure 3.2 Locality map for the Klipdam/Holpan project ...... 17 Figure 4.1: Slimes dam configuration on Holpan ...... 27 Figure 4.2: Slimes dam configuration on Klipdam ...... 28 Figure 6.1: The General Geology of South Africa...... 33 Figure 6.2: Schematic stratigraphic representation of the gravels of the lower Vaal River basin, showing Older Gravels (above) and Younger Gravels (Below) (Marshall, 2004) ...... 35 Figure 6.3: Location of known, mapped terraces between Windsorton and Barkly West (redrawn after Helgren, 1979) ...... 36 Figure 6.4: Schematic view of coarser gravel channel bars in a braided river system ...... 44 Figure 6.5: Bedrock geology surrounding the project area (Council for Geoscience). Ra – Ventersdorp Lava (Allanridge formation; Qc – Quaternary cover (calcrete); DA – alluvial diamond occurrence ...... 45 Figure 6.6: Fixed and mobile trapsites and their depositional environments (Jacobs, 2005) ...... 46 Figure 6.7 Bedrock contours of gravel in glacial scour on Klipdam/Holpan ...... 47 Figure 7.1: Diagrammatic representation of relationships among colluvial, eluvial and fluvial-alluvial gravels in the Vaal River system (Wilson, et al., 2006) ...... 51 Figure 7.2: Formation of eluvial gravels (Marshall, 2004) ...... 52
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Figure 7.3: Formation of Eluvial Gravels (Marshall, 2004) ...... 52 Figure 7.4: Formation of colluvial gravels (Marshall, 2004) ...... 53 Figure 9.1 Location of completed drilling and pitting on Klipdam/Holpan ...... 57 Figure 9.2 Contours of fluvial-alluvial gravels ...... 58 Figure 9.3 Contours of Rooikoppie gravels ...... 59 Figure 12.1 Location of bulk-sampling activities on Klipdam/Holpan during 2006-2008 ...... 66 Figure 12.2: Location of drilling, pitting and sampling on Erf 2001 and Erf 2004 (the legend for the Rooikoppie thickness background can be seen on Fig. 10.3) ...... 67 Figure 12.3 Flowsheet for the processing and final recovery on Klipdam (Rockwell, 2007) ...... 72 Figure 12.4 Flow sheet for the processing and final recovery on Holpan (Rockwell, 2007) ...... 73 Figure 12.5: Schematic distribution of alluvial diamonds within an alluvial deposit – random distribution of clusters of points (Rombouts, 1987)...... 75 Figure 12.6 Location of mining activities during the period February 2009 – April, 2012 ...... 77 Figure 12.7: Model for large stones for (a) Holpan and (b) Klipdam (Oosterveld, 2010) ...... 82 Figure 12.8: Diamond size frequency for the combined Klipdam/Holpan population ...... 83 Figure 13.1: The extremely low concentrations of diamonds, combined with low homogeneity results insignificant difficulties in the evaluation of alluvial diamond deposits (after Lock, 2003) 91 Figure 13.2: Resource estimation on the Klipdam project at 30 April 2012 ...... 94 Figure 13.3 Correlation between estimated and recovered grade on Klipdam/Holpan (January 2007 – February 2012) ...... 95 Figure 14.1: Relationships between resources and reserves (SAMREC, 2007) ...... 98 Figure 14.1 Location of properties where alluvial diamonds have been mined economically between Windsorton and Kantien Koppie at Barkly West (Source: Google Earth) ...... 101 Figure 14.2 Location of the Slypklip North project (www.paramountmining.com) ...... 103
Tables Table 3.1: UTM Co-ordinates of the Klipdam/Holpan Mine mining and prospecting properties ...... 18 Table 3.2 Summary of Holpan-Klipdam landholdings ...... 19 Table 3.3 Schedule of rehabilitation guarantee payments ...... 21 Table 6.1 Simplified Stratigraphy of the Cainozoic alluvial deposits (Modified after SACS, 1980, De Wit et al., 2000) ...... 34 Table 12.1 Production data for 2006/2008 bulk-sampling programme ...... 65 Table 12.2: Production results from Klipdam/Holpan for Feb 2009 – 2012 ...... 78 Table 12.3: Recovered grades for the period 2009/2012 ...... 80 Table 12.4: Diamond sales figures for Klipdam and Holpan for 2009/2010...... 81 Table 12.5: Estimation of the number of large stones expected on Holpan and Klipdam ...... 83 Table 13.1: 2006 Resource estimate for Holpan-Klipdam (De Decker, 2006) ...... 87 Table 13.2 Resource statement as at March 2007 ...... 87 Table 13.3 Resource statement as at October 2007 ...... 88 Table 13.4 Resource statement as at May 2008 ...... 88 Table 13.5: Resource statement as at 28 February 2009 ...... 89 Table 13.6: Resource statement for the Klipdam/Holpan mine as at 30 November 2010 ...... 89 Table 13.7: Resources on the Klipdam/Holpan Mine, as estimated at 30 April, 2012 ...... 93 Table 16.1: Economic indicators for South Africa (February , 2012) ...... 105
Plates Plate 4.1 Flat, glaciated plain on which the Klipdam/Holpan deposits were formed (view to the NW, Holpan mine in centre) ...... 24 Plate 4.2: Thin grassland, low bush and sparse trees typical of the Holpan and Klipdam properties 25 Plate 4.3: Grave site on the Holpan mine property (photo courtesy of Rockwell) ...... 29 Plate 6.1 Example of calcreted fluvial-alluvial deposits at Klipdam...... 38
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Plate 6.2 Highly calcreted basal gravel from the palaeochannel on Holpan ...... 39 Plate 6.3 Rooikoppie deposits formed in makondos developed in the calcreted fluvial-alluvial deposits on Holpan ...... 40 Plate 6.4 Rooikoppie deposits formed in makondos developed on Ventersdorp lava bedrock on Klipdam ...... 41 Plate 6.5: Rooikoppie deposits, as exposed on Erf 2004 (above) and Erf 1 (right) ...... 42 Plate 9.1: Logging and sampling drill-cuttings on Holpan (2007) ...... 56 Plate 10.1 Locked secure box into which the FLOWSORT concentrates are sent...... 61 Plate 12.1 Mining thin Rooikoppie gravels and underlying calcreted alluvial gravels ...... 68 Plate 12.2: Removal of Rooikoppie gravels from the bedrock ...... 69 Plate 12.3: Rotary pan sampling plant on Klipdam (2007) ...... 70 Plate 12.4 DMS processing plant on Holpan (2007) ...... 71 Plate 12.5 Glove-box, in which the diamonds were sorted on Holpan ...... 74 Plate 14.1: Mining of alluvial diamonds along the Vaal River prior to the turn of the 20th century (de Wit, 2008) ...... 100 Plate 14.2: Fluvial alluvial gravels on Van Zoelens Laagte (photo courtesy of Rockwell) ...... 102 Plate 14.3: Rooikoppie operations on the Van Zyl’s claims between Klipdam & Holpan...... 102
Units and Abbreviations
Unit Description Ma Millions of Years before Present ct Carat(s) ct/st Carats per Stone ct/100m3 Carats per 100 cubic metres cpht Carats per 100 Tonnes tph Tonnes (metric) per hour m Metres M Million SG Specific Gravity BBBEE Broad Based Black Economic Empowerment (the more correct term of the usually shortened BEE (Black Economic Empowerment) DMR Department of Mineral Resources (Previously known as Department of Minerals and Energy “DME”) DWAF Department of Water and Forestry DTM Digital Terrain Model QP Qualified Person, as defined by National Instrument 43-101 CP Competent Person, as defined by SAMREC DMS Dense Media Separation plant Bottom cut-off Bottom cut-off refers to the smallest size diamond (in mm) that is recovered in the sampling and mining process JSE Johannesburg Stock Exchange TSX Toronto Stock Exchange
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SUMMARY
This geological report is prepared to document the history of exploration, bulk-sampling and trial- mining on the properties, as well as the current resource estimate on the Klipdam and Holpan mines as well as the Erf 1 and Erf 2004 prospecting properties in the Barkly West district of the North West Province of South Africa (“the assets”, “the Klipdam project” or “the properties”). The report comprises background information and drill and sample data, derived from the property up to 30 April, 2012. This information is presented as a summary ahead of the proposed sale of the assets.
The asset properties are situated in the Barkly West District of the Northern Cape Province, approximately 45km NNW of Kimberley and some 770km from Johannesburg. The Barkly West district and, particularly, the towns of Barkly West and Windsorton, are important historical diamond mining centres, where both alluvial and kimberlite deposits have been mined for over 100 years. The Klipdam project properties lie some 6km to the west of the Vaal River on a well-defined palaeochannel of Tertiary (presumed early-Miocene) age. The project is comprised of the Klipdam and Holpan mining properties and the Erf 1 and Erf 2004 prospecting properties. The details of these landholdings are summarised as:
Permit Property Name Area (ha) Mineral Right Renewal Date Number
Remaining extent Mining Right Protocol 2,370.0518 12 April 2020 of Holpan 161 (HCVWD) 07/2010
Remaining extent Mining Right 44/2008 1,466.0095 06 December 2022 of Klipdam 157, (KDMC) CMR 24 February 2010 Prospecting Right Erf 1, Windsorton 183.8177 1193 PR Application for renewal (HCVWD) accepted at DMR 16/02/2010 In Process Erf 2004, Prospecting Right 587.7319 1787PR 8 April 2015 Windsorton (Batla Resources)
Erf 2004, Prospecting Right 374.6630 2131PR 29 August 2013 Windsorton (HCVWD)
The stratigraphy of the middle-lower Vaal River is relatively simple. The bedrock consists of +2,700 million year old Ventersdorp lavas overlain by younger Dwyka tillites and Ecca shales. Overlying these rocks is a series of mostly Cainozoic gravel deposits that have long been mined for their diamond content. Prior to the (Palaeozoic/Mesozoic) Karoo period, the (pre-Karoo) Vaal River cut a network of channels closely approximating the present floodplain. These channels were later utilised by the Dwyka (continental-type) glaciers and were filled with tillites and shales (at ± 280-250 million years). The post- Karoo Vaal River, subsequently, incised into these formations and deposited gravels and large quantities of fine-grained sediments in numerous cycles during the late Cretaceous to the Holocene.
The terrace exposures in the Windsorton – Barkly West area are best known for the wealth of diamonds that have been produced. Several levels of terrace development above the present Vaal River have been recognised and subdivided into Older terrace deposits and Younger gravels on the basis of lithological and topographical observations. In addition to the development of the primary, fluvial-
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alluvial deposits, eluvial and colluvial re-working has resulted in the accumulation of extensive Rooikoppie deposits. These deposits represent a derived gravel and consist mainly of sub-angular to well-rounded and polished siliceous pebbles and reddish coloured sand. The clastic material is believed to originate from the fluvial alluvial gravel units and consists of its most resistant components, in particular, chert, agate, jasper, quartzite and vein quartz. Due to the decomposition and winnowing of the less resistant clastic and matrix material, there has been a substantial concentration of the more durable components in the original gravel, including diamonds. Iron has stained the entire assemblage, giving it a reddish colour and hence the name Rooikoppie, literally meaning ‘Red Gravels on a Hill’. In the past, Rooikoppie gravel was mined throughout the region by small-scale prospectors using unsophisticated mining and diamond recovery techniques. These (colluvial) Rooikoppie deposits can be formed during any cycle of landscape formation and any pre-existing deposit may be remobilised several times. Consequently, it is possible to have similarly looking colluvial Rooikoppie deposits developed across terraces of different ages and in different locations. As a result, they are not time specific deposits.
The amount of outcrop on the properties is minimal, due to the mature level of planation of the gravel surface and the introduction of wind-blown sand found over large areas of the area. Where exposed, bedrock outcrop is generally in the form of Ventersdorp lava. The most common indication of the existence of these rock types below the surface is large loose blocks strewn over the surface. All of the properties are, typically, covered with derived/Rooikoppie gravels which may, or may not, be underlain by varying thicknesses of fluvial-alluvial deposits. To date, fluvial-alluvial gravels have not been identified on the prospecting properties of Erf 1 and Erf 2004. The derived gravels, typically, overlie Ventersdorp lavas. Much of the fluvial-alluvial gravel deposits, however, are underlain by glacial valley tillites of the Dwyka Group, which have incised into the underlying Ventersdorp lava bedrock. Dolerite dykes are known to intrude the entire sequence.
The Rooikoppie units located on the Klipdam/Holpan properties are, primarily, of colluvial origin – the downcutting of the Vaal River has resulted in the erosion of pre-existing gravels and their re-distribution across the landscape. Two sub-varieties of colluvial gravels are recognised – (a) where the gravel is deposited on relatively flat, weathered bedrock and (b) where the bedrock (Ventersdorp lava) has been deeply weathered to produce large corestones, around which the younger, diamond-bearing gravel has concentrated.
Since diamonds are heavy minerals, they are typically concentrated preferentially in the lower portions of the gravels units within the alluvial profile. Although diamonds may also be present in the sandy units, their low concentration levels and small average size combines to make them uneconomic and thick units of sand and sandy gravels are excavated so as not to dilute the grade of the gravel units. Thinner, internal sand lenses are, however, excavated as part of the mining process. In addition, diamonds may settle into cracks in the bedrock surface, especially where it is weathered. In these instances, some 10-20cm of soft footwall is excavated along with the gravels and this decreases the recovered grade.
A total of 5,2761 Reverse Circulation (RC) boreholes and prospect pits have been drilled on Klipdam/Holpan, Erf 1 and Erf 2004 for a total depth of 12,362.11m. The boreholes/pits are located on grids which range from reconnaissance (100x200m) to detailed (100x50m). Drill results are used, primarily, to define the presence of gravel units and to estimate their thicknesses.
1 Boreholes and prospect pits are used interchangeably depending on depth of gravels and ease of access. They are located on the same grid and the same information is obtained – the deeper fluvial-alluvial deposits are, generally, drilled and the shallower Rooikoppie gravels are pitted. Page 8
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The boreholes are all vertical and the gravel deposits are horizontal (since they are very young, geologically, and are not affected by large scale tectono-structural upheavals). Therefore, the gravel thicknesses (as determined from drilling) are true thicknesses.
Since regional gravel grades are, typically, less than 0.5ct/100m3 and average diamond sizes are typically >1carat per stone (ct/st), boreholes are not sampled for diamonds. Furthermore, no other minerals or elements that can be assayed are known to show positive (or negative) relationships with diamonds in alluvial deposits. Consequently, borehole samples are not collected for assay, nor are intersections composited.
A total of some 8,632,582m3 of gravel has been processed from the Klipdam project during Rockwell’s bulk-sampling and trial-mining programmes (2006-2012). The weighted average grade over this period has been 0.9ct/100m3. During this time, Rockwell concentrated on the higher grade fluvial-alluvial gravels where they were present and also on the non-sandy colluvial gravels.
Rockwell has estimated the following Indicated and Inferred Resources for the project as at 30 April, 2012. They were estimated by Rockwell’s Manager, Resources, G. Norton, (Pr. Sci. Nat.), a qualified person who is not independent of the Company and reviewed by T.R. Marshall, PhD, (Pr. Sci. Nat.), a qualified person who is independent of the Company and is responsible for the estimate.
Property Gravel Type Indicated Inferred Grade Value Resource Resource (ct/100m3) (USD/ct) Fluvial alluvial Holpan Rooikoppie 1,378,401 4,858,938 0.80 962 Fluvial alluvial 989,100 1.03 Klipdam Rooikoppie 1,528,900 1,112,000 0.82 724 Erf 2004/1 Rooikoppie 684,800 1,851,000 0.87 TOTAL 4,581,100 7,822,000 0.84 751 ∗ Volumes fully diluted of sampling and mining for the period 2008-Nov 2012 (Totals rounded off to reflect the fact that it is an approximation.) # Grade estimated with bottom cut-off stone size at 2mm
In addition to the Mineral Resources, Rockwell has also identified some 448 ha of exploration potential.
The excavation and processing of the bulk-samples as well as the trial-mining procedures are, essentially similar, except for the volumes processed. The mining of the gravels on the Klipdam project, as practised by Rockwell, was undertaken using mechanised, shallow opencast earthmoving techniques:
The topsoil (which is generally minimal to non-existent) was removed and stored separately for use in later rehabilitation activities. The Rooikoppie gravel was loaded into Articulated Dump Trucks (ADT’s) by either excavator or front-end loader for transport to the plant. The calcretised overburden to the Primary gravel was removed so that the gravels were exposed and mined by bulldozers and excavators. Care was taken to ensure the sterile excavation of the gravels such that no contamination by the footwall lithologies occurred. Excavation continued to the base of the gravels where higher basal grades are expected to occur. The shales and tillites forming the bedrock in the project area are friable and are a distinctive greyish-green colour, while the lavas tend to present as large blocky units. Where the bedrock is soft, approximately 20cm of bedrock was excavated with the gravels, so that any diamonds in the weathered rock would be recovered. Page 9
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The fluvial-alluvial gravels were transported by ADT’s to the diamond recovery plants. Surveying of the box cuts was undertaken on a monthly basis by the mine surveyor in order to obtain precise volumes for the fluvial-alluvial gravel, the calcrete and the Rooikoppie gravel, against which diamond production could be reconciled and grade determined. Trial-mining quantified various issues relating to internal dilution of the gravels with minor (non-diamondiferous) finer-grained lenses contained within the gravel units.
A double-18 ft rotary pan-plant system was used to process gravels on the Klipdam mine and a Dense Media Separation (DMS) plant was used at Holpan mine. Processing rates (ROM) for each of the two plants was approximately 360 tph. Concentrates were processed through FLOWSORT X-Ray recovery and grease-belt systems, before final hand-sorting in secure glove-boxes. QA/QC was maintained through the use of tracers – both bort diamonds (supplied by Steinmetz) and ceramic balls. These tracers were introduced into different parts of the plant to ensure optimum diamond recovery. Fluorescent slingshot tracers and bort diamonds were used to continuously test for maximum equipment performance. Daily, 20 tracers were inserted into each FlowSort machine. Recoveries were monitored and problems with tracer recoveries were reported immediately to the plant superintendent who deals with the matter directly.
The extent to which the estimates of mineral resources on a project may be mined commercially may be affected materially by various environmental, legal, financial, socio-economic, and marketing issues (the “Modifying Factors” referred to in both the CIM and SAMREC codes). In an attempt to quantify these variables, the following data (inter alia) is, generally, considered important in an economic consideration of a mineral deposit, through a Pre-Feasibility Study (“PFS”): • Mining and Production • Revenue • Operating Costs and Fees • Capital Costs • Taxes and royalties • Depreciation, interest and residual value
All of these “Modifying Factors” were considered by Rockwell during trial-mining on the Klipdam project in 2009/2010. Throughout this programme, mining and processing methods/plans were developed for Rockwell’s specific requirements. The results of the trial-mining programme and, subsequent, Preliminary Economic Assessment (“PEA”) were applicable only to the specific mining and processing methods applied by Rockwell during that period.
The “Modifying Factors” used in the 2010 PEA are not valid going forward under a different mining plan and, as a result, no economic study is presented in this report. A PFS has not been completed on the project properties and no Mineral Reserves are estimated for the Klipdam properties as at the date of this report.
The Holpan mine was put on Care & Maintenance on Friday, May 6, 2011. The Klipdam section has continued in production to the date of this report (and is still a going concern, processing gravel from the Klipdam, Erf 1 and Erf 2004 properties).
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1 INTRODUCTION
1.1 Terms of Reference and Scope of Work
Explorations Unlimited (“EU”) was retained by Rockwell Diamonds Inc. (“Rockwell” or “the Company”) to prepare a Geological Report on the Klipdam and Holpan mines as well as the Erf 1 and Erf 2004 prospecting properties in the Barkly West district of the North West Province of South Africa (“the assets”, “the Klipdam project” or “the properties”). The report comprises background information and drill and sample data, derived from the property up to 30 April, 2012. This information is presented as a summary ahead of the proposed sale of the assets. This report is based on background information and drill and bulk-sample2 data, including the results of trial-mining3 programme derived from the properties and is prepared to document the history of exploration, bulk-sampling and trial-mining on the properties, as well as the current resource estimate
Seven documents, relating to the Klipdam/Holpan mine, have been submitted to the JSE Limited Stock Exchange and filed on www.sedar.com. 1. “Technical Report on the Holpan and Klipdam Alluvial Diamond Mines, Barkly West District, Northern Cape Province, South Africa” by De Decker and Associates Consulting Services, of 30 March 2006. 2. “Technical Report on The Klipdam and Holpan Alluvial Diamond Properties, Barkly West District, The Republic Of South Africa” dated 30 March 2007, by T R Marshall 3. “Technical Report on The Klipdam and Holpan Alluvial Diamond Properties, Barkly West District, The Republic Of South Africa” updated on 31 October 2007, by T R Marshall 4. “Technical Report on The Klipdam and Holpan Alluvial Diamond Properties, Barkly West District, The Republic Of South Africa” updated on 31 March 2008 (by T R Marshall, in conjunction with G Norton) 5. “Technical Report on the Klipdam/Holpan Alluvial Diamond Properties, Barkly West District, The Republic of South Africa”, for Rockwell Diamonds Inc., effective date 28 February 2009 (by T R Marshall , in conjunction with G Norton) 6. “Technical Report on the Klipdam/Holpan Alluvial Diamond Properties, Barkly West District, The Republic of South Africa”, for Rockwell Diamonds Inc., updated 22 December 2009 (by T R Marshall, in conjunction with G Norton) 7. “Updated Technical Report on the Klipdam/Holpan Alluvial Diamond Properties, Barkly West District, The Republic of South Africa”, for Rockwell Diamonds Inc., effective date 30 November 2010 (by T R Marshall, in conjunction with G Norton)
Explorations Unlimited (“EU”) is a South African based exploration consultancy owned by Dr Tania R Marshall that has been in operation since 1996. EU provides a variety of exploration and prospecting consulting services to the international minerals community, in particular with respect to geological, evaluation and (financial) valuation of alluvial diamond mineral properties. This Report was prepared, primarily, by Dr T R Marshall (Pr. Sci. Nat.). Dr Marshall has over 20 years experience in the alluvial diamond industry, including a background in international mineral exploration and evaluation studies and has had direct experience with alluvial-eluvial diamond mining operations as a consulting geologist and, also, as an operator. Dr Marshall’s experience includes operational and financial aspects of alluvial diamond mining, including mine-planning and costing. Rockwell has accepted that the qualifications,
2 In this document, bulk-sampling is taken to be the initial period of sampling during which reconnaissance targets are investigated and inferred and indicated resources are identified. 3 Once significant indicated resources have been identified, the trial-mining programme investigates the extent to which the resources can be mined economically. Page 11
ROCKWELL DIAMONDS INC, KLIPDAM/HOLPAN MINE April 30, 2012
expertise, experience, competence, and professional reputation of Dr Marshall are appropriate and relevant for the preparation of this Report.
Rockwell, listed on the TSX (RDI), and the JSE (RDI), is a company involved in the exploration and mining of alluvial diamond deposits. In South Africa Rockwell and its wholly-owned subsidiary Rockwell Resources RSA (Pty) Ltd (“Rockwell RSA”) owns, and Rockwell RSA operates, the Klipdam/Holpan mines (Barkly West); has operated the Wouterspan mine (currently on Care & Maintenance) and owns the Makoenskloof Prospect (Middle Orange River) through a 74% shareholding in HC Van Wyk Diamonds Limited. Rockwell and Rockwell RSA also own 74% of Saxendrift Mine (Pty) Ltd.
The report was compiled, primarily, by Dr Marshall. Where the document refers to “the author”, the senior (independent) QP, Dr Marshall, is referenced, unless otherwise indicated. The document was co- authored by Mr. Glenn Norton who is the Group Technical Manager for Rockwell Diamonds Inc. Mr. Norton has twelve years experience in the exploration and exploitation of alluvial diamonds throughout Africa and is Rockwell’s in-house Qualified Person.
This Report has been prepared in accordance with the Canadian NI 43-101 Standards Of Disclosure For Mineral Projects, the NAPEGG guidelines for the Reporting of Diamond Exploration Results, Identified Mineral Resources and Ore Reserves and the Best Practice Guidelines prepared by the Canadian Institute of Mining, Metallurgy and Petroleum (CIM) to assist the Qualified Person(s) (QP) in the planning, supervision, preparation and reporting of Mineral Resource and Mineral Reserve (MRMR) estimates. The resource estimate has, further, been prepared with specific reference to the SAMREC code (“South African Code for Reporting of Mineral Resources and Mineral Reserves”). In particular, the SAMREC Code provides guidelines for the diamond industry. The SAMREC Code has also been incorporated into the Johannesburg Stock Exchange (JSE) Listings Rules. Since Rockwell is dual listed in both Canada and South Africa, reference is made to both CIM and SAMREC resource estimation codes (with CIM taking preference as the company’s primary listing is the TSX).
The conclusions expressed in this independent resource estimate are appropriate as at 30 April, 2012. The appraisal is, therefore, only valid for this date and will change with time in response to ongoing exploration and production results as well as with variations in diverse external factors.
1.2 Sources of Information
The comments and recommendations in this report, specific to the Klipdam project, are based, primarily, on information and technical documents and production data supplied by Rockwell. Other technical/scientific papers and miscellaneous documents referred to are identified within the text or have been referenced in Section 18.
Since Dr Marshall was not on the project site for the full period of the prospecting, bulk-sampling and trial-mining much reliance was placed on the technical management of Rockwell who provided production data and internal audit reports for review. Dr Marshall has reviewed this data and considers it to be reasonable for the purpose of this report. In these aspects, reliance has been placed upon the relevant individuals providing the information, specifically Mr. Norton (Group Technical Manager for Rockwell), who is registered with SACNASP and may act as a QP/CP in his own right.
An independent assessment of the mine diamond size frequency distribution, with special emphasis on the expected recovery of large stones was completed by Dr M M Oosterveld in February 2010. Dr Oosterveld is an acknowledged expert in this field, and is registered with SACNASP. The author has not independently verified the findings of this study, but has accepted them to be materially accurate.
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The mined volumes are surveyed by an independent professional surveyor (F J van der Merwe) who is registered with PLATO4 and who may act as a CP in his own right. These are provided to Rockwell under certification on a monthly basis. The author has relied on these mined volumes in all sections dealing with bulk-sample and trial-mining results. Steps taken to verify this information are presented in section 11.
1.3 Units and Currency
All values are metric, unless otherwise stated. Historical grade and tonnage figures are reported in units as originally published. Diamond values are expressed in United States Dollars.
1.4 Field involvement of Qualified Persons
The latest site visit to the project was undertaken by Dr Marshall during the week of 30 Aug – 2 Sept 2010. During this time a review was made of all geological, technical and administrative procedures and protocols being practiced by Rockwell personnel. In addition, numerous discussions were held with the management and technical personnel of Rockwell, who readily provided all requested information. EU’s extensive experience in this area (including previous visits to the Property) as well as that gained from prior investigations of other, nearby deposits was also drawn upon as required.
1.5 Use of Data
Neither EU nor family members have a business relationship with Rockwell or any associated company, nor with any other company mentioned in the Report which is likely to materially influence the impartiality of the Report, or create the perception that the credibility of the Report could be compromised or biased in any way. The views expressed herein are genuine and deemed independent of Rockwell. Moreover, neither the author of the report nor family members have any financial interest in the outcome of any transaction involving the properties considered in this Report, other than the payment of normal professional fees for the work undertaken in its preparation (which is based upon hourly charge-out rates and reimbursement of expenses). The payment of such fees is not dependent upon the content, or conclusions, of this Report or any consequences of any proposed transaction.
Rockwell has warranted that a full disclosure of all material information in its possession or control has been made to EU, and that it is complete, accurate, true and not misleading. Draft copies of the Report have been reviewed for factual errors by Rockwell. 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.
Consent is, hereby, provided for the use of this Report in the sale of this property. EU reserves the right, but will not be obligated, to revise this Report and conclusions if additional information becomes known to EU subsequent to the date of this Report.
4 South African Council for Professional Land Surveyors and Technical Surveyors Page 13
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2 RELIANCE ON OTHER EXPERTS
2.1 Legal Opinion
An opinion regarding the underlying legal contracts, permissions and agreements was provided by Chris Stevens (director) of Taback & Associates (Pty) Ltd on 12 August, 2010 – Rockwell Diamonds Inc: Title Opinion in respect of H C van Wyk Diamonds (Pty) Ltd and Klipdam Diamond Mining Company (Pty) Ltd.
Chris Stevens is a partner with Tabacks (comprising Mervyn Taback Inc and Taback & Associates) where he leads the firm's mining and natural resources law department. He advises on all aspects of mining law in South Africa, including in relation to commercial arrangements, conveyancing, litigation, opinion work, black economic empowerment laws and due diligence aspects. He advises many of the South African major mining houses on these aspects, as well as medium size mining companies and junior exploration companies. He further advises numerous American, UK, Canadian and Australian mining companies with interests in South Africa and acts for numerous black empowerment companies in relation to mining transactions. He has also been involved in numerous transactions for South African mining entities in sub-Saharan Africa. He has also been integrally involved in advising numerous mining companies on various aspects of the Mineral and Petroleum Resources Development Act, 28 of 2002, as well as the amendments to that legislation. Chris Stevens co-lectured the LLB course at the University of the Witwatersrand on prospecting and mining law in 1998 to 2007. He lectures at the University of the Witwatersrand to mining and engineering students on compliance aspects and annually lectures at the University of Pretoria for MSc geology students in a compliance course. He sat on the mining law committee of the International Bar Association in 2002 to 2006. Chris Stevens received B.Com and LLB degrees from the University of Witwatersrand and has been practicing mining law since 1987. He was admitted as a notary public in 1990. Chris Stevens speaks at numerous conferences, both in South Africa and internationally in relation to the South African mining industry and, as such, is well qualified to produce reliable legal opinions on the Klipdam project.
The author has not independently verified the status of these contracts, permissions and agreements but has accepted that the legal opinion represents a materially accurate situation. The author has relied on this opinion for the compilation of Section 3.3
2.2 Diamond Valuation
Valuation of the recovered diamonds has been through the industry standard practice of putting representative diamond parcels up for sale, either through Flawless Diamonds Tender House (“FDTH”) or Steinmetz Diamond Group (“SDG”)
FDTH is a marketing and tender sale company (held 20% by Rockwell) that operates a professional run, fully transparent “sealed-bid tender system”. Details of this process are described in a later section.
The SDG group provides rough and polished diamonds to customers internationally and has manufacturing facilities in Botswana, South Africa, Namibia and New York. The group is well-known for its investment in rare and exceptional diamonds as well as for the creation of unique high-end jewellery (amongst which are the 203.04ct De Beers Millennium Star and the 59.6ct fancy vivid Steinmetz Pink.
Values obtained for diamonds through both these means represent actual sales completed in competitive market by registered, practicing, international diamond buyers whose qualifications (and individual identities) are unknown. Since the values thus obtained are actual, realised sales figures, and
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ROCKWELL DIAMONDS INC, KLIPDAM/HOLPAN MINE April 30, 2012 not simply a valuation with no obligation to purchase, there are no risks associated with the diamond values used in this technical report. These sales values have been relied upon by the author in all sections relating to mineral resources. The author has checked each brokers note and Kimberley Process Certificate to verify the information provided.
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3 PROPERTY DESCRIPTION AND LOCATION
3.1 Property description and location
The Klipdam/Holpan Mine properties are situated in the Barkly West District of the Northern Cape Province, approximately 45km NNW of Kimberley (Fig 3.1) and some 770km from Johannesburg. The Barkly West district and, particularly, the towns of Barkly West and Windsorton, are important historical diamond mining centres, where both alluvial and kimberlite deposits have been mined for over 100 years (de Wit et al., 1997; Marshall, 1987).
Figure 3.1: Location of the Klipdam/Holpan Project in the Northern Cape Province
The Klipdam/Holpan Mine properties lie some 6km to the west of the Vaal River on a well-defined palaeochannel of Tertiary (presumed early-Miocene) age. The project is comprised of the Klipdam and Holpan mining properties and the Erf 1 and Erf 2004 prospecting properties (the Erfs are also known as the Klipdam Extension project). The details of these landholdings are summarised in Fig. 3.2. The surveyed co-ordinates of the properties are given in UTM units in Table 3.1.
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Figure 3.2 Locality map for the Klipdam/Holpan project
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Table 3.1: UTM Co-ordinates of the Klipdam/Holpan Mine mining and prospecting properties
POINT UTM Y UTM X POINT UTM Y UTM X A 6,863,306.25 262,211.94 CC 6,865,022.55 271,970.35 B 6,866,310.95 265,252.71 DD 6,865,059.50 272,383.76 C 6,864,009.69 266,939.07 EE 6,865,009.96 272,390.25 D 6,866,612.22 269,603.88 FF 6,865,052.17 272,606.95 E 6,865,565.96 270,284.52 GG 6,864,836.29 272,632.37 F 6,866,778.80 271,942.11 II 6,864,794.62 272,418.36 G 6,866,322.74 272,402.84 JJ 6,863,666.91 272,564.13 H 6,866,649.31 272,801.18 KK 6,863,551.36 271,609.51 I 6,867,291.09 272,354.77 LL 6,864,965.32 270,683.08 J 6,867,370.79 272,427.63 MM 6,864,975.78 270,782.72 K 6,867,438.88 273,337.89 NN 6,864,863.20 270,814.95 L 6,867,346.14 273,542.36 OO 6,864,866.05 270,961.81 M 6,867,588.46 273,846.73 PP 6,864,986.10 270,926.09 N 6,867,646.32 273,569.20 QQ 6,862,679.36 272,180.25 O 6,867,443.66 273,063.37 RR 6,862,426.32 271,015.02 P 6,867,433.94 272,686.53 SS 6,860,836.78 269,260.56 Q 6,868,203.92 273,361.31 TT 6,862,395.76 268,119.78 R 6,868,095.07 273,866.50 UU 6,862,314.10 268,071.40 S 6,865,606.10 274,972.51 VV 6,861,883.10 268,294.95 T 6,865,317.96 274,744.21 WW 6,861,826.33 268,055.35 U 6,865,793.61 273,737.09 XX 6,861,595.33 268,060.78 V 6,864,009.10 275,543.70 YY 6,861,434.50 268,281.59 W 6,863,808.37 274,394.59 ZZ 6,860,958.49 268,602.97 X 6,864,939.28 274,091.10 AZ 6,860,779.01 268,418.05 Y 6,864,926.47 273,890.77 BY 6,860,143.49 268,805.26 Z 6,865,074.68 273,773.98 CX 6,859,858.33 268,614.82 AA 6,865,026.99 273,541.83 DW 6,859,312.80 266,669.08 BB 6,865,187.13 273,299.74
The total area of the mine properties are 3,836.0613ha, which includes sufficient space for (current and future) mine offices and out-buildings, processing and final recovery facilities, as well as for the necessary, fines disposal (tailings) ponds, transitory coarse dumps and more permanent water supply dams. The prospecting right areas on Erf 1 and Erf 2004 only cover 183.8177ha and 587,7319ha, respectively but, since they are adjacent to the Klipdam mine property and form a natural extension to the existing resources, they will not form an independent operation.
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3.2 Permits, Contracts and Agreements
3.2.1 Royalty Payments
As with all mining properties in South Africa, the Klipdam project is subject to a State royalty. The royalty bill was introduced on May 1, 2009, with royalties payable from March 1, 2010. In terms of the currently applicable formulae, the applicable royalty rates will vary according to the profitability of the mining company, subject to a minimum rate of 0.5% and maximum rate of 7.0% for diamonds (unrefined minerals).
3.2.2 Surface ownership / land use rights
The surface rights (as well as the land ownership) of the farms Holpan and Klipdam are currently held by HC van Wyk Diamonds (Pty) Ltd and Klipdam Mining (Pty) Ltd, respectively. Erf 1, Windsorton, is part of the Windsorton municipal grounds. Rockwell’s portion of this property is not occupied. Other portions may have informal settlements or other diggers present.
The surface and land rights of Erf 2004 Windsorton are held by a third party (MJA Boerdery cc) with whom Rockwell has a land use agreement. There are a number of clauses in the agreement dealing with surface use, granted by M J A Boerdery CC to HCVWD. There are detailed provisions dealing with surface use for prospecting and mining, roads, generators and electric cables, boreholes and water extraction, rehabilitation, etc. It is recorded in the surface use clause that HCVWD has been appointed by the holder to conduct exploration and mining operations on the property. It is then recorded that all of the entitlements and conditions granted and contained in the agreement shall, ipso facto, be applicable and binding on the contractor.
3.2.3 Mineral rights
The mining/prospecting properties are currently, held under five different licences5 (Table 3.2).
Table 3.2 Summary of Holpan-Klipdam landholdings
Permit Property Name Area (ha) Mineral Right Renewal Date Number
Remaining extent Mining Right Protocol 2,370.0518 12 April 2020 of Holpan 161 (HCVWD) 07/2010
06 December 2022 (A Section 11 cession from Remaining extent Mining Right 44/2008 1,466.0095 Klipdam Mining (Pty) Ltd to of Klipdam 157, (KDMC) CMR HCVWD was granted but has not been registered – remains in KDMC)
5 All of these rights will be transferred by Rockwell into KDMC, which is to form the sales asset. Page 19
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24 February 2010 Prospecting Right Erf 1, Windsorton 183.8177 1193 PR Application for renewal (HCVWD) accepted at DMR 16/02/2010 In Process Erf 2004, Prospecting Right 587.7319 1787PR 8 April 2015 Windsorton (Batla Resources)
Erf 2004, Prospecting Right 374.6630 2131PR 29 August 2013 Windsorton (HCVWD)
3.2.3.1 Mining Right
R/E Holpan 161: • The Mining Right is valid to 12 April 2020. • The Mining Right is held in the name of HCVWD and will need to be ceded to KDMC.
R/E Klipdam 157: • The Mining Right is valid to 6 December 2022. • KDMC is a wholly owned subsidiary of Rockwell Diamonds and holder of the right. A section 11 cession was applied for to cede the converted right to HCVWD. This cession was granted, but has not been registered. Consequently, the rights remain in KDMC.
3.2.3.2 Prospecting Rights
A prospecting right over the Erf 1 Windsorton Mineral Area was issued to HCVWD with Prospecting Right Nr 1193PR and registered with the Mining Titles Office on 27 March 2009. The prospecting right, granted in respect of diamonds, endures for a period of two years which commenced on the 25th February 2009 and is valid for 1 year until 24 February, 2010. A renewal application has been submitted to DMR and accepted on 16 February 2010, and is still in progress.
The Erf 2004 prospecting property comprises two separate surveyed portions of Erf 2003 Windsorton, held under Prospecting Rights 1787PR and 2131PR. • Prospecting Right 2131PR is held by HCVWD (right granted 30 August 2010, but not yet executed. The application was for 36 months and should expire on 29 August 2013. • Prospecting Right 1787PR was held by Batla Resources (Pty) Ltd and was the subject of a prospecting agreement with HCVWD. This option was exercised by HCVWD on 30 September 2010 and has been fully paid for (ZAR 6 Million).
3.3 BEE Compliance
Rockwell’s 26% Black Economic Empowerment (“BEE”) partner of record for the Klipdam project is African Vanguard Resources (Pty) Ltd “(AVR”). AVR will not continue to be the BEE partner in the sales asset and, therefore, the incoming party will supply their own BEE partner of choice.
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3.4 Environmental
There is an existing EMPR approved in terms of section 39 of the Minerals Act of 1991 on the Klipdam project. During 2010, Rockwell (HCVWD) compiled and submitted an updated Environmental Management Programme (“EMPR”) to DMR (30 April 2010) in order to take into account their proposed updates to the mining programme on the mine properties and the adjacent prospecting land. Acceptance of this EMPR by DMR is still in progress.
Since the incoming party will not be mining according to the Rockwell mining plan, it will be incumbent upon them to apply for an amendment to the approved EMPR, delineating their new mining plan, including environmental regulations and rehabilitation programme.
3.4.1 Environmental Rehabilitation
An ongoing rehabilitation programme is important to the mining operation. On the Klipdam project, rehabilitation has entailed the immediate or near immediate (following short-term side-casting) backfilling of overburden into pits concurrent with the advance of the pit face. All oversize material and tailings derived from processing has been returned to the excavations using Articulated Dump Trucks (ADT’s) on their return cycle. In the case of slimes, such material is pumped to the dam as normal and once sufficiently dry, is removed and spread over the mined out areas in order to give a smooth natural profile to the rehabilitated area. The final stage in the rehabilitation process is the replacement of topsoil, which is removed and stockpiled prior to excavation. The topsoil contains a significant proportion of highly resistant root systems and plant seeds, which appear to assist in the rapid establishment of a secondary plant succession comprising grass, followed by small shrubs within approximately two years. Rehabilitation takes place on an ongoing basis in order to diminish costs at closure. Land use after mining is expected to revert to that in the pre-mining period, namely extensive livestock or game farming.
The quantum of the financial provision contemplated in Regulation 54 of the MPRDA has been revised and adjusted accordingly annually, based on a survey assessment of the environmental liability. Surveys of excavations are conducted by a registered surveyor and results are forwarded to the Environmental manager who calculates the outstanding rehabilitation as per the approved table provided by the DMR. A bank guarantee has been prepared for the amount and submitted to the DMR.
Rockwell rehabilitation guarantees are held as scheduled below (Table 3.3). The moneys are held in a term deposit with Standard Bank in Kimberley. The incoming party will be required to replace all of Rockwell’s existing rehabilitation guarantees.
Table 3.3 Schedule of rehabilitation guarantee payments
PROPERTY BANK GUARANTEES TOTAL Replaced on 05/09/20066, Standard Bank, M469081, R2,000,000. Holpan 161,
(HCVWD) R4,000,000 14/12/2006, Standard Bank, M473384,
R500,000
6 Replaced 14/09/2005,Nedbank 662/26423804 Page 21
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31/08/2007, Standard Bank, M482738 R500,000
10/11/2008, Standard Bank, M498301 R500,000
11/02/2009, Standard Bank, M501035 R500,000.00 26/03/2002, Standard Bank, M405702 R1,000,000
14/12/2006 Standard Bank, M473394 R500,000 Klipdam 157, R2,500,000 (KDMC) 31/08/2007, Standard Bank, M482745 R500,000
10/11/2008, Standard Bank, M498280 R500,000 Erf 1 Windsorton 29/06/2007, Standard Bank, M519737 R169,953.20 (HCVWD) R169,953.20 Erf 2004, (Ptn Erf 2003), 30/03/2010, Standard Bank, M513563 R150 000 Windsorton R150 000 R6,819,953.20
These funds are fully utilised except for approx. R200,000, which is held as a guarantee for ESKOM. Calculation of total current rehabilitation liabilities (as per DMR requirements) for the Klipdam project is ZAR 16,893,889 (R9,367,898 for Klipdam and R7,525,991 for Holpan).
3.4.2 Water permits
Water is available to the Klipdam project by means of water licences and quotas obtained from the Department of Water Affairs and Forestry (DWAF). The water for Holpan is obtained by pumping an allowed quota of 3 x 203,906m3/ha/year plus an additional 4,108m3 /month from the canal. An additional 114,693m3/ha/year is obtainable from the canal on Klipdam. The cost of this water is calculated at R713.88/ha per year, payable to DWAF in advance. An extra allowance of 3,600,000m3/year on Holpan and 2,400,000m3/year on Klipdam was applied for on 04/12/2007 and 10/07/2007 respectively. In terms of the updated EMPR that has been prepared, new submissions have been made to DWAF to comply with current legislation. Results are still pending.
The incoming party will be required to assume responsibility for the administration of the water permit application process.
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3.5 Social Responsibility
3.5.1 Social and Labour Plans
According to the MRPDA a Social and Labour Plan (SLP) is required to be submitted to the DMR along with the other requirements for a mining right. The objectives of the SLP (according to the MPRDA) is to promote employment and advance the social and economic welfare of all South Africans; to contribute to the transformation of the mining industry; and to ensure that holders of mining rights contribute toward the socio-economic development of the areas in which they are operating, as well as the areas from which the majority of the workforce is sourced. In harmony with these objectives, the SLP requires that the company address literacy levels and life skills within the workforce as well as implement career progression paths, mentorships, internships and bursary plans for its employees. In addition, the company is required to contribute to the upliftment and development of the local communities through procurement, establishment of a Future Forum and the creation of Small, Micro and Medium Enterprises (SMME’s).
In terms of the approved SLP submitted by Rockwell (HCVWD) in 2007, the company committed itself to significant expenditure based on its planned social initiatives. Since the Rockwell SLP for the Klipdam project is approved only until end 2012, it will be incumbent upon the incoming party to provide the DMR with a new SLP for approval, which will include an update on the mine closure plans.
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4 ACCESSIBILITY, CLIMATE, LOCAL RESOURCES, INFRASTRUCTURE AND PHYSIOGRAPHY
4.1 Topography, elevation and vegetation
The Klipdam/Holpan mine properties are situated in a region of largely flat, infertile ground punctuated, in places, by hills (koppies) in a narrow strip of dry savannah between the fertile plains of the Free State province to the east and the Karoo, an area of sparse, arid semi desert that occupies much of central South Africa.
The project area itself is almost completely flat (Plate 4.1), a result of both continental glaciation and subsequent fluvial planation. The major topographic features include a very subtle rise in the middle of the Klipdam property, and a gentle rise of the project area towards the western limit of the Holpan property. Such features are seen to affect the Rooikoppie gravel distribution. Very subtle hollows, some of which host minor ephemeral drainages also occur within the project area.
Plate 4.1 Flat, glaciated plain on which the Klipdam/Holpan deposits were formed (view to the NW, Holpan mine in centre)
The project area lies in veld type 32, Kalahari Plains Thorn Bushveld (van Rooyen & Burger, 1974) - three veld types can be defined, namely Acacia tortilis (Umbrella thorn) savannah, the camphor bush (‘vaalbos’) shrub veld and the mixed Blackthorn/Camphor Bush/Raisin bush shrub veld. A fourth modified veld type is related to the mined and rehabilitated areas (Plate 4.2). No endangered species or rare plants were recorded in the mining area. The camel thorn tree, Acacia erioloba, protected under the terms of the Forestry Act no. 84 of 1998, occurs in certain areas presently not earmarked for mining. Permits would have to be obtained from DWAF should the need arise for the removal of such trees.
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Plate 4.2: Thin grassland, low bush and sparse trees typical of the Holpan and Klipdam properties
A number of species recorded on site are weeds, declared weeds and potential. Such weeds are opportunistic and their appearance marks the start of the succession process to restore the bush. The more invasive and potentially harmful weeds will be eradicated as part of the company’s continuing environmental management programme.
The current EMPR has identified 12 mammal, 52 bird, three reptile and two amphibian species on the property. Two Red Data Book (RDB) 13 species, namely the Aardvark and African Wild Cat, were recorded. Both species are highly mobile and mining activities should not negatively affect them. Mining at the Klipdam project is not expected to have any detrimental effect on the investigated fauna of the area.
4.2 Access and infrastructure
To the extent determined by Rockwell’s trial-mining, the sufficiency of surface rights for mining operations, the availability and sources of power, water, mining personnel, potential tailings storage areas, potential waste disposal areas, and potential processing plant sites are all described below.
4.2.1 Water
The Vaal River is situated approximately five kilometres from the mining operation but the mining does not impact negatively on the river. The only other surface water is the artificially created slimes dams and raw water storage dams. The area is flat and water run-off is mainly through sheet run-off, rather than in drainage lines. The small drainage lines in the area will only carry water during exceptional Page 25
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rainfall events such as a big cloudburst, experience a flash run-off and be dry again after the run-off except for possible hollows in the drainage lines. Evaporation is high and surface water is hardly encountered in this area. There is no normal flow in dry weather conditions – it is devoid of any water.
The project sources water from the DWAF canal and from boreholes under licenses and quotas from DWAF (see section 3.4.2). The depth of the water table is approximately 5-8m at Holpan and 10m at Klipdam. There are four boreholes on Klipdam and three at Holpan as indicated on the Mining Authorisation Map. No fountains occur on the property. The boreholes vary in depth from 45-100m and their delivery rate varies from 400-2,000ℓ/hr. There are no other boreholes on adjacent properties within a kilometre radius of the mine.
4.2.2 Power
The property is connected to the national Electricity Supply Commission (ESKOM) electricity grid, with the necessary transformers and supply lines in place. Power is provided through a 22kV line. Voltage is decreased to 400V and distributed as required. Backup power is supplied through a 2MvA generator at Klipdam.
4.2.3 Communication
A Samsung telephone system provides external voice communication as well as VOIP via the main Diginet line. On-mine communication for production personnel is conducted through two-way, short- wave (HF) radios. Three cellular telephone networks are also available for project personnel as well as for personal communication.
4.2.4 Transportation
Access to the project area is by tarred roads from Kimberley (~45km along route R31) and Barkly West (~23km along route R374). A network of farm tracks gives good access to all areas of the property. For reference, Kimberley is some 570km from Johannesburg and can be accessed by national road, rail and air services. A large, national, airport is located at Kimberley, with daily flights to/from Johannesburg and Cape Town. A helipad is located on Holpan.
4.2.5 Waste Disposal
Septic tanks and French drains provide sewage disposal.
4.2.6 Tailings disposal
Two slimes dams have been constructed – one at each of the Klipdam and Holpan properties. The surface areas of the slimes dams cover approximately 6.5 ha at Klipdam and 12.4 ha at Holpan. Both slimes dams are designed to last throughout the life of the mine (Fig. 4.1 and 4.2). Minor issues have been experienced with the beaching7 at both of the slimes dams. Fewer problems arise during summer when high associated evaporation rates are experienced than in winter.
7 Beaches or beaching is the term applied to the method of depositing slimes on the edges of the dam so as to build up an impervious layer. Page 26
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Figure 4.1: Slimes dam configuration on Holpan
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Figure 4.2: Slimes dam configuration on Klipdam
4.2.7 Coarse dumps
The primary disaggregation and screening is done next to the plant and the overburden is then backfilled. Trucks take screened material to the treatment plant. The slimes will be pumped to the mine residue dams and the oversized tailings will be dumped, backfilled and landscaped.
4.2.8 Fuel storage and supply
The asset includes a fully equipped workshop, lubricating bay and wash-bay, as well as fuel tanks (at Klipdam there are 2 x 23,000l and 1 x 50,000l diesel tanks and on Holpan there is a 80,000l diesel tank). The diesel tanks are all fully bunded and are environmentally compliant against accidental spills.
4.2.9 Staff/Labour
Unskilled labour (and some semi-skilled labour), however, is abundant and can easily be accessed from nearby towns and communities (such as Barkly West, Delportshoop and Warrenton, as well as local informal settlements. Skilled and semi-skilled labour is generally accessible from the nearby major centres of Kimberley and Bloemfontein.
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4.2.10 Sensitive landscapes
The Klipdam/Holpan area has been the site of mining since the 19th century. As a result of its long history, numerous grave sites are scattered throughout the property (Plate 4.3). No graves are allowed to be destroyed, damaged, altered, exhumed or removed from its original position without a license from the South African Heritage Resources Agency. In order to prevent accidental damage, grave sites identified within the mining area should be fenced off to prevent any disturbance to the sites.
Plate 4.3: Grave site on the Holpan mine property (photo courtesy of Rockwell)
Apart from the graveyards that may be of significance, the entire area is viewed as a very low intensity archaeological site. All mining, as required by the National Heritage Resources Act, 1999 (Act No. 25 of 1999), is to take place at least 100m from these grave sites.
4.2.11 Accommodation and offices
An on-site mine office, responsible for daily mining operations on the Klipdam project is located on Holpan. On-site permanent offices include: • Main office building with five offices, small kitchen and ablutions • Mine stores with two offices • Mechanical Workshop with four offices and ablutions • Engineering workshop with two offices and ablutions • Training with four offices, small training hall and ablutions • First aid facility consisting of three rooms • Bokamosa Bricks with one office and ablutions • Main security gate with one office and ablutions
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On Klipdam, permanent offices include: • Main office with one office and ablutions • Tearoom with ablutions • Engineering workshop and ablutions
4.2.12 Essential services
All services and facilities, including hospitals, police, and municipal, are available in Kimberley (~200km), including the regional office of the Department of Minerals and Energy (DME). However, most essential services can be obtained at Barkly West, some 25km distant from the mine.
4.3 Climate
The area forms part of the high plateau (or Highveld) of South Africa and receives some 200-450mm of rain annually, which falls mostly during summer, in afternoon thunderstorms. The winter months are almost completely dry. Vegetation is, typically, limited to thin grasses, low bush and succulent plant species. Winter temperatures range from 0°C at night to approximately 14°C during the day, and summer daytime temperatures often reach 45°C.
The mine has a year round operating season and prevailing climatic conditions do not impact on the mining operation to any significant degree. Disruptions do occur due to poor road conditions following heavy rains and three-to-four hour down-time may occur when soaked gravel stockpiles are too wet to process efficiently.
During years of exceptional rainfall flooding may occur, resulting in significant disruptions to production, as well as damage to infrastructure (municipal as well as on-mine).
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5 HISTORY
5.1 Historical
The first alluvial diamond discovery in South Africa was on the farm De Kalk 37 near Hopetown in 1866. However, it was the discovery of alluvial diamonds along the banks of the Vaal River near Barkly West in 1868 that led to the great South African diamond rush and the development of the diamond industry as it is known today (De Wit, 1996). Diggers from Barkly West subsequently uncovered the ‘dry-diggings’ in the adjacent Kimberley area, leading to the development of the Kimberley diamond mines. The Vaal River, along with the section of river between the towns of Windsorton and Barkly West, the Longlands/Gong-Gong gravel splay downstream of Barkly West, and the Riverview splay adjacent to Windsorton became famous for the mining of alluvial diamonds. The Holpan/Klipdam properties are located within this area, roughly midway between Barkly West and Windsorton. Both Holpan and Klipdam were mined from the earliest days and are well known for yielding large diamonds (for example, a 220ct stone was valued at £2,420 (USD180,000 at 2006 values) and a 412.5ct stone was sold for approximately £5,000 (USD370,000 at 2006 values) (Beetz, 1931).
Due to the regular yield of large diamonds, Holpan and Klipdam have been the site of digging and mining of surface deflation Rooikoppie deposits since the discovery of the Barkly West diamond fields. Such artisanal operations in this area were particularly active in the late 1800’s and early 1900’s when production fell dramatically with the commencement of World War I. Digging during the 1880’s and early 1890’s around Barkly West exhausted many of the richer Rooikoppie deposits, leading the prospectors to move farther upstream to Warrenton, Christiana and Bloemhof and into the Transvaal.
With the strong decline of the Rand against the Dollar during the 1990’s and the availability of abundant cheap electrical power, alluvial diamond mining became attractive again. Activity along these large drainage systems and small scale mining or digging operations once again became common in the Kimberley region along the Vaal River. In the Kimberley region, the main areas of interest were once again concentrated around Windsorton, Riverview, Riverton, Holpan, Klipdam and Barkly West.
5.2 Previous Ownership
In 1994, the Van Wyk family began operations on claims on the Holpan property and shortly thereafter Sonora Gold Inc., a Toronto listed company started operating on an adjacent part of the Holpan property. In 1996, Sonora Gold Inc acquired KDMC. Subsequently, in 1999, the company changed its name to Sonora Diamond Corporation (TSE-SON). During this time, the Van Wyks also acted as earth-moving contractors to Sonora.
The Van Wyk operations (incorporated in the company HC van Wyk Diamonds (Pty) Ltd in 2001) were initially small but, with the discovery of larger diamonds and the purchase of larger earth moving equipment, they were able to sustain and enlarge their operations. Key to their ongoing success was the purchase of a large bulldozer used to rip and clear the calcretised layer overlying buried gravels on Holpan. The HCVWD operation grew steadily on Holpan, while the Sonora venture stuttered and eventually collapsed, largely due to operating problems and lack of capital. Records show that, subsequent to 2000, HCVWD had grown to a sizable operation on Holpan and acquired Sonora Diamonds, thereby expanding the company’s presence on Holpan and Klipdam. Success of the HCVWD operation hinged on the use of large earth-moving equipment, processing of increasing volumes of gravel and the regular recovery of large, high value diamonds.
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In 2005, Rockwell purchased the rights to both the HCVWD and KDMC properties. Rockwell proceeded with bulk-sampling on these properties during 2006-2008 and, subsequently, proceeded with trial- mining from 2009 until the current date. Holpan was put on Care & Maintenance at the end of May 2011 and Klipdam continues as a going concern.
5.3 Previous Exploration/Development
Few records exist of the diamond production from the area prior to 2000. However, it is known that the Rooikoppie gravels were extensively exploited. A report by R Cooke (in Van der Merwe, 2005) refers to 9,338.63 carats which had been recovered by the Klipdam Diamond Mining Company during the period 1933-1986. The same report also records that 266.56 carats were produced from a bulk-sampling programme (44,368 tonnes treated) conducted by Star of Africa (Pty) Ltd in 1987.
From 1995-1997, R Cooke and E Gerryts assessed the potential of the properties. The exploration target for all gravels ranged from 6,800,000 to 16,900,000 tonnes grading 0.5-1.5cpht, including fluvial and Rooikoppie gravels. A limited bulk sampling program turned an average grade of 0.66cpht (R. Cooke, 1997). It is important to note that these statements of potential quantity and grade are conceptual in nature, that there has been insufficient exploration in these areas to define a mineral resource and that it is uncertain if further exploration will results in the targets being delineated as a mineral resource.
The Klipdam Mining Company (KDMC) produced 18,333 carats between July 1996 and February 1999 from the Klipdam Farm, with +80% gem quality stones (Norman & Cooke, 2001). Based on a size distribution analysis (Van Wyk, 2003), diamond production indicates that 20% of the diamonds by weight should be larger than 8 carats per stone and 10% larger than 32 carats per stone.
In February of 2000, Majestic Resources NL of Perth, Australia, announced its intention to purchase KDMC. In terms of the agreement, Majestic would pay USD 2.5M for the 5Million immediately-mineable tonnes, and a further USD 0.30/tonne for agreed economic gravel tonnes in the “New Discovery” area, to a maximum of USD 2.4M. An initial payment of USD 1.5M had been placed in trust, subject to certain terms and conditions in the agreement. By August of the same year, negotiations had broken down and the agreement was dissolved. At the same time, a document was commissioned by KDMC (Colliston and Saner, 2000), in which the results of an exploration drilling programme was discussed – 1,706 boreholes were drilled, defining an area that became a focus of later exploration by HCVWD.
Erf 1 forms part of the Windsorton municipal lands and has, mostly, been used for cattle grazing by the local community. No modern diamond mining activities are known from the property, except in early 2010 a local illegal artisanal digger was found on the property (and, subsequently, evicted). No information is available regarding his activities.
Although portions of Erf 2004 were held by Batla Resources for alluvial diamonds – no prospecting activities are known from the property.
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6 GEOLOGICAL SETTING AND MINERALISATION
6.1 General Geology and Mineral Deposits of South Africa
The geology of South Africa (Fig. 6.1) is extremely varied and spans a period of about 4 billion years (SACS, 1980). The northeast portion of the country is dominated by the granitic rocks and belts of volcanic and sedimentary rocks forming the Archaean Kaapvaal Craton. Much of the rest of the country is covered by Phanerozoic sediments.
The earliest clusters of diamondiferous kimberlites, namely Kuruman and Cullinan, intruded into South Africa during the Proterozoic. The main kimberlitic (both diamondiferous and barren) event took place in the late Mesozoic, however. All the economically viable kimberlites occur on the Kalahari Archon (Kaapvaal and Zimbabwe Cratons), while those occurring in the surrounding Proterozoic basement are non-diamondiferous (Gurney, et al., 1991). Over 2,000 kimberlite pipes, blows and fissures have been recorded across South Africa, Lesotho, Swaziland, Botswana and Zimbabwe, spanning emplacement age range of approximately 1,700 – 40 Ma. Kimberlite emplacement was followed by the liberation and entrainment of diamonds and the subsequent deposition of terraces on the ancient Vaal and Orange Rivers.
Klipdam/Holpan Mine
Figure 6.1: The General Geology of South Africa
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6.2 The Alluvial Diamond Fields of the Middle Vaal River
The stratigraphy of the middle-lower Vaal River is relatively simple. The bedrock consists of +2,700 million year old Ventersdorp lavas overlain by younger Dwyka tillites and Karoo shales. Overlying these rocks is a series of mostly Cainozoic gravel deposits that have long been mined for their diamond content (Table 6.1). Prior to the (Palaeozoic/Mesozoic) Karoo period, the (pre-Karoo) Vaal River cut a network of channels closely approximating the present floodplain (Partridge & Maud, 1987). These channels were later utilised by the Dwyka (continental-type) glaciers and were filled with tillites and shales (at ± 280-250 million years). The post-Karoo Vaal River, subsequently, incised into these formations and deposited gravels and large quantities of fine-grained sediments in numerous cycles ranging from the late Cretaceous to the Holocene.
Table 6.1 Simplified Stratigraphy of the Cainozoic alluvial deposits (Modified after SACS, 1980, De Wit et al., 2000)
Upper A3 Gravels (Riverton alluvial gravels) Pleistocene Middle A2 Gravels (Rietputs alluvial gravels) MESOZOIC - Pleistocene CAINOZOIC Pliocene Intermediate Gravels (Proksch Koppie and Wedburg units) DEPOSITS CALCRETISATION Miocene A1 Gravels (Holpan Sequence) Upper A0 Gravels (Nooitgedacht Deposits) Cretaceous
The terrace exposures in the Windsorton - Delportshoop area are best known for the wealth of diamonds they have produced. Partridge and Brink (1967) and Helgren (1979) recognized several levels of terrace development above the present Vaal River and subdivided the alluvial deposits of the Lower Vaal basin into “Older” (Nooitgedacht, Holpan, Proksch Koppie and Wedburg) terraces deposits and “Younger” (Rietputs and Riverton Formations) gravels on the basis of lithological and topographical observations (Fig. 6.2 and 6.3).
At Warrenton, a structural bench of Ventersdorp volcanics developed at +21 to +23m is covered with colluvial Rooikoppie gravels of probable “Older Gravel” age. Other locations of similar “Older Gravels” are found at Sydney’s Hope, Witrand, Klipdam/Holpan, Spence’s Kop, Waterval as well as numerous other, sporadically occurring patches between Windsorton and Barkly West. Many of these high-level gravels exhibit extensive colluvial redistribution.
The Wedburg terrace forms a morpho-stratigraphic marker throughout the lower Vaal River basin. At Windsorton this terrace occurs on both sides of the Vaal River at +22 to +24m above the river. Vestiges of the Wedburg terrace can be traced almost continuously around Windsorton and east of Riverview Estates. Between Windsorton and Barkly West the Wedburg terrace is irregularly preserved on both sides of the river. The type exposure of the “Younger Gravels” is at Windsorton where the Rietputs and Riverton I formations are part of a +12 to +14m terrace. Younger Riverton formations (IV and V) are located on lower +8 to +9m and +4 to +5m terraces, respectively. Unlike the older gravels, the gravels of the Rietputs formation, which mostly lie buried beneath the Riverton deposits between Windsorton and Barkly West, are often thick and record primary depositional structures with significant facies variation.
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Figure 6.2: Schematic stratigraphic representation of the gravels of the lower Vaal River basin, showing Older Gravels (above) and Younger Gravels (Below) (Marshall, 2004)
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Figure 6.3: Location of known, mapped terraces between Windsorton and Barkly West (redrawn after Helgren, 1979)
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6.2.1 Geochronology
The changes in local geomorphic environment recorded at Holpan are impressive, although they lack definitive temporal references, as no diagnostic fossils or artefacts have been found here (Helgren, 1979): • The chronology begins with erosion of the Karoo sediments from the Holpan platform. The preservation of striations on both Dwyka tillite and Ventersdorp volcanics indicates the inefficiencies of post-glacial erosional processes, even though a major river must have flowed over at least part of the Holpan platform. Basal fluvial-alluvial deposits of the Holpan gravels suggest a mid-channel bedload deposit, now preserved in glacial scours (refer section 9.2). • Subsequently, the major (Vaal) river gradually slid eastwards, down the pre-Karoo slope. Erosional processes, probably related to a tributary stream, removed part of the basal fluvial alluvial unit to leave a smooth erosional bevel on its surface. • The fluvial-alluvial deposits were later calcreted. (During the late Miocene the South African interior was subjected to extensive calcretisation. This has been used to define the Holpan sequence in time.) During a subsequent period, makondos (solution hollows) formed in the calcreted surface of the fluvial-alluvial unit. The residual surface sediments created at this time were yellowish red, fine sands which now fill the makondos. • Subsequently, fluvial processes were reactivated across parts of the platform, the composition and bedding of which suggests torrential ephemeral streams (tributaries). • A brief hiatus followed with limited erosion and weak calcretisation of a unit of “Derived gravels”. This calcretisation is estimated to be of Pleistocene age. • The end of this hiatus was marked by rapid aggradation of a second, thick “Derived gravel” unit. • The “Derived gravels” were then calcreted and, still later, partly decalcified and lateritized through weathering of the Ventersdorp lavas. Co-incident, in part, with this lateritizing event, was local colluvial remobilisation of the gravels near the surface.
Since there has been no significant tectonic activity in the lower Vaal River basin since the late Cainozoic, the cut-and-fill events described above have been attributed to repeated and significant changes of hydrological regime (Helgren, 1979). The basal fluvial-alluvial deposits are ancient (early Miocene or older?) but the later cut-and-fill events may correlate with some of the younger “older gravels” (Proksch Koppie or Wedburg) or even with “Younger gravel” events, such as Rietputs and Riverton deposits.
6.3 Property Geology (Klipdam/Holpan)
The amount of outcrop on the properties is minimal, due to the mature level of planation of the gravel surface and the introduction of wind-blown sand found over large areas of the area. Where exposed, bedrock outcrop is generally in the form of Ventersdorp lava. The most common indication of the existence of these rock types below the surface is large loose blocks strewn over the surface.
All of the properties are, typically, covered with derived/Rooikoppie gravels which may, or may not, be underlain by varying thicknesses of fluvial-alluvial deposits. To date, fluvial-alluvial gravels have not been identified on the prospecting properties of Erf 1 and Erf 2004. The derived gravels, typically, overlie Ventersdorp lavas. Much of the fluvial-alluvial gravel deposits, however, are underlain by glacial valley tillites of the Dwyka Group, which have incised into the underlying Ventersdorp lava bedrock (ref: Fig. 6.2). Dolerite dykes are known to intrude the entire sequence.
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6.3.1 Fluvial-alluvial Deposits
The alluvial diamond deposits at Holpan-Klipdam, typically, comprise two well developed palaeochannel features containing extensive coarse gravel sequences (Plate 6.1) which are capped by calcretised sand and silt layers and a few coarser gravel lenses. They form deposits of considerable thickness, often in excess of 5 m, and consisting of rapidly aggraded or dumped material, ranging in size from large boulders to sand. The gravels are compacted and frequently cemented with secondary lime to form calcretised cobble and boulder deposits. In situ the gravels show little evidence of stratification with a few arenaceous zones. The primary fluvial-alluvial gravel deposit appears to be devoid of any obvious size gradation of the component clasts upwards through the succession, a characteristic which has been attributed to the high stream velocity and rapid deposition. Clasts consist mainly of Ventersdorp lava with minor banded iron formation, chert, quartzite and quartz and the total sequence may be 1 - 8 m thick.
The fluvial-alluvial gravels typically rest directly on the bedrock. The basal units are often extensively calcretised (Plate 6.2). and the thickness of the gravel bed varies from about 1-6m, although on average is approximately 3m thick The Primary gravels comprise a poorly sorted assemblage of large boulders (up to 45 cm in diameter at the base of the unit), cobbles and pebbles set in a sandy matrix that is considered to have been deposited by a large middle stage braided river system.
Plate 6.1 Example of calcreted fluvial-alluvial deposits at Klipdam
These deposits represent a derived gravel and consist mainly of well-rounded and polished siliceous pebbles and reddish coloured sand. The clastic material is believed to originate from the fluvial alluvial gravel units (Marshall, 2004) and consists of its most resistant components, in particular chert, agate, jasper, quartzite and vein quartz. Due to the decomposition and winnowing of the less resistant clastic and matrix material, there has been a substantial concentration of the more durable
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Plate 6.2 Highly calcreted basal gravel from the palaeochannel on Holpan
6.3.2 Derived (Rooikoppie) Deposits
Typically, Rooikoppie gravel may occur as both eluvial and colluvial varieties:
Eluvial Rooikoppie Gravel
A thin veneer of red oxidized soil with coarse cobble clasts and windblown sand overlies the calcretised sequence. In places, potholes in the surface of the calcretised layer host pockets of this material. Calcretisation of pre-existing sedimentary sequences, such as alluvial deposits, has been shown to develop according to a definite generic sequence. In fine grained sediments, as are generally found at the top of alluvial sequences, calcrete nodules coalesce to form a honeycomb calcrete, the voids of which are finally filled to form a hardpan deposit. In the underlying more sandy or gravelly sequences, calcification proceeds along similar lines, but more slowly. At the surface, all but the siliceous or resistate clasts including diamonds, become calcreted to form a hardpan conglomerate at the surface.
If calcretes are covered by soil for any length of time, the uppermost layer undergoes a form of decomposition resulting in the formation of makondos – a type of solutional weathering feature that has the appearance of a pothole (Plate 6.3). These makondos may be infilled with diamond-bearing resistate alluvial gravels and later surface material and the whole sequence may or may not be subsequently calcretised. Where diamond-bearing resistate gravels, in reality a concentrate, infill makondos, the eluvial deposit will be richer in diamonds than the original alluvial deposit.
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Plate 6.3 Rooikoppie deposits formed in makondos developed in the calcreted fluvial-alluvial deposits on Holpan
Colluvial Rooikoppie Gravel
These deposits are typically 10 – 20 cm thick and consist of uncemented, granular-to-pebbly, resistant clasts, composed mainly of quartz, quartzite and agate set in a matrix of dark red, fine-to-medium sand. All the larger clasts are of locally derived material (typically Ventersdorp lava), which contains large core-stones at the base of its weathering profile. The deposits are very extensive (often covering many square kilometres) and drape bedrock irregularities with uneven thicknesses. The gravels, in turn, may often be overlain by thin layers of Kalahari Sands. These derived deposits are best preserved as matrix- supported gravels in pockets in deeply weathered Ventersdorp lavas where the palaeosurface has produced pseudokarst features by laterization processes.
The main driving forces behind the formation of these types of deposits appear to be the processes associated with laterite and or ferricrete development as well as slope downwearing and backwearing. Laterite is generally formed as a ferruginous cementing precipitate. In one model of laterite formation, the original precipitates form within the narrow depth range of fluctuation of the groundwater table, which sinks as the landsurface is reduced by erosion. These precipitates accumulate as an increasingly thick layer in the lower parts of the soil profile. When downwasting ceases and the water table stabilises, the residuum is hydrated and transformed into a massive variety of laterite. A pallid zone develops beneath the laterite as a result of leaching of the saprolite during subsequent landscape cycles. Crustal uplift causes additional leaching which depletes the underlying saprolite to form pseudokarst features. During leaching and pseudokarst development, retreat of the slope permits older armoured, diamond-bearing alluvial gravels to move downslope and to concentrate as resistate particles within the pseudokarst solution cavities.
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As the landscape is lowered by weathering and deflation resulting from more than one episode of post- Cretaceous uplift or sea-level lowering the original alluvial gravels are eroded and distributed over the surrounding surface to form thin, laterally extensive, [derived] deposits that have been formed or modified by colluvial or hill-slope processes. This complex process of redistribution of pre-existing, diamondiferous alluvial units may result in significant [lateral] displacement of commercial deposits.
These (colluvial) Rooikoppie deposits can be formed during any cycle of landscape formation and any pre-existing deposit may be remobilised several times. Consequently, it is possible to have similarly looking colluvial Rooikoppie deposits developed across terraces of different ages and in different locations. As a result, they are not time specific deposits. Their main use in geologic interpretation is twofold; primarily as an indicator of a hiatus at the end of a depositional cycle, and secondarily as a climatic indicator since the better-developed colluvial deposits are more likely to have formed under warm, humid conditions.
Colluvial Rooikoppie on Klipdam/Holpan is also found as an extensive layer blanketing the land surface outside of the main palaeochannel areas. In this case, the bedrock is primarily Ventersdorp lavas. In these areas, the Ventersdorp lavas have weathered into large (to very large) boulders (as seen in Plate 6.4) and the gravel has concentrated in the spaces between these boulders.
Plate 6.4 Rooikoppie deposits formed in makondos developed on Ventersdorp lava bedrock on Klipdam
Similar deposits have been identified on the farm Nooitgedacht 66 (De Wit, 2004), located on the east bank of the Vaal River, just upstream of Barkly West, some 25km directly south of Klipdam/Holpan. The sheet geometry of the deposit and the absence of obvious channels was used to infer that the process of deposition occurred in a shallow and wide depression. The dominant matrix supported and poorly sorted nature of the deposit suggested that deposition was through sheet-wash or hill-wash processes. It was, further, proposed that these Nooitgedacht Rooikoppie deposits represent remnants of an early
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tributary to the palaeo Vaal River that existed in the Cretaceous. As a result of significant reduction in landscape denudation during the Early Tertiary, associated with major changes in climatic conditions, the higher level derived gravels were left as elevated terraces or platforms. Consequently, the Nooitgedacht deposit has been associated with the African erosion cycle (sensu Partridge and Maud, 1987).
Due to the similarities seen in the Rooikoppie deposits on Klipdam/Holpan, as well as in elevation, it is suggested that these deposits formed in the same manner and at the same time and that they, too, are remnants of a Cretaceous age drainage line that has been, subsequently, deflated across an extensive area.
6.4 Property Geology (Erfs 1 and 2004)
Rooikoppie deposits, essentially similar to those located on the Klipdam/Holpan mine properties, have been identified on both Erf 1 and Erf 2004 (Plate6.5). Both properties are, effectively, an extension of the Klipdam gravels eastwards.
Plate 6.5:
Rooikoppie deposits, as exposed on Erf 2004 (above) and Erf 1 (right)
6.5 Mineralization
6.5.1 Nature of Mineralisation
Mineralisation in the Lower Vaal River is, typically, confined to alluvial fills preserved on terraces which are, typically, incised into the bedrock. Subsequently, an alluvial fill may be modified by a combination of eluvial and colluvial processes.
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Terraces
A terrace is formed by the deposition and subsequent erosion of as an alluvial-fill package of sediments, leaving them perched above current river level. Where incision takes place in the centre of the valley- fill, terraces may be developed on both banks of the river. If incision is accompanied by lateral migration, as is often the case, the terrace is restricted to one bank only. The term “terrace” is, therefore, simply a morphological term, and any number of typical stream features can be displayed on the terrace - such as splays, chute bars, point bars, channels, and sand banks. The terrace initially preserves the morphology of the braided river deposits, but later erosion can dissect or totally remove the terrace.
On a regional scale, terraces tend to have an elongated sheet-like shape, with an overall gentle gradient downstream, but this gradient can be stepped at barriers across the river valley, such as lithological changes in bedrock, cross dykes, etc. Consequently, contemporaneous terraces can be deposited at differing elevations, and, conversely, terraces at the same elevation were not necessarily deposited during the same cycle, at the same time. Several attempts have been made to correlate terraces along the Vaal and middle Orange River using elevations, either above sea level or above the present river level, of the various deposits. These attempts at correlation have met with limited success. In addition to the problem of stepping, no allowance can be made for post-depositional regional warping. Subsequent differential incision of the river into the terrace platform can, further, complicate the issue.
Alluvial Fills
An alluvial fill is the record of a set of superimposed floodplains, reflecting an interval of net, but not necessarily continuous or homogenous, deposition along a river valley. The unconformities between alluvial fills record erosional phases when the main stream and its local tributaries incised earlier alluvium and bedrock surfaces, removing part of that alluvial record and leaving behind limited, and usually transitory, fill on eroded surfaces, destroying earlier terraces.
The alluvial sequences of the Vaal River record many such erosional and depositional phases. The interpretation of complex alluvial fills is difficult because the processes of sediment supply and those of erosion and transport are interrelated, not only to each other, but also to other factors in the wider geomorphic environment. In addition, the processes responsible for a cumulative history of incision and floodplain aggradation have variable magnitude, frequency, spatial location and temporal context. Such changes, further, do not occur with constant intensity through time; may have been accomplished by an assortment of events with variable magnitudes, durations and frequencies; and may not be uniformly distributed across the river valley at any particular time.
Phases of floodplain incision and deposition can occur in both arid and humid climatic settings. Under more arid conditions, low stream flow typically results in wide, shallow channel sections. The valleys display moderate sinuosity and braiding may be frequent. Braided stream segments are highly transient environments. The braided channels are unstable through time and gravel bars are formed and destroyed continuously. Shifting bars and channels cause wide variations in local flow conditions resulting in varied depositional assemblages. Common features in braided stream deposits include irregular bed thicknesses, restricted lateral and vertical variations within the sediments, and abundant evidence of erosion and re-deposition. On a broad scale, most deposits are complex with units of no great lateral extent. The coarser-grained (gravel) units are commonly elongate and are surrounded by finer-grained units (Fig. 6.4).
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The coarser units are, typically, the higher-priority diamond targets, but are generally too small to be targeted for selective mining techniques. The preferred mining method is to bulk mine both the coarse gravel bars and the intervening finer material. Consequently, the ratio of coarse to fine material is an important issue for sample representivity and grade estimation.
Figure 6.4: Schematic view of coarser gravel channel bars in a braided river system
Post-depositional erosion of fluvial-alluvial deposits results in the formation of colluvial and eluvial derived or Rooikoppie deposits. Since these are simply reworked alluvial fill deposits they are composed of the same coarser gravel-boulder clasts. The eluvial (calcreted) variety of derived gravels is found in the same locality as the underlying fluvial-alluvial units whereas the colluvial variety is spread out over much of the surface (covering pre-existing deposits or directly on top of bedrock (Marshall, 2004).
6.5.2 Surrounding Rock Types/Regional Bedrock Geology
The bedrock of the middle-lower Vaal River valley is dominated by Ventersdorp lavas and sediments of the Transvaal Supergroup. These basal rocks are widely overlain by a veneer of flat-lying Dwyka tillite as well as shales and siltstone of the Karoo Supergroup which are preserved only in local hollows or glacial scours. The Dwyka, typically, comprises matrix-supported diamictite with both local and transported pebbles and boulders as drop-stones in a rock-flour matrix. The bedrock is cut by faults and dolerite dykes, which are rarely exposed. Owing to the irregularity of the pre-Dwyka surface, several reaches of the river are superimposed on pre-Dwyka topographic highs, which, due to their relative resistance to erosion, give rise to more rugged topography. Here the Vaal River is confined to gorges with increased river gradients. In contrast, the more easily eroded Dwyka has been dissected by minor tributaries of the Vaal River, giving rise to a trellis-type drainage pattern.
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As can be seen from the 1:250000 scale geology map (2824 Kimberley) supplied by the South African Council for Geoscience (Fig. 6.5), the project area is underlain predominantly by Ventersdorp Lavas and overlain by younger Quaternary cover (Qc).
Figure 6.5: Bedrock geology surrounding the project area (Council for Geoscience). Ra – Ventersdorp Lava (Allanridge formation; Qc – Quaternary cover (calcrete); DA – alluvial diamond occurrence
The majority of the soils in the area are of the Hutton type and of aeolian origin. In most places these soils are relatively shallow, especially where underlain by calcrete. These Hutton soils are prone to mostly wind erosion, but this is a function of vegetation cover. Surface runoff following an event such as a cloudburst could cause erosion, but these soils are generally of low erodability.
6.5.3 Geological Controls
1. Numerous kimberlite pipes and fissures are known to exist within the Barkly West district of the Northern Cape Province. Grades of these kimberlitic intrusives vary dramatically from barren to highly economical. Erosion of these primary kimberlites as well as of older alluvial and colluvial/eluvial deposits has resulted in hundreds of thousands of carats being eroded into surrounding alluvial gravels. As the diamonds entered the alluvial system, a natural attrition process resulted in the destruction of poorer quality stones. These diamonds were deposited along the course of the river in favourable trap sites either in bedrock-traps or in point-bar complexes and within-channel bars, particularly in meanders, scour pools and areas of divergent flow (Fig. 6.6).
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Figure 6.6: Fixed and mobile trapsites and their depositional environments (Jacobs, 2005)
2. Locally, bedrock geology and structural features play an important role in diamond concentration of the basal alluvial deposits. As has been described in Sections 6.2 and 6.3, the bedrock is comprised of both Ventersdorp lavas and Dwyka tillite. The lavas, where they are not weathered too deeply, promote the development of potholes and trapsites along the palaeochannel. The tillite, however, is a friable, flat-lying sedimentary rock that does not, generally, form extensive trapsites and the deposits developed on this substrate are, typically, broad and highly braided.
3. Dykes and other linear structures can be seen on Google Earth. These trend NNW, sub-parallel to the main glacial scour (Fig. 6.7). A second structural fabric (trending NE) is also visible. The impact of these features on the depositional environment of the fluvial-alluvial gravels may vary from significant to negligible.
6.6 Mineralisation on Klipdam/Holpan Mine
Geologically the fluvial-alluvial gravel on the Holpan and Klipdam properties is Miocene in age (~25- 5Mya) and is located on the Holpan terrace, some 60m above the present Vaal River (Refer Fig.6.2). The fluvial-alluvial gravels are blanketed by colluvial gravels of varying ages and do not outcrop. Younger terraces are located to the east of these mine properties
Geological mapping and drilling results indicated that this river system flowed in a wide meander-loop across the Klipdam and Holpan properties and has incised some 20m into the bedrock (Fig. 6.7). The location of the channel appears to be controlled by two dominant glacial scours, one in an ENE-WSW direction and another in a N-S orientation. These scours (filled with Dwyka tillites and younger gravels) were, likely, carved out along pre-existing fracture/joint patterns.
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Figure 6.7 Bedrock contours of gravel in glacial scour on Klipdam/Holpan
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Significant volumes of fluvial-alluvial gravels have been preserved in these scours, despite the significant deflation of the region. However, as a result of the various periods of deflation, colluvial Rooikoppie gavels are wide-spread over the entire property. It is likely that these Rooikoppie gravels have been derived from the deflation and reworking of older alluvial gravels (of both fluvial and colluvial in origin).
Analysis of the diamond size frequency of the Klipdam/Holpan mine by Dr M M Oosterveld (2010) indicates that the upper size of gravels that should be processed through the final recovery plant is 40mm. With this upper limit, diamonds up to 590ct may be recovered. The lower economic cut-off is estimated at 2mm.
On the prospecting properties Erf 1 and Erf 2004, derived Rooikoppie gravels associated with the older gravel units, are considered high priority targets. Two sub-varieties of colluvial gravels are recognised: (a) gravel is deposited on a relatively flat, weathered bedrock and (b) a younger, diamond-bearing gravel concentrated around large corestones formed by deep weathering of the (Ventersdorp lava) bedrock.
Since diamonds are heavy minerals, they are typically concentrated preferentially in the lower portions of the gravel units within the alluvial profile. Although diamonds may also be present in the sandy units, their low concentration levels and small average size combines to make them uneconomic. Thick (mineable) units of sand and sandy gravels are excavated and stockpiled separately (as overburden) so as not to dilute grades unnecessarily (this is not an issue in the Rooikoppie gravels where the entire sequence is generally only 0.5m thick). Thinner, internal sand lenses are, however, excavated as part of the mining process.
In addition, diamonds may settle into cracks in the bedrock surface, especially where it is weathered. In these instances, some 10-20cm of soft footwall is excavated along with the gravels. Although this, effectively, decreases the recovered grade,
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7 DEPOSIT TYPES
The diamondiferous gravels occur on a number of terraces along the Vaal River (ref. Section 6). These terraces have been divided stratigraphically into Older and Younger Gravel units (Helgren, 1979). The stratigraphic units being targeted for prospecting and sampling on the Klipdam and Holpan mine properties are the Older (typically, Holpan) gravels – both fluvial-alluvial and derived (Rooikoppie) varieties.
7.1 Fluvial-Alluvial Deposits
7.1.1 Older gravels
The highest and oldest gravels occur between some 80-120m above present river level and include the Nooitgedacht (A0) deposits. These deposits appear to have been deposited in the late Cretaceous. Generally these Older Gravel deposits can be divided into two horizons; the overlying “Rooikoppie Gravels (also known as “Red Older Gravels “or “Potato Gravels”) and the basal alluvial gravels.
The uncemented Rooikoppie Gravels are a weathered and (colluvially) reworked residual of the calcreted basal older gravels (remnants of a pre-existing diamondiferous fluvial alluvial deposit) and, being a concentrate, contained a greater proportion of diamonds and have been almost entirely mined out where they were either outcropping or covered by thin overburden. These Rooikoppie deposits are typically 1 0-20cm thick and consists of uncemented, granular to pebbly, sub-rounded to sub-angular, resistant clasts, composed mainly of quartz, quartzite and agate set in a matrix of dark red, fine to medium sand. All the larger boulders are of locally derived Ventersdorp lava, which contains large core- stones at the base of its weathering profile. The deposits are laterally very extensive and drape bedrock irregularities with uneven thickness. The gravels are, in turn, overlain by Kalahari Sands. The underlying basal (alluvial) gravels are often preserved in hollows (“sluits”) in the Ventersdorp lavas (Spaggiari, 1993).
The next suite of older gravels (Holpan Gravels (A1) consists of well-preserved, variably calcreted, primary fluvial sediments at approximately 60m above present Vaal River level. A large remnant channel meander has been preserved at Windsorton on the farms Klipdam and Holpan. This palaeochannel is between 75m and 400m wide and is covered by 4-12m of calcreted fine-grained fluvial sediments (de Wit et al., 1997) and is characterised by elongate bodies of gravel surrounded by finer grained material, typical of a low energy braided river system. Gravel thickness varies from less than 1m to 8m (with an average of 3.7m). The gravels consist predominantly of well rounded, densely packed, cobble to boulder gravel. The average gravel clast size varies from 50-100mm but lava boulders up to 1m in diameter are present. The matrix contains well rounded pebbles of lava, epidote, banded ironstone, quartzite, agate, quartz and dolerite. In places, the gravels are cemented by calcium carbonate (calcrete). The bedrock consists of Ventersdorp lava with isolated thin remnants of Karoo sediments preserved in depressions. The degree of calcretisation associated with the Holpan gravels is typical of Miocene age gravel deposits throughout much of southern Africa, reflecting the extremely dry prevailing climates.
A veneer of loosely packed, derived (Rooikoppie) gravels flanks the channel. These gravels lie on an irregular but generally planar surface of Ventersdorp lava and Dwyka shale. Overburden, where present, usually consists of a thin layer of soil, windblown Kalahari sand and calcrete, in places. The gravel thicknesses vary from a single layer of pebbles up to deposits of metre scales. Most of the pebbles are chert, agate, quartz, quartzite and banded ironstone and range in size from 5-60mm. The matrix consists of variable proportions of sand and clay.
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Older gravels (Intermediate gravels) occur also on the Proksch Koppie terrace (30-45m) and the Wedburg terrace (21-30m), whose remnants are preserved from Windsorton to Delportshoop (Helgren, 1979). These gravel deposits are very similar to those developed on the higher (Nooitgedacht) terrace in that both derived Rooikoppie gravels and underlying remnants of calcreted alluvial gravels are known to exist. These gravel terraces, however, are less calcified than the 60m (Holpan) terraces, reflecting less arid prevailing climates. The Wedburg deposits have yielded a sparse, poorly-provenanced vertebrate fauna representing ages of about 4.5 to 3.5 Ma (Pliocene).
7.1.2 Younger gravels
As the Vaal River continued incising it deposited the Younger Gavels. These alluvial deposits have been subdivided into the Rietputs and Riverton Formations (Cooke, 1949; Butzer et al., 1973). Partridge and Brink (1967) suggested that the Rietputs Formation (A2), which form the +12-14m floodplain terrace, are all part of one formation with three distinct erosional and depositional (or aggradational) units, designated Rietputs A, B and C. Fossil evidence and the presence of Acheulian artefacts indicate that these Rietputs sediments are of Middle Pleistocene age (Partridge and Brink, 1967).
Rietputs A: The Rietputs A gravels comprise a crudely stratified granule-boulder conglomerate with a pale brown sandy matrix. Rare fine sandy lenses up to 30cm thick are also known to occur within the sequence. Total thicknesses may have been in the order of 25m. These deposits often have a rudaceous, red, winnowed lag or a palaeosol developed at the surface. The upper surface may also be calcreted. Rietputs A gravels are known and mined along the Vaal River from Windsorton to Winters Rush (few outcrops are visible in this area, however, since the Rietputs gravels are overlain by younger Riverton deposits). Rietputs A deposits are the result of incision and deposition under a humid climate. The channels of known Rietputs A deposits vary in width from some 360m to over 2,500m (at Windsorton). Calculations of possible river volumes suggest that the Rietputs A Vaal River had a discharge four to five times that of the present river (Helgren, 1979) under which conditions rivers would produce relatively straight and locally over-deepened (unusually deep potholes) channels.
Rietputs B: Rietputs B gravels comprise crudely horizontally bedded granule-coarse cobble conglomerate with a pale brown silty-sand matrix. Silty-sand, sand and calcrete over bank deposits are also known to occur. The sequence is typically calcreted and thicknesses are in the order of 3-10m. Rietputs B deposits accumulated under a climate more arid than at present as is evidenced by the abundant calcretisation. Palaeohydrological speculations are inappropriate since arid climates typically support low water episodes interspersed with less frequent floods, resulting in a very broad floodplain in which numerous discontinuous gravel deposits are scattered.
Rietputs C: The Rietputs C gravels are a 1-6m thick sequence of typically calcreted massive gravels in which no lenses of fine material or overbank deposits are known to occur. Climatic conditions during Rietputs C times appear to have fluctuated from semi-arid to humid. Rietputs C gravels are nearly always found in or near the present river channel and have mostly been completely mined out.
Following the deposition of the Rietputs Formation is the Riverton Formation (A3), a complex, cut-and- fill sequence of sands, silts and clays that eroded through all of the pre-existing Rietputs deposits. Riverton Formation sediments occupy the +8 to 9 m terrace (Butzer et al., 1973). Today these are mostly preserved along the Harts River and are not known to contain economically viable quantities of diamonds. Based on archaeological evidence these deposits are late Pleistocene to Holocene in age
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(Beaumont and Morris, 1990). The Riverton Formation provides classic examples of fine-grained deposition during a period of fluctuating regional climates, both more humid and more arid than present. The massive sands of Members I and III seem to suggest intervals of arid deposition, while the finer sediments and relict sinuous channel ways of Members, II, IV and V suggest deposition under humid climates, resulting in typical meander deposits.
The five units comprising the Riverton Formation are: Riverton I (Rv1): Up to 2m of sandy-silt, silty-sand, cross bedded clay-sandy-silt and laminated sands. Riverton II (Rv2): Up to 2m of clay-silt-sand, clay-sand-silt and clay-silt. Riverton III (Rv3): Up to 10m of massive inhomogeneous sands with minor gravel lenses and capped with a calcrete palaeosol. Riverton IV (Rv4): Up to 10m thick sequence of red sand and silty-sand with dispersed pebbles and <1m thick gravel lenses and pale brown to brown sandy silt, silty sand and massive sand, with a basal gravel (non-diamondiferous to poorly diamondiferous) that can be up to 3m thick. Riverton V (Rv5): A 4-5m thick sequence of sandy-silt and silty-sand.
7.2 Derived (Rooikoppie Gravels)
These deposits represent a derived gravel and consist mainly of well-rounded and polished siliceous pebbles and reddish coloured sand. The clastic material is believed to originate from the fluvial alluvial gravel units (Marshall, 2004) and consists of its most resistant components, in particular chert, agate, jasper, quartzite and vein quartz. Due to the decomposition and winnowing of the less resistant clastic and matrix material there has been a substantial concentration of the more durable components in the original gravel, including diamonds. Iron has stained the entire assemblage, giving it a reddish colour and hence the name Rooikoppie, literally meaning ‘Red Gravels on a Hill’. In the past, Rooikoppie gravel was mined throughout the region by small-scale prospectors using unsophisticated mining and diamond recovery techniques. Typically, Rooikoppie gravel may occur as both eluvial and colluvial varieties (Fig. 7.1):
Figure 7.1: Diagrammatic representation of relationships among colluvial, eluvial and fluvial- alluvial gravels in the Vaal River system (Wilson, et al., 2006)
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7.2.1 Eluvial Rooikoppie Gravel
A thin veneer of red oxidized soil with coarse cobble clasts and windblown sand overlies the calcretised sequence. In places, potholes in the surface of the calcretised layer host pockets of this material. Calcretisation of pre-existing sedimentary sequences, such as alluvial deposits, has been shown to develop according to a definite generic sequence. In fine grained sediments, as are generally found at the top of alluvial sequences, calcrete nodules coalesce to form a honeycomb calcrete, the voids of which are finally filled to form a hardpan deposit. In the underlying more sandy or gravelly sequences, calcification proceeds along similar lines, but more slowly. At the surface, all but the siliceous or resistate clasts including diamonds, become calcreted to form a hardpan conglomerate at the surface (Fig. 7.2).
Figure 7.2: Formation of eluvial gravels (Marshall, 2004)
If calcretes are covered by soil for any length of time, the uppermost layer undergoes a form of decomposition resulting in the formation of makondos – a type of solutional weathering feature that has the appearance of a pothole (Fig. 7.3). These makondos may be infilled with diamond-bearing resistate alluvial gravels and later surface material and the whole sequence may or may not be subsequently calcretised. Where diamond-bearing resistate gravels, in reality a concentrate, infill makondos, the eluvial deposit will be richer in diamonds than the original alluvial deposit.
Figure 7.3: Formation of Eluvial Gravels (Marshall, 2004)
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7.2.2 Colluvial Rooikoppie Gravel
These deposits are typically 10 – 20 cm thick and consist of uncemented, granular-to-pebbly, resistant clasts, composed mainly of quartz, quartzite and agate set in a matrix of dark red, fine-to-medium sand. All the larger clasts are of locally derived material (typically Ventersdorp lava), which contains large core-stones at the base of its weathering profile. The deposits are very extensive (often covering many square kilometres) and drape bedrock irregularities with uneven thicknesses. The gravels, in turn, may often be overlain by thin layers of Kalahari Sands. These derived deposits are best preserved as matrix- supported gravels in pockets in deeply weathered Ventersdorp lavas where the palaeosurface has produced pseudokarst features by laterization processes.
The main driving forces behind the formation of these types of deposits appear to be the processes associated with laterite and or ferricrete development as well as slope downwearing and backwearing. Laterite is generally formed as a ferruginous cementing precipitate. In one model of laterite formation, the original precipitates form within the narrow depth range of fluctuation of the groundwater table, which sinks as the landsurface is reduced by erosion. These precipitates accumulate as an increasingly thick layer in the lower parts of the soil profile. When downwasting ceases and the water table stabilises, the residuum is hydrated and transformed into a massive variety of laterite. A pallid zone develops beneath the laterite as a result of leaching of the saprolite during subsequent landscape cycles. Crustal uplift causes additional leaching which depletes the underlying saprolite to form pseudokarst features. During leaching and pseudokarst development, retreat of the slope permits older armoured, diamond-bearing alluvial gravels to move downslope and to concentrate as resistate particles within the pseudokarst solution cavities.
As the landscape is lowered by weathering and deflation resulting from more than one episode of post- Cretaceous uplift or sea-level lowering the original alluvial gravels are eroded and distributed over the surrounding surface to form thin, laterally extensive, [derived] deposits that have been formed or modified by colluvial or hill-slope processes (Fig. 7.4). This complex process of redistribution of pre- existing, diamondiferous alluvial units may result in significant [lateral] displacement of commercial deposits.
Figure 7.4: Formation of colluvial gravels (Marshall, 2004)
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Colluvial Rooikoppie deposits can be formed during any cycle of landscape formation and any pre- existing deposit may be remobilised several times. Consequently, it is possible to have similarly looking colluvial Rooikoppie deposits developed across terraces of different ages and in different locations. As a result, they are not time specific deposits. Their main use in geologic interpretation is twofold; primarily as an indicator of a hiatus at the end of a depositional cycle, and secondarily as a climatic indicator since the better-developed colluvial deposits are more likely to have formed under warm, humid conditions.
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8 EXPLORATION
8.1 Remote Sensing (Satellite Imagery / Aerial Photo interpretation)
During 1996, a detailed aerial photographic interpretation of the Klipdam/Holpan area was completed by Nick Lockett of Australia (Fig.8.1).
KLIPDAM MINE
HOLPAN MINE
8.2 Geophysics
No geophysical surveys have been conducted over the properties comprising the Klipdam project. Due to the presence of the Ventersdorp lava bedrock (which is both variably weathered and variably magnetised), it is unlikely that geophysical surveys will be effective here.
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9 DRILLING
All drilling by Rockwell was carried out using a conventional Reverse Circulation (RC) machine with a 76mm (diameter) bit and a 28 bar compressor. The drilling contractor was Champ Drilling CC, a local drilling company that has many years of experience drilling for alluvial gravels.
The level of contamination of the samples was kept to a minimum – minor amounts of soap may sometimes be added to assist with penetration. Samples representing every 1.0m advance are collected for observation (Plate 9.1). The drill was under constant observation and, as a result, the depth estimates of lithological contacts could be noted to within 0.50m. Each sample was logged by a geologist based upon macroscopic examination of the drill cuttings on each one metre interval. The results were noted in a field notebook. Observations in the field include grain-size, colour, degree of roundness (especially of quartzite and chert clasts), and end-of-hole lithology (bedrock). The logs were later summarised and gravel deposit types were assigned based upon their stratigraphic and sedimentological characteristics. All drill hole positions were surveyed and elevated. This method of drilling was found to be successful on the Klipdam/Holpan mining and prospecting properties with few drillholes having to be abandoned due to poor drilling conditions.
Plate 9.1: Logging and sampling drill-cuttings on Holpan (2007)
Due to difficulties with drilling conditions in areas covered by colluvial Rooikoppie, pits/trenches were dug with hydraulic excavators. The presence of old diggings made it difficult to differentiate virgin gravel from dumped material in conventional drilling and accurate logging was made almost impossible. The pitting obviated this problem and a more precise estimate of gravel present could be obtained. The pits were logged by a geologist, following similar procedures as for the drill holes.
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9.1 Location
A total of 5,276 Reverse Circulation (RC) boreholes and prospect pits were drilled on Klipdam/Holpan, Erf 1 and Erf 2004 for a total depth of 12,362.11m. (Fig. 9.1). The boreholes were drilled on grids ranging from reconnaissance (100x200m) to detailed (100x50m). Boreholes and prospect pits are used interchangeably depending on depth of gravels and ease of access. They are located on the same grid and the same information is obtained – the deeper fluvial-alluvial deposits were, generally, drilled and the shallower Rooikoppie gravels were pitted.
Figure 9.1 Location of completed drilling and pitting on Klipdam/Holpan
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9.2 Results
Geological mapping and drilling results indicated that the Holpan-age river system(Fig. 9.2) flowed in a wide meander-loop across Erf 2004 and the Klipdam and Holpan properties and has incised some 20m into the bedrock (Refer to Section 6 for geological details).
Figure 9.2 Contours of fluvial-alluvial gravels
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The location of the channel appears to be controlled by two dominant, sub-parallel, glacial scours oriented ENE-WSW. These scours (filled with Dwyka tillites and younger gravels) were, likely, carved out along pre-existing fracture/joint patterns. Significant volumes of fluvial-alluvial gravels have been preserved in these scours, despite the significant deflation of the region. Post depositional geomorphic processes have resulted in the erosion of much of the extension of the fluvial-alluvial gravels on Erf 2004 and eastwards. However, as a result of the associated deflation, colluvial Rooikoppie gavels are wide-spread over the entire property (Fig. 9.3), although relatively thin (usually less than 1m).
Figure 9.3 Contours of Rooikoppie gravels
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Contouring the drill/pitting data further highlights a number of interesting features: • As expected, fluvial-alluvial (palaeochannel) gravels are confined to the region of the glacial scours, with gravel thicknesses over 2m having been intersected. • It had been previously expected that the channel on Klipdam would continue on in a WSW- direction. However, the drilling indicates that it joins up with the Holpan channel instead. • The Rooikoppie gravels are spread out unevenly across much of both mine properties. • Indications are that both Rooikoppie and fluvial-alluvial gravels extend onto the two exploration properties, located adjacent to Klipdam on the NE. • It is interesting to note that the thickest Rooikoppie gravels do not overly the fluvial-alluvial channel, but seem to define the presence of an older drainage line, somewhat different to the younger channel gravels.
Drill results are used, primarily, to define the presence of gravel units and to estimate their thicknesses. The boreholes are all vertical and the gravel deposits are horizontal (since they are very young, geologically, and are not affected by large scale tectono-structural upheavals). Therefore, the gravel thicknesses (as determined from drilling) are true thicknesses.
Since regional gravel grades are, typically, less than 0.5ct/100m3 and average diamond sizes are typically >1 carat per stone (ct/st), boreholes are not sampled for diamonds. Furthermore, no other minerals or elements that can be assayed are known to show positive (or negative) relationships with diamonds in alluvial deposits. Consequently, borehole samples are not collected for assay, nor are intersections composited.
9.3 Representativeness
As can be seen from Fig 9.1 above, the completed, detailed drilling programme on both Klipdam and Holpan, as well as Erf 1 and Erf 2004 has covered all outcropping and sub-cropping gravels with a detailed grid. The results are, thus, extremely reliable for resource estimation purposes.
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10 SAMPLING PREPARATION ANALYSIS AND SECURITY
Due to the nature of alluvial diamond deposits, samples are not taken for assay as would be normal for precious or base metal prospects. Gravel bulk-samples were processed through Rockwell’s plant to determine average sample grade and the recovered diamonds were then sold on the open market for a determination of value. Consequently, no samples were dispatched to any analytical or testing laboratories. Further, sample splitting and reduction methods were not employed.
As described above, alluvial diamond deposits can only be sampled through bulk-samples comprising tens-hundreds of thousands of cubic metres of gravel. Further, the diamond distribution pattern (grade) of alluvial deposits is such that there is no repeatability of sample results, even from adjacent samples of tens of thousand cubic metres in size. Consequently “check-samples” such as are standard in the precious and base-metal industries, are not possible.
The sampling procedures and security described here reflect the situation as practised by Rockwell during the bulk-sampling and trial-mining programmes.
10.1 Sample Security
During the final recovery process described in Section 11.3.3, all FLOWSORT concentrates were sent directly to a twin-locked secure box (Plate 10.1) before being hand-sorted in a glove box. Both the FLOWSORT and grease plants were containerised in an attempt to improve security. Access to all areas of the final recovery was controlled and monitored by closed circuit television.
Plate 10.1 Locked secure box into which the FLOWSORT concentrates are sent.
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The area around the sort-house was declared a Red Zone and enclosed with high-security fencing and monitored by surveillance equipment. An automated security system was installed at all plant sites and formed part of the integrated system, which monitored all areas of the operation remotely. The security system also included closed circuit television on all sensitive areas of the plants and final recovery rooms, access control (fingerprint biometrics), motion detection and tracking technology as well as guard patrols. This one system monitored all of Rockwell’s mines in the Northern Cape (Holpan/Klipdam, Wouterspan and Saxendrift) and was also linked to the Johannesburg head office by a dedicated ADSL line.
Since the samples were processed through Rockwell plant, Rockwell personnel were involved from the excavation of the gravels through to the final recovery of the diamonds. However, no officers or directors of Rockwell were involved in any part of this process. The procedures of the recovery processes have been described in detail in Sections 10 and 12. Further, Section 11 describes the processes employed by the authors to verify and validate all results.
10.2 Tracer testing QA/QC
In order to determine the level of accuracy of the concentrating and final recovery plants, density tracers were used extensively during bulk-sampling operations. Density Tracers are plastic particles which incorporate powders or other materials to impart suitable combinations of properties including density and colour. They are used to determine partitioning characteristics of density separators and other units accurately, rapidly and at low cost. Density tracers with densities spanning the range of interest are added to the circuit feed and retrieved from the product and rejects streams, manually or with the assistance of magnets or X-Ray sorters. After retrieval they are sorted into their various densities, and the resulting data are used to plot a partition curve. The form of the curve can indicate whether the metallurgist should take actions such as adjust medium density, replace a worn circuit component, or correct an overload or medium instability situation.
On a daily basis, and more often when problems were identified, 40 tracers (10 of each of the 3mm, 5mm, 8mm and 10mm blocks (supplied by Partition Enterprises of Brisbane, Australia) were fed, at random, into different parts of each processing plant to test the recovery efficiencies of the system. The tracers were fed primarily into the launder chute feeding the pans, but also into the classifier and directly into the X-ray Flow Sort itself. The recovery of the tracers was noted in the daily production report and incorporated into the final database. The recovery of the tracers was done by the diamond sorters and all inconsistencies reported to the Senior Operations Manager.
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11 DATA VERIFICATION
Procedures and protocols govern every phase of data collection by Rockwell – from drillhole location, through bulk-sampling and processing, to final recovery and sales. The independent QP was involved in the drafting up of these protocols and they are reviewed, updated and audited regularly – during each site visit, during the compilation of the technical report and prior to the initiation of a new phase of exploration or mining. Spot checks were carried out by the independent QP on various aspects of the operation during site visits and, in the opinion of the independent QP, the procedures, as applied on the Klipdam project, were well executed by Rockwell staff and are satisfactory for resource estimates.
As part of the data verification and resource estimation processes the independent QP and the Group Technical Manager, Rockwell’s non-independent QP, worked closely together at each step. Prior to the initiation of new procedures and protocols which may impact on resource estimation results, discussions were held on the potential implications for both short and long term gravel volume, and diamond grade and value assessments. Further, the independent QP audited (both interactively and independently) the procedures used by the Group Technical Manager to produce the resource estimates and models.
It is important to note that, although every data verification and resource estimation process was reviewed and audited by the independent QP, Rockwell also evaluated these issues in parallel, as part of their internal corporate responsibility. Any discrepancies, as well as potential issues, were thus identified by both parties separately and combined and are dealt with before they could become problems. While the Group Technical Manager had overall control and responsibility for the resource evaluation programme, QA/QC for individual portions of the project were the responsibility of designated individuals. The standard of record keeping was found upon inspection to be very high and there was sufficient evidence to show that the internal checks referred to above were being carried out on a regular basis. Among the internal checks performed by Rockwell (and reviewed regularly by the independent QP) to ensure that data is complete and accurate were: • drill-logs were checked and signed off by two different individuals; • gravel volumes were reconciled by exploration/survey and operations personnel; • the production records were examined by the management for inconsistent or unexpected data; • management reconciled the data from the diamond recovery log, mine registry, production records, register of diamonds recovered, and sales slips and; • management regularly audited the buyers’ records of transactions to ensure that they agree with the sales slips received. • Advanced computer/network security and backup measures were applied regularly, ensuring minimal disruption in the case of computer failures.
The geological database is the critical starting point to effective resource and reserve estimation and maintaining the integrity of the database is fundamental. In order to verify the integrity of the data, the database was routinely processed through DatashedQAQCTM, a database programme which enforces compliance through various protocol levels. All drill data was captured by the Database Manager to ensure continuity and verified by the geologist who logged the hole. The independent QP has audited the borehole drilling and logging process from beginning to end, and regularly made spot checks on the operation during each site visit.
During July 2009, a data audit was completed for the Rockwell Diamonds Inc Database by Maxwell GeoServices of Australia. This audit was conducted on the data that had been added to the database up to July 2009. Not only was the audit performed on the data, but the data was moved to the Maxwell MDM 4.4.2, which includes a number of new tables to better capture future data. This database has all
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the statutory triggers and foreign keys in the database. During the database audit, a number of minor issues were identified which needed attention. In response to this audit, Rockwell’s database manager updated and verified all recommendations (completed January 2010). A copy of both the Maxwell audit and the Rockwell update documents were forwarded to the independent QP.
Mined volumes are sent to Rockwell under certificate from an independent professional surveyor and subsequently captured onto the production database by the Database Co-ordinator and verified by the Group Technical Manager. The procedures and protocols of the surveyor have been reviewed by the independent QP and found to be in accord with industry standard. In addition, the surveyor provides a DTM of the area surveyed to Rockwell. This DTM is imported into SURPAC, which then calculates the volume of the mined area. If the computer calculated volume differed from the surveyor’s volume by more than 5% then the area is re-surveyed. Further, if subsequent mine grades are unexpectedly high or low, the volumes are re-checked or potential errors. This was routinely done by Rockwell staff and reviewed by the independent QP
All diamond data (total carats and total stones as well a list of every individual stone recovered) is recorded on the relevant mine and forwarded to the Database Co-ordinator who added it to the database. Verification and change reports were used to track changes to the digital database by the Database Co-ordinator; copies of which were forwarded to the Group Technical Manager. The independent QP received and reviewed this data regularly.
Payment for diamond parcels was always received by electronic transfer and a formal broker’s note provided from the buyer and this also serves to indicate compliance with the Kimberley Process. This data was, subsequently, added to the production database. The author has examined each brokers note and found them all to be present and correct.
As has been described in various section of this document, alluvial diamond deposits can only be sampled through bulk-samples comprising tens-hundreds of thousands of cubic metres of gravel (often referred to as trial-mining). Further, the diamond distribution pattern (grade) of alluvial deposits is such that there is no repeatability of sample results, even from adjacent samples of tens of thousand cubic metres in size. Consequently “check-samples” such as are standard in the precious and base-metal industries, are not possible. As a result, the author has had to rely substantially on the production and sales data collected by all the operational personnel. Random sample data have, however, been verified by the independent QP who has audited the information from drilling to modelling. The author has, furthermore, examined all of the original production and sales data files used in the resource estimation process.
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12 Mineral Processing and Metallurgical Testing
Mineral processing and metallurgical testing has taken place in two phases on the Klipdam project. The bulk-sampling phase was conducted during 2006-2008. This was followed by trial-mining from 2009 to 2012. The programme and procedures described below reflect the situation as practised by Rockwell on this project.
12.1 Bulk- Sampling
Due to the distinctive nature of alluvial diamond deposits, samples are not taken for assay as would be normal for precious or base metal prospects. Instead, bulk-samples of gravels are processed through an on-site plant to determine average sample grades and the recovered diamonds are, subsequently, sold on the open market for a determination of realised value.
In this document, bulk-sampling is taken to be the initial period of sampling during which reconnaissance targets are investigated and Inferred Resources are identified (typically, the first one or two years of prospecting). Thereafter, as the programme expands to estimate significant Indicated Resources, this is defined as the trial-mining period. Further, it is during this trial-mining, which may extend over another two-three years, that the relevant mining, processing and other economic factors are evaluated that may, ultimately, lead to the conversion of the Indicated Resources to Probable Reserves through a Pre-Feasibility Study.
12.1.1 Location
The bulk-sampling programme on Klipdam/Holpan was conducted during 2006-2008 (Fig.12.1). During this period, a total of 4,516,771m3 of gravel was processed (Table 12.1) for a weighted average recovered grade of 0.79ct/100m3.
Table 12.1 Production data for 2006/2008 bulk-sampling programme
2006 2007 2008
Grade Grade Grade Volume Carats 3 Volume Carats 3 Volume Carats 3 (ct/100m ) (ct/100m ) (ct/100m )
Jan 69,993 611.64 0.87 111,530 1,047.60 0.94 106,221 362.36 0.34
Feb 120,220 798.64 0.66 119,570 1,145.07 0.96 287,780 1077.76 0.37
Mar 134,929 1,221.14 0.91 286,320 1,142.64 0.40 114,534 1,044.21 0.91
Apr 103,242 1,127.16 1.09 150,610 890.54 0.59 161,827 1,906.39 1.18
May 188,522 1,124.39 0.60 180,150 1,526.68 0.85 148,775 1,464.63 0.98
Jun 171,637 1,795.16 1.05 198,090 1,744.49 0.88 128,927 941.67 0.73
Jul 127,941 1,228.94 0.96 168,009 1,513.18 0.90 156,484 1,046.40 0.67
Aug 88,299 882.52 0.99 169,186 1,707.81 1.01 75,633 408.08 0.54
Sep 195,365 1,214.63 0.62 140,442 1,129.71 0.80 125,300 1,239.21 0.99
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Oct 132,824 1,099.92 0.83 116,489 720.91 0.62 126,452 1,105.43 0.87
Nov 111,467 1,493.20 1.34
Total 1,444,442 12,597.34 0.87 1,640,396 12,568.63 0.77 1,431,933 10,596.14 0.74
The disparities in sample grade are, generally, the result of variations in the relative amounts of Rooikoppie and fluvial-alluvial gravels processed. During 2007, however, dilution due to poor mining practice was identified as a major contributing factor. The problem practices were identified and Rockwell took steps to mitigate against it, by improving in-pit supervision.
Figure 12.1 Location of bulk-sampling activities on Klipdam/Holpan during 2006-2008
Bulk-sampling of Erf 2004 and Erf 1 was initiated in 2010 (Fig. 12.2). In July and August 2010, 44,826m3 of gravel was mined from Erf 2004 to recover 282.55ct (259 stones) for a sample grade of 0.63ct/100m3. During October 2010, 176ct from this sample were sold for an average of USD986/ct. Since these results are from two small samples, they cannot be viewed as representative of the entire property. However, it is worth noting that both the sample grade and diamond value are within the ranges recovered from the adjacent Klipdam property.
The gravel from Erf 1 is a continuation of the Rooikoppie gravel as mined on Klipdam, and so this is not seen as a new project. The gravel is mined as part of the trial-mining exercise and reported with the Klipdam results.
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Figure 12.2: Location of drilling, pitting and sampling on Erf 2001 and Erf 2004 (the legend for the Rooikoppie thickness background can be seen on Fig. 10.3)
12.1.2 Mining/Excavation Methodology
The bulk-sampling of the gravels at both Klipdam/Holpan and Erf 2004 and Erf 1 were undertaken using mechanised, shallow opencast earthmoving techniques: • Any topsoil was removed and stored separately for use in later rehabilitation activities. • Where underlying fluvial-alluvial gravels were present, the Rooikoppie gravel is loaded into Articulated Dump Trucks (ADT’s) by either excavator (Plate 12.1) or front-end loader for transport to the plant. • The calcretised overburden to the fluvial-alluvial gravel was removed so that the gravels were exposed and mined by bulldozers and excavators. After the calcrete overburden was removed for backfilling, stockpiling or use in road-building as appropriate, fluvial alluvial gravels were mined. The gravel was excavated very carefully to ensure that minimal contamination by the footwall lithologies occurred. The shales and tillites forming the bedrock in the project area are friable and are a distinctive greyish-green colour, while the lavas tend to present as large blocky units. Where the bedrock was soft (friable or decomposed Dwyka tillite), approximately 20cm of bedrock was excavated with the gravels, so that any diamonds in the weathered rock would be recovered. • Where only Rooikoppie gravels were excavated directly from the Ventersdorp lava bedrock, a similar procedure was followed (Plate 12.2).
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Plate 12.1 Mining thin Rooikoppie gravels and underlying calcreted alluvial gravels
The fluvial-alluvial gravels were subjected to ‘in-pit’ screening to -48mm and transported by ADT’s to the diamond recovery plants. Box-cuts were surveyed on a monthly basis by the (independent) mine surveyor in order to obtain precise volumes for the gravels, against which diamond production could be reconciled and grade determined. At that stage the gravels were loaded onto ADT’s and transported to the screening plant which ran at 160tph and scalped at -74+40mm, with a secondary screen feeding the -32mm gravel to the processing plants.
12.1.3 Sample Processing and Final Recovery
During the sampling period (2006/2007), the samples were batch-processed through the rotary pan plant on Klipdam and the DMS plant on Holpan. Processing rates (ROM) for each of the two plants was approximately 360 tph. Prior to running these samples, the entire plant was cleaned thoroughly to prevent any contamination. After concentrating the gravels through the various plants, all concentrates were processed through the FlowSort and glove-box final-recovery plant on Holpan.
The samples from Erf 1 and Erf 2004 were processed through the Klipdam rotary pan plant and final recovery system that was set up for the trial-mining programme.
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Plate 12.2: Removal of Rooikoppie gravels from the bedrock
12.1.3.1 Rotary Pan Plant on Klipdam
Material for the Klipdam rotary pan plant (Figure 12.2; Plate 12.2) was transported via trucks to the plant, where it was tipped into a bin and any oversize material (+70mm) was scalped off by the primary screen. Undersize material (-70mm) was transported via a series of conveyor belts to the plant feed stockpile. Stockpile material was then fed to the plant using a front-end loader. Material was withdrawn from the bin using a vibratory feeder which discharged onto the scrubber feed conveyor. This conveyor belt was equipped with a weightometer and a variable speed motor, allowing for the control of feed rate into the scrubber. The scrubber feed conveyor discharged into a scrubber feed chute where the material was combined with water introduced into the scrubber, from the Klipdam process water dam. The discharge of the scrubber was directly onto a double-deck screen which scalped the material at ±30mm. All oversize material was fed into an oversize bin before being trucked to open excavations for rehabilitation. Material from the bottom deck was fed to the pans via a conveyor belt equipped with a weightometer to record tonnage to the pans.
Undersized material and slurry from the screen was pumped to a separator cyclone situated above the pan tailings bin. The cyclone underflow discharges directly into the bin whilst the cyclone overflow discharged into a sump, which was then pumped to an agitated pulp header tank situated above the pans. Pulp from the header tank was introduced into the rotary distributor where it was combined with the feed material and discharged directly into either of the two pans. The rotary distributor ensured that material was equally divided amongst the two pans. The tailings from each pan (overflow) discharged continually onto an individual dewatering screen, oversize material discharged onto common tailings transfer conveyor and the screen undersize and slurry reported to a central sump. The slurry was pumped directly to the fine residue deposit.
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Plate 12.3: Rotary pan sampling plant on Klipdam (2007)
The oversize tailings were transported via conveyor belt to the pan tailings bin where it was combined with the separator cyclone underflow, this material was then trucked to the relevant open excavations as part of the on-going rehabilitation process. The bin was equipped with an automated valve, which was controlled by the truck driver.
The concentrate from each pan was removed as a batch using individual screw conveyors, which was undertaken every 30 minutes for a period of 6 minutes. The concentrate from the two pans were then combined and transported along a conveyor belt to a dewatering screen. Screened oversize material discharged onto a conveyor belt which transported the material to a concentrate bin. Screened undersize gravitated to the central sump where it was combined with the pan tailings slurry and pumped to the fine residue deposit.
Pan concentrate was withdrawn from the bin using two vibrating screens, the last of which was inclined with the introduction of water in the opposite direction, thereby removing any vegetation. Screen undersize and vegetation discharged into a central sump, which in turn gravitated into a central sump where it was pumped to the Klipdam process water dam. Oversize from the screen discharged into an attritioner for X-ray FLOWSORT recovery preparation.
12.1.3.2 DMS Plant on Holpan
The DMS plant at Holpan was designed, fabricated and commissioned by Bateman (Fig. 12.2 and Plate 12.3). The gravels from the mining blocks were hauled to the 600 tph trommel screen at the treatment plant where all the +70mm material was removed to the oversize dump. The -70mm material fell through the rotating trommel screen onto the belt conveyor from where it was dumped onto a stockpile.
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The stockpiled material was fed into the 360tph Scrubber. During this process clay and other particles were washed and broken from the matrix. This allows for the liberation of the diamonds to take place. As the material exited the Scrubber it flowed over a double-deck vibrating screen with water sprays, removing the +30mm and -2mm material. The +30 mm material reported, via a conveyor, to the oversize surge bin, from where the material was dumped into the Volvo A40D ADT’s for transport to backfilling areas. The -2mm material was pumped as slurry to the de-sanding operation from where the +0.3mm was extracted for rehabilitation; the -0.3mm was sent to the fine residue deposits and the water was recycled.
Plate 12.4 DMS processing plant on Holpan (2007)
The washed and screen -30mm to +2mm material was then conveyed to the surge bin in front of the DMS preparation screen. The surge bin fed the preparation screen via a belt conveyor. At the preparation screen, ROM gravel was scalped to discard the +70mm fraction with the remaining -70mm fraction being washed and screened to yield a product ranging from +2.0 to -30.0 mm, suitable for treatment by the DMS plant before being mixed with the Ferro-Silicon (Fe-Si) in the mixing box.
The density of the Fe-Si was automatically kept at 2.7 g/cm³ by a density controller located in the Motor Control Centre. From the mixing box the material was pumped up to the separation unit, which consisted of a bank of 400mm cyclones where the material was separated based on density. The density of diamond is approximately 3.53 g/cm³ and it will report to the concentrate (‘heavies’/’sinks’) while the material lighter than 3g/cm³ will report to the tailings (‘lights’/’floats’). The DMS plant features a two-stream system to enable it to continue to operate at 50% capacity during maintenance of one half of the machine.
The concentrate reported to the concentrate vibrating screen, while the tailings reported to the tailings vibrating screen, where the Fe-Si was washed off. From the tailings vibrating screen, the tailings then dropped onto a conveyor which conveyed them to the tailings bin, from where the tailings would be Page 71
ROCKWELL DIAMONDS INC, KLIPDAM/HOLPAN MINE April 30, 2012 tipped into a Volvo A40D ADT for transport to the backfilling areas.
ROOIKOPPIE GRAVEL ALLUVIAL GRAVEL RECEIVING GRAVEL
-400MM
-400+70MM TROMMEL SCREEN -70MM SECTION
STOCKPILE FOR SURGE
SCRUBBING DEGRITTING & -2MM SECTION -70+30M SCREENING (2 MODULES) -0.6MM -0.6MM PUDDLE -30+2MM -2+0.6MM
COARSE TAILS COMBINED BOKAMOSO TAILINGS PAN (BEE DISPOSAL SECTION BRICKWORK INITIATIVE) CONC. ALTERNATIVE
RECOVERY FINE RESIDUE REHABILITATIO PLANT DEPOSIT
Figure 12.3 Flowsheet for the processing and final recovery on Klipdam (Rockwell, 2007)
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ROOIKOPPIE GRAVEL ALLUVIAL GRAVEL RECEIVING GRAVEL SECTION
-400MM
-400+70MM TROMMEL ADDITIONAL SCREEN LOAD -70MM SECTION CAPACITY
STOCKPILE -70MM FOR SURGE
SCRUBBING & DEGRITTING -2MM SCREENING SECTION -70+30MM
-30+2MM -2+0.3MM -
COARSE TAILS COMBINED BOKAMOSO
TAILINGS DMS (BEE
DISPOSAL SECTION BRICKWORK
INITIATIVE) CONC.
ALTERNATIVE
RECOVERY SLIMES REHABILITATION PLANT DISPOSAL
Figure 12.4 Flow sheet for the processing and final recovery on Holpan (Rockwell, 2007)
12.1.3.3 Final Recovery
The concentrate was conveyed, via a jet pump, to the top of the Final Recovery room where the concentrate was first screened into three size fractions. All fractions were then passed through six X-ray FLOWSORT units (three double-pass systems).
Tailings from the FLOWSORT process were, then, passed over grease belts equipped with automated recovery systems, the purpose being to ensure that any diamonds that failed to report to the FLOWSORT (through non- X-ray fluorescence or due to equipment malfunction) were also recovered. The final concentrate was then passed to the picking cabinets in which the material passed over small vibrating feeders to enable easy hand-picking of diamonds. Page 73
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The final diamond recovery was done in a glove box (Plate 12.4), the hands of the picker being inserted into gloves attached to the cabinet, avoiding direct contact at all times. All diamonds picked were dropped into a drop safe at the bottom of the glove box.
Plate 12.5 Glove-box, in which the diamonds were sorted on Holpan
12.1.4 Drilling, sampling and recovery factors
Details regarding drilling, gravel thicknesses, and geological controls on deposition are presented in previous sections. A number of issues peculiar to alluvial diamond sampling in general have, however, been identified and these impact specifically on the size of the samples and the complexity of statistical estimations.
• Low grades The grade of a diamond deposit is the estimated number of carats contained in one hundred tonnes (cpht) or hundred cubic metres (ct/100m3) of gravel and, typically, averages ≤ 1cpht (roughly equivalent to 0.001 -0.0001ppm) for inland South African alluvial deposits (Lock, 2003).
• Large individual diamond size Diamonds constitute discrete units of varying size (weight). In all of the inland alluvial deposits of South Africa, average diamond sizes are in the range of 0.5-2.0ct/st. Consequently, they form discrete particle deposits as opposed to disseminated particle deposits. Often the size and value distribution from stone to stone is erratic and it is possible that the majority of the value of a parcel is attributed to a single stone.
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• Low homogeneity of diamond distribution Individual diamonds are not evenly or uniformly distributed throughout an alluvial deposit; neither are they randomly distributed. Rather, their distribution has been described as a random distribution of clusters of points (Fig. 12.5), where the clusters are both randomly distributed in space, and the point density of each cluster is also random (Rombouts, 1987).
Figure 12.5: Schematic distribution of alluvial diamonds within an alluvial deposit – random distribution of clusters of points (Rombouts, 1987).
• Depositional environments Alluvial streams are highly transient environments. The braided channels are unstable through time and gravel bars are formed and destroyed continuously. Shifting bars and channels cause wide variations in local flow conditions resulting in varied depositional assemblages. Common features in braided stream deposits include irregular bed thicknesses, restricted lateral and vertical variations within the sediments, and abundant evidence of erosion and re-deposition. On a broad scale, most deposits are complex with units of no great lateral extent. Locally, bedrock features play an important role in diamond concentration of the alluvial deposits, with diamonds occurring preferentially in natural traps such as gullies, potholes and gravel bars and, typically, reworked through one or more post-depositional colluvial or eluvial.
• Lack of associated minerals or geochemical signature In contrast to kimberlite deposits, alluvial diamond deposits are not characterized by any standard (or deposit-specific) satellite/indicator mineral assemblage that may occur in higher, more easily measureable, concentrations than the diamonds. The deposits also do not have any associated geochemical signatures that can vary according to diamond grade (or any other geological characteristic).
• Grade variation In a single gravel unit (or even within a few metres), diamond grades may vary from barren to over 100cpht, due to the development of localized trap-sites under favourable bedrock conditions, or hydraulic fractionation within a channel or bar. Consequently, the diamond distribution pattern (grade) of alluvial deposits is such that there is no repeatability of sample results, even from adjacent samples.
In order to account for all of these issues, alluvial diamond deposits can only be sampled through bulk- samples comprising tens-hundreds of thousands of cubic metres of gravel. Bulk-sampling is completed in much the same manner as the production mining would be, except on a smaller scale. With positive results, bulk-sampling naturally progresses to trial-mining, during which all of the modifying parameters are determined to allow a decision of whether to proceed to full production.
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Diamond recovery is dependent on mechanical recovery through the application of physical properties of both diamond and gravel – density and size variation (to concentrate the heavy mineral portion from the bulk gravel) and fluorescence and wettable properties of the diamond during final recovery. The processing and recovery plants are affected by various issues such as the nature and amount of calcrete in the gravels as well as the amount of clay in the matrix.
12.1.5 Sample Quality
As has been described above, alluvial diamond deposits can only be sampled through bulk-samples comprising tens-hundreds of thousands of cubic metres of gravel (often referred to as trial-mining). Further, the diamond distribution pattern (grade) of alluvial deposits is such that there is no repeatability of sample results, even from adjacent samples of tens of thousand cubic metres in size. Consequently “check-samples” such as are standard in the precious and base-metal industries, are not possible.
The fundamental issue with grade determination on Klipdam/Holpan mine is that, although the fluvial- alluvial and Rooikoppie gravels from the two mining blocks are excavated and processed separately, final recovery of the diamonds is combined. Consequently, it is unknown what the grade contribution of the fluvial-alluvial gravels is in comparison with the Rooikoppie gravels. It cannot even be assumed that the grade is contributed equally between these two gravel types. The recovered grade figure has no way of distinguishing how much Rooikoppie was mined and how much fluvial-alluvial gravel. So, any variation in grade may be related to the percentage of which gravel was mined, in addition to a host of other geological and production related issues. As a result, although it is possible to estimate gravel volume and diamond sales values for the two properties at an indicated resource classification, the grade remains at a slightly lower confidence level, due to this inherent uncertainty in the relative contribution of the Rooikoppie and fluvial-alluvial gravel units.
12.1.6 Representativeness
As can be seen from the sampling map, the bulk-samples are not taken along a systematic grid, neither are they sited so as to sample specific horizons. The key reasons for this are: • the extremely large size of the sample. • the anticipated mining plan for the properties is based on high volumes (and low grades) and, therefore, the samples have to address average recoveries. Consequently, samples are not sited so as to intersect areas of anticipated higher (or lower) grade. • the mining plan combines both Rooikoppie (colluvial) and fluvial-alluvial gravels. As a result, these units have not been sampled separately.
These issues notwithstanding, the samples have been sufficiently large so as to produce reliable results, as is shown by the repeatability of the grades in the subsequent mining programme.
12.2 Trial-Mining
This section covers the mineral processing and diamond recovery (trial-mining) on the Klipdam and Holpan operations from February 2009 – April 2012. During this period, 4,115,811m3 of gravel was excavated from the properties (Fig. 12.6).
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Figure 12.6 Location of mining activities during the period February 2009 – April, 2012
The excavation, mining, processing and final recovery methods are similar to those employed during the sampling phase of the operation, except for the volumes processed. These methods have been described in Section 12 and will not be repeated here, except to note that during late-2008 and 2009, minor improvements were made to the plants, namely: • During December 2008 – January 2009, Rockwell erected a new dewatering screen to the DMS plant on Holpan. This was built on-site by Rockwell staff, from existing equipment and materials. • During 2009, a second dewatering unit was built in the same manner and added to the Holpan DMS. • During 2009, small incremental improvements were also made to the Klipdam plant. These improvements mainly involved minor re-engineering and training.
12.2.1 Results
12.2.1.1 Grades
During the period February 2009 to April, 2012, some 4,115,811m3 was processed as part of the trial- mining exercise on Klipdam and Holpan mines (Table 12.2). The weighted average recovered grade was 1.03ct/100m3 (Table 12.3).
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Table 12.2: Production results from Klipdam/Holpan for Feb 2009 – 2012
Gravel treated (m3) Carats Produced # Stones
20 09 TOTAL TOTAL TOTAL Holpan Holpan Holpan Klipdam Klipdam Klipdam
Jan-09 43,250 49,073 92,323 521.74 258.80 780.54 550 251 801
Feb 65,780 58,506 124,286 498.99 150.03 649.02 437 134 571
Mar 70,789 72,260 143,049 529.30 322.94 852.24 372 306 678
April 74,141 59,894 134,035 579.55 513.45 1,093.01 613 483 1,096
May 81,614 58,080 139,694 1,029.16 512.10 1,541.26 1,060 453 1,513
Jun 111,784 89,611 201,395 1,430.90 831.98 2,262.88 1,574 747 2,321
Jul 82,862 89,801 172,663 1,201.01 815.59 2,016.60 1,306 788 2,094
Aug 87,121 93,710 180,831 1,073.42 869.13 1,942.55 1,252 903 2,155
Sep 85,674 74,595 160,269 553.95 460.93 1,014.88 612 444 1,056
Oct 77,604 57,535 135,139 930.22 372.80 1,303.02 1,217 303 1,520
Nov 64,718 50,434 115,152 913.21 452.70 1,365.91 1,196 445 1,641 Sub- 845,337 753,499 1,598,836 9,261.45 5,560.45 14,821.90 10,189 5,257 15,446 total
Gravel treated (m3) Carats Produced # Stones
2010 TOTAL TOTAL TOTAL Holpan Holpan Holpan Klipdam Klipdam Klipdam
Jan-10 37,978 36,292 74,270 466.57 363.62 830.19 557 334 891
Feb 55,604 65,207 120,811 463.54 732.89 1,196.43 628 550 1,178
Mar 57,326 57,764 115,090 595.09 681.53 1,276.62 718 582 1,300
April 64,413 66,317 130,730 892.02 507.35 1,399.37 950 381 1,331
May 94,344 74,949 169,293 1463.96 826.93 2,290.89 1,636 503 2,139
Jun 89,027 81,509 170,536 595.18 730.56 1,325.74 802 464 1,266
Jul 78,084 74,920 153,004 690.55 932.04 1,622.59 703 494 1,197
Aug 69,815 87,187 157,002 807.94 448.96 1,256.90 921 320 1,241
Sep 91,768 86,771 178,539 1,492.65 570.31 2,062.96 1,513 353 1,866
Oct 84,207 78,264 162,471 1,245.61 736.95 1,982.56 1,324 362 1,686
Nov 79,275 67,994 147,269 1,018.15 823.87 1,842.02 970 608 1,578 Sub- 801,841 777,174 1,579,015 9,731.26 7,355.01 17,086.27 10,722 4,951 15,673 total
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Gravel treated (m3) Carats Produced # Stones
20 11 TOTAL TOTAL TOTAL Holpan Holpan Holpan Klipdam Klipdam Klipdam
Mar 72,351 44,642 116,993 751.80 539.75 1,291.55 750 616 1,366
April 61,546 24,300 85,846 451.16 307.82 758.98 562 277 839
May 60,295 4,954 65,249 629.35 55.00 684.35 598 79 677 Jun 55,087 55,087 422.38 0.75 423.13 296 2 298 Jul 50,160 50,160 671.05 559 Aug 59,020 59,020 637.03 579 Sep 64,048 64,048 728.92 645 Oct 65,003 65,003 616.52 632 Nov 65,115 65,115 811.29 940 Dec 36,949 36,949 180.72 233 Sub- 589,574 73,896 663,470 5,900.22 903.32 6,803.54 5,794 974 6,768 total
Gravel treated (m3) Carats Produced # Stones
20 12 TOTAL TOTAL TOTAL Holpan Holpan Holpan Klipdam Klipdam Klipdam
Jan-12 63,877 63,877 1,132.21 1,132.21 1,258 1,258 Feb 56,810 56,810 736.89 736.89 763 763 Mar 75,048 75,048 902.83 902.83 930 930
April 78,755 78,755 798.62 798.62 969 969
Sub-total 274,490 274,490 3,570.55 3,570.55 3,920 3,920
2009- 2,511,242 1,604,569 4,115,811 28,463.48 13,818.78 42,282.26 30,625 11,182 41,807 2012
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Table 12.3: Recovered grades for the period 2009/2012
2009 Klipdam Holpan TOTAL 2010 Klipdam Holpan TOTAL Feb 1.21 0.53 0.85 Jan-10 1.23 1.00 1.12 Mar 0.76 0.26 0.52 Feb 0.83 1.12 0.99 April 0.75 0.45 0.60 Mar 1.04 1.18 1.11 May 0.78 0.86 0.82 April 1.38 0.77 1.07 Jun 1.26 0.88 1.10 May 1.55 1.10 1.35 Jul 1.28 0.93 1.12 Jun 0.67 0.90 0.78 Aug 1.45 0.91 1.17 Jul 0.88 1.24 1.06 Sep 1.23 0.93 1.07 Aug 1.16 0.51 0.80 Oct 0.65 0.62 0.63 Sep 1.63 0.66 1.16 Nov 1.20 0.65 0.96 Oct 1.48 0.94 0.83 Dec 1.41 0.90 1.19 Nov 1.28 1.21 1.25 Sub-total 1.10 0.74 0.93 Sub-total 1.21 0.95 1.08
2011 Klipdam Holpan TOTAL 2012 Klipdam Holpan TOTAL Feb 1.77 1.77 Mar 1.04 1.21 1.10 1.30 1.30 April 0.73 1.27 0.88 1.20 1.20 May 1.04 1.11 1.05 1.01 1.01 Jun 0.77 0.77 Jul 1.34 1.34 Aug 1.08 1.08 Sep 1.14 1.14 Oct 0.95 0.95 Nov 1.25 1.25 Dec 0.49 0.49 Sub-total 0.98 1.00 Sub-total 1.30 1.30
This weighted average mine grade (1.03ct/100m3) is somewhat higher than the average sample recovered during 2006/2008 (0.72ct/100m3). This is, in part, the result of improved mining practices resulting in lower dilution of the gravel grade. Further, increased plant efficiencies have increased diamond recoveries significantly.
In addition, Rockwell’s trial-mining studies have indicated that the Rooikoppie gravels can be subdivided into two groups, on the basis of their sand content. The more sandy gravels are proving problematic for the current plant configuration, resulting in low diamond recoveries. Consequently, from 2010, Rockwell processed only the non-sandy colluvial gravels which, in turn, resulted in an increased recovered grade. If the sandy gravels were to be added back into the equation, then the recovered grade would be expected to be around 0.84ct/100m3 – still slightly higher than the bulk-sample grade, due to increased mining and processing efficiencies. Page 80
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12.2.1.2 Values
During the period February 2009 – April 2012, a total of 40,627.76ct were sold for a combined average of USD791/ct (Table 12.4). However, looking in a little more detail, it is apparent that diamond sales for 2009 were still deflated (after the international economic crisis of 2008). From March 2010, sales values (USD1,049/ct for Klipdam and USD1,229/ct for Holpan, with a weighted average of USD1,129/ct) returned to good levels, although still somewhat lower than 2007 and early 2008.
Table 12.4: Diamond sales figures for Klipdam and Holpan for 2009/2010.
Month Carats USD Revenue USD/ct Klipdam Holpan Klipdam Holpan Klipdam Holpan Feb-09 1,471.62 704.72 613,618.00 222,509.00 416.97 315.74 April 1,001.24 439.77 569,656.06 93,834.89 568.95 213.37 May 575.44 436.36 302,309.26 144,339.95 525.35 330.78 June 1,042.36 612.39 599,345.27 332,409.73 574.99 542.81 July 916.36 453.60 286,318.70 622,554.00 312.45 1,372.47 Aug 1,176.78 863.59 1,399,386.00 248,529.00 1,189.17 287.79 Nov 2,350.13 1,741.80 1,316,575.06 388,419.54 560.21 223.00 Total 2009 8,533.93 5,252.23 5,087,208.35 2,052,596.11 596.12 390.80 Jan-Feb 10 2,206.60 1,182.49 1,191,595.66 1,114,245.69 540.01 942.29 March-May 1,390.57 1,513.79 867,694.51 2,233,774.01 623.98 1,475.62 June-July 1,412.55 1,011.02 589,550.49 945,232.08 417.37 934.93 Aug 2,214.74 2,206.10 1,454,659.30 3,246,209.86 656.81 1,471.47 Oct 2,248.95 1,029.26 2,910,744.88 999,513.62 1,294 971.10 Nov 472.27 383.06 2,223,690 433,304 4,709 1,131 Total 2010 9,754.32 7,119.95 9,110,994.42 8,413,311.23 934 1,182 Q1 1,429.49 198.60 1,476,902.88 107,510.28 1,033 541.34 Q2 1,393.48 945.49 1,445,327.70 993,575.41 1,037 2,426.18 Q3 1,990.45 1,356,386.21 681 Q4 2,512.58 1,269,316.76 505 Total 2011 7,326.00 1,144.09 5,547,933.55 1,101,085 757 962 Q1 1,497.24 841,286.22 561.89 Total 2012 1,497.24 841,286.22 561.89 27,111.49 13,516.27 20,587,422.54 11,566,993.03 759 856 TOTAL 40,627.76 32,154,415.57 791
During 2011/2012, 9,967.33cts were sold from the Klipdam project for an average of USD751/ct (8,823.24ct at USD724/ct from Klipdam mine and 1,144.09ct at USD962/ct from Holpan mine). Included
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in these parcels were some 43 stones (+9.8ct/st), which sold for USD2,530/ct. These comparatively low values on Klipdam appear to be related to the gravels which were mined during this period. As described in this document, Rockwell concentrated on mining non-sandy colluvial gravels from late 2010 . However, for the most part, these areas comprised gravels that had previously been mined by artisanal diggers. The diggers had taken out most of the bigger, higher quality stones, leaving lower value stones behind.
12.2.1.3 Diamond Size Distribution
During February 2010, Dr M M Oosterveld analysed the diamonds recovered from the Klipdam and Holpan operations during 2007-2009 (Oosterveld, 2010). The purpose of this analysis was to investigate the occurrence of stones larger than 10ct.
HOLPAN
In a production of 18,274ct during 2007-2009, some 124 stones larger than 10ct/st were recovered. The cumulative frequency with respect to size (Fig. 12.7a) shows that, from +10ct to +40ct the graph is fairly straight, through which a linear model was fitted. Comparison of the observed results against the modelled results shows that in the +60ct size class, four stones were recovered against an expectation of two-three stones and that in the 100ct size class, one stone was recovered against an expectation close to one. These differences are most likely caused by the variability in the occurrence of larger stones and there is no indication that stones are lost due to theft or recovery efficiency.
(a) (b)
Figure 12.7: Model for large stones for (a) Holpan and (b) Klipdam (Oosterveld, 2010)
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KLIPDAM
The same procedures were followed as for Holpan. Comparison of the observed results against the modelled results (Fig. 12.7b) shows that in the +60ct size class, they were equal at seven stones and in the +100ct size class, two stones were recovered while nearly three could be expected. There are no indications of the loss of larger stones. For upper cut-off screensize and/or crushing consideration (if crushing is done) a calculation was done of how many stones could be expected in a production of 100,000ct (Ref. Table 12.5). By end 2009, only 21,657ct had been recovered.
For upper cut-off screensize and/or crushing considerations, a calculation was done to forecast how many large stones could be expected in a production of 100,000ct (Table 12.5). By end 2009, Rockwell had only recovered some 18,274 ct from Holpan. To produce a +400C stone from this deposit, on average a minimum production of 500,000ct would be required.
Table 12.5: Estimation of the number of large stones expected on Holpan and Klipdam
Holpan Klipdam Stone size Expected # stones Recovered in Expected # stones Recovered in (Carats) (in 100,000ct) 24,068cts (in 100,000ct) 29,124cts 2007-(2010) 2007-(2010) +60 13 5 33 10 +100 4 2 13 3 +200 1 4 +400 1
During 2009/2012, a total (Klipdam and Holpan) of 42,282.26cts were recovered (41,807 stones) for an average stone size of 1.01ct/st (Fig. 12.8). Stones +2.5ct/st make up +80% of the value of the Klipdam/Holpan diamonds, although they represent little more than 10% of the population.
Stones
8,000
7,000 6,000 5,000 4,000 3,000 2,000 Number of of Number Stones 1,000 0
Diamond Sizes (Ct)
Figure 12.8: Diamond size frequency for the combined Klipdam/Holpan population
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During the bulk-sampling exercise, diamond sizes averaged around 2ct/st; trial-mining average is 1.01ct/st. The decrease in average recovered stone size is not a reflection on a deteriorating ore-body but, rather, as a result of increased processing/plant efficiencies, recovering smaller stones that, previously, were lost.
12.3 Representativeness
As can be seen from Fig. 12.6 the trial-mining is representative of the areas which have been drilled on a detailed grid (and classified as Indicated Resource – see section 13 for details). Areas still classified as Inferred Resources have not yet been trial-mined.
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13 MINERAL RESOURCE ESTIMATE
None of the major international codes deal specifically with the peculiarity of alluvial diamonds when it comes to resource or reserve estimations. The reason for this is that, typically, alluvial diamond companies have not, historically, been significant public companies (other than De Beers) that have required guidance in these matters.
A Mineral Resource8 is a concentration or occurrence of material of economic interest in or on the earth’s crust in such form, quality and quantity that there are reasonable and realistic prospects for eventual economic extraction. The location, quantity, grade, continuity and other geological characteristics of a Mineral Resource are known, or estimated from specific geological evidence, sampling and knowledge interpreted from an appropriately constrained and portrayed geological model. Mineral Resources are subdivided, and must be so reported, in order of increasing confidence in respect of geoscientific evidence, into Inferred, Indicated or Measured categories. .... Portions of a deposit that do not have reasonable and realistic prospects for eventual economic extraction are not included in a Mineral Resource.
The Indicated and Inferred Resource categories used in this Report follows the CIM (2005) definition. The resultant estimations are materially similar to those set out in the SAMREC Code (2009), which includes a diamond specific definition.
CIM Standards define9 Inferred Resources as: “that part of a Mineral Resource for which quantity and grade or quality can be estimated on the basis of geological evidence and limited sampling and reasonably assumed, but not verified, geological and grade continuity. The estimate is based on limited information and sampling gathered through appropriate techniques from locations such as outcrops, trenches, pits, workings and drill holes.”
Due to the uncertainty that may be attached to Inferred Mineral Resources, it cannot be assumed that all or any part of an Inferred Mineral Resource will be upgraded to an Indicated or Measured Mineral Resource as a result of continued exploration. Confidence in the estimate is insufficient to allow the meaningful application of technical and economic parameters or to enable an evaluation of economic viability worthy of public disclosure. Inferred Mineral Resources must be excluded from estimates forming the basis of feasibility or other economic studies.
For comparison, the SAMREC code defines an Inferred (Diamond) Resource as: “that part of a Diamond Resource for which tonnage or volume, grade and average diamond value can be estimated with a low level of confidence. It is inferred from geological evidence and assumed, but not verified, geological and grade continuity and a sufficiently large diamond parcel is not available to ensure a reasonable representation of the diamond assortment. It is based on information gathered through appropriate techniques from locations such as outcrops, trenches, pits, workings and drillholes that may be limited or of uncertain quality and reliability.”
This category, which has a lower level of confidence than that applying to an Indicated Mineral Resource is intended to cover situations where a mineral concentration or occurrence has been identified and limited measurements and sampling completed, but where the data are insufficient to allow the
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geological and/or grade continuity to be confidently interpreted. Due to the uncertainty which may be attached to some Inferred Mineral Resources, it cannot be assumed that all or part of an Inferred Mineral Resource will necessarily be upgraded to an Indicated or Measured Mineral Resource as a result of continued exploration. Further, confidence in the estimate is insufficient to allow the meaningful application of technical and economic parameters or to enable an evaluation of economic viability worthy of public disclosure.
CIM defines Indicated Resources as: “ that part of a Mineral Resource for which quantity, grade or quality, densities, shape and physical characteristics, can be estimated with a level of confidence sufficient to allow the appropriate application of technical and economic parameters, to support mine planning and evaluation of the economic viability of the deposit. The estimate is based on detailed and reliable exploration and testing information gathered through appropriate techniques from locations such as outcrops, trenches, pits, workings and drill holes that are spaced closely enough for geological and grade continuity to be reasonably assumed.”
Mineralization may be classified as an Indicated Mineral Resource by the Qualified Person when the nature, quality, quantity and distribution of data are such as to allow confident interpretation of the geological framework and to reasonably assume the continuity of mineralization. The Qualified Person must recognize the importance of the Indicated Mineral Resource category to the advancement of the feasibility of the project. An Indicated Mineral Resource estimate is of sufficient quality to support a Preliminary Feasibility Study which can serve as the basis for major development decisions.
The 2007 SAMREC code defines an Indicated (Diamond) Resource as: “that part of a Diamond Resource for which tonnage and volume, densities, shape, physical characteristics, grade and average diamond value 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 drillholes. The locations are too widely or inappropriately spaced to confirm geological and grade continuity but are spaced closely enough for continuity to be assumed and sufficient diamonds have been recovered to allow a reasonable estimate of average diamond value.”
The confidence level associated with the Indicated Mineral Resource is sufficient for this information to be applied to global mine design, mine planning; to allow the appropriate application of technical and economic parameters; and to enable an evaluation of economic viability.
13.1 Previous Resource Estimates
13.1.1 De Decker & Associates Resource Evaluation Report (2006)
In March of 2006, De Decker and Associates completed a NI43-101 compliant technical report on the Klipdam/Holpan properties for Rockwell Ventures Inc. A total of 3,243 boreholes with a combined depth of 14,486m were drilled on Holpan-Klipdam between 1994 and 2007. Boreholes were spaced at 50 m intervals along traverses 100 m apart. As of January 2006, the drilling programme, supported by bulk sampling test work and field observation, had outlined a gravel resource of approximately 7,500,000m3 of Rooikoppie and 4,300,000 m3 of Primary gravel on the Holpan-Klipdam properties (Table 13.1). A simple aggregated global average diamond grade of 1.16 ct/100 m3 was accepted,
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based on bulk sampling results. For the period June 2003 to December 2005, the average diamond value was USD848 per carat. The continuity of the geology and mineralisation, together with the degree of confidence in grade and stone value are considered sufficient to classify the diamondiferous gravels, as an Inferred Resource. The production information used to support this contention was derived from a mined volume of 3,267,400m3 and a total of 37,809 carats. It was, further, estimated that 4,800,000m2 of gravel that is visually similar to the Rooikoppie gravels (and, as such would be considered an exploration target), surrounds the area of the inferred resource.
Table 13.1: 2006 Resource estimate for Holpan-Klipdam (De Decker, 2006)
Volume of Gravel Grade Average Value Gravel Resource Resource Category (m3) (ct/100m3) (USD/ct) Holpan 1,659,971 Palaeochannel Klipdam 3,035,920 1.16 848 Palaeochannel Inferred Rooikoppie (Holpan 7,643,776 & Klipdam)
TOTAL 12,339,667 1.16 848
13.1.2 Explorations Unlimited (March 2007, November 2007, May 2008)
Since the publication of the DDA report in March 2006 mining at both properties concentrated on Rooikoppie gravels. The (calcreted) palaeo channel basal (palaeochannel) gravels comprised only a minimal proportion of the mine production and the resource figures for these units remained unchanged from the DDA report. Depleting the volumes of Rooikoppie gravels mined and processed during the period January 2006 to March 2007, the resources estimated to exist on the Klipdam/Holpan properties is identified in Table 13.2. Based on the sale of 15,938 carats through Flawless Diamonds (Pty) Ltd during 2006/2007, the average value of the Holpan-Klipdam diamonds is USD876/ct.
The resources of March 2007 were estimated by Rockwell’s Manager, Resources, G. Norton, (Pr. Sci. Nat.), a qualified person who is not independent of the Company and reviewed by T.R. Marshall, PhD, (Pr. Sci. Nat.), a qualified person who is independent of the Company and is responsible for the estimate.
Table 13.2 Resource statement as at March 2007
Description of DDA gravel Volume of Gravel Volume of Gravel Sampled Grade Gravel Resource Volume (m3) mined (m3) remaining (m3) (ct/100m3) Holpan Primary 1,659,971 ------1,659,971 Gravel 1.16 Klipdam Primary 3,035,920 ------3,035,920 Gravel Rooikoppie (Holpan 7,643,776 1,889,308 5,754,468 0.81 and Klipdam) TOTAL 12,339,667 10,450,359 0.95
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The 2007 close-spaced drilling programme on the Klipdam fluvial-alluvial (palaeochannel) gravels has increased the confidence in the presence of diamondiferous gravels and has, further, refined the resource estimate for this deposit. Since no separation of resources into Rooikoppie / fluvial alluvial deposits was made at the time, and the two properties were combined into a single mining entity, it was decided to present a single resource (Table 13.3).
Depleting the volumes of Rooikoppie gravels mined and processed during the period January 2006 to October 2007 and supplementing the resources with volumes defined by the new drill data, the October 2007 estimate of mineral resource is tabulated below. They were estimated by Rockwell’s Manager, Resources, G. Norton, (Pr. Sci. Nat.), a qualified person who is not independent of the Company and reviewed by T.R. Marshall, PhD, (Pr. Sci. Nat.), a qualified person who is independent of the Company and is responsible for the estimate.
Table 13.3 Resource statement as at October 2007
Resource Volume of Mining/sampling Sales Values Classification gravel (m3) grade (ct/100m3) (USD/ct) TOTAL GRAVEL (Rooikoppie and Inferred 9,227,000 0.82 1,040 fluvial-alluvial)
Based on the sale of 24,783.82 carats through Flawless Diamonds (Pty) Ltd during the entire production period of 2006/2007, the average value of the Holpan-Klipdam diamonds was USD 1,040/ct. This figure was increased from the previous value of USD 848/ct as a result of the improved market for larger stones. During the period 31 October 2007 – 31 May 2008 the resources outlined above were, further, depleted by mining activities. Some 893,400m3 of mixed Rooikoppie and calcreted fluvial-alluvial gravel was processed to recover 7,951.26ct at an average grade of 0.89ct/100m3. These diamonds were sold on the open market for an average of USD1,318/ct. The increase in average diamond value was attributed, in part, to the worldwide increase in the value of gemstones as well as to the recovery of a number of large (+50ct) stones. The sample grade of 0.89ct/100m3 was due to a combination of improved grade control coupled with the mining of virgin Rooikoppie and fluvial-alluvial gravels. The weighted average grade, however, increased from 0.82ct/100m3 to 0.83ct/100m3.
The updated resource statement as at 31 May 2008 is given below (Table 13.4). They were estimated by Rockwell’s Manager, Resources, G. Norton, (Pr. Sci. Nat.), a qualified person who is not independent of the Company and reviewed by T.R. Marshall, PhD, (Pr. Sci. Nat.), a qualified person who is independent of the Company and is responsible for the estimate.
Table 13.4 Resource statement as at May 2008
Inferred Ave Grade Ave Value Resources (ct/100m3)* (USD/ct) TOTAL GRAVEL (Rooikoppie and 8,334,000 0.83 1,318 fluvial-alluvial) TOTAL 8,334,000 0.83 1,318 * At a bottom cut-off of 2mm10
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13.1.3 Explorations Unlimited (December, 2009)
During 2008 over 7,000cts were sold for over USD2,500/ct as a result of the positive diamond market. However, since late 2008 diamond prices fell dramatically, as evidenced by the average sales figures in February 2009 of USD130-190/ct. Rockwell sold stones from Klipdam and Holpan separately over much of 2008. No diamonds were sold from these mines during November 2008 to February 2009 due to the dramatic drop in international diamond prices. Rockwell modelled that the 2009 diamond prices would approximate 50% of the 2008 value, namely USD915/ct for Klipdam and USD671/ct for Holpan.
The updated resource statement as at 28 February 2009 is given below (Table 13.5). The resources were estimated by Rockwell’s Manager, Resources, G. Norton, (Pr. Sci. Nat.), a qualified person who is not independent of the Company and reviewed by T.R. Marshall, PhD, (Pr. Sci. Nat.), a qualified person who is independent of the Company and is responsible for the estimate.
Table 13.5: Resource statement as at 28 February 2009
Description of Volume* of Gravel Volume* of Gravel Grade Value Gravel Resource (m3) at Inferred (m3) at Indicated (ct/100m3) (USD/ct) Classification Classification Holpan Fluvial- 294,000 alluvial Gravel 2008 -1,157 0.74 Holpan Rooikoppie # 5,643,000 1,137,300 2009 - 671 gravel Klipdam Fluvial- 1,504,163 alluvial Gravel 2008 - 3,892 0.91 Klipdam # 1,312,000 1,135,200 2009 - 915 Rooikoppie gravel TOTAL 8,753,163 2,272,500 0.84 ∗ Volumes fully diluted of sampling and mining for the period 2008-Feb2009 (Totals rounded off) # Modelled values for 2009 (by Rockwell, 2009)
13.1.4 Explorations Unlimited (November, 2010)
During March-November 2010, Rockwell has sold some 13,485.18ct of diamonds through open tender to Flawless Diamonds during 2010 for an average recovered value of USD1,129/ct (USD1,229/ct for Holpan and USD1,049/ct for Klipdam). The Indicated and Inferred resource estimate for the project as at 30 November 2010 are summarised in Table 13.6). They were estimated by Rockwell’s Manager, Resources, G. Norton, (Pr. Sci. Nat.), a qualified person who is not independent of the Company and reviewed by T.R. Marshall, PhD, (Pr. Sci. Nat.), a qualified person who is independent of the Company and is responsible for the estimate.
Table 13.6: Resource statement for the Klipdam/Holpan mine as at 30 November 2010
Description of Gravel Volume* of Gravel Volume* of Gravel Grade# Value Resource (m3) at Indicated (m3) at Inferred (ct/100m3) (USD/ct) Classification Classification Holpan Fluvial-alluvial 517,800 527,000 0.95 1,229
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Holpan Rooikoppie Klipdam Fluvial-alluvial 989,100 1.21 1,049 Klipdam Rooikoppie 1,102,100 949,000 Erf 2004, Windsorton 404,700 127,000 0.63 986 TOTAL 3,013,700 1,603,000 ∗ Volumes fully diluted of sampling and mining for the period 2008-Nov 2010 (Totals rounded off to reflect the fact that it is an approximation.) # Grade estimated with bottom cut-off stone size at 2mm
The significant decrease in resource volume from the previous year was as a result of Rockwell reporting only non-sandy colluvial gravels as a resource. As a result some 5-6Mm3 of gravel was removed from the resource classification and reported as exploration potential. It is important to note that this gravel was removed from the resource classification because of mining and processing parameters imposed by Rockwell for themselves and not for any geological reason.
13.2 Current (2012) Resource Estimation
13.2.1 Key Assumptions
This study has applied the following criteria for the estimation of indicated and inferred resource estimates:
Indicated Resources • Of primary importance is the confidence that can be placed on the volume model. Rockwell has implemented a system whereby the volumes of mined out areas are regularly reconciled with the volumes predicted by the drilling. Where a good correlation is found (within 10% annually with a variance of less than 15% on a monthly basis) then adjacent areas are considered for indicated resource category; • A minimum drilling grid of 100x50m is preferred, except where mining has indicated both geological and grade continuity. • An indicated resource has to lie within 250m of a reference bulk-sampling pit from which a minimum of 3,000 – 5,000cts have been recovered (for confidence in the grade and value estimations). • Similarly, the geological environment is considered – indicated resource gravels need to lie within the same geological environment (channel or overbank, for example) as the reference bulk-sample.
Inferred Resources • A minimum drill grid on 200x200m • A minimum of 500cts from the property (for grade and value estimation) • Similar broad geological environment (same terrace, for example and same gravel type – no extrapolation from Rooikoppie to fluvial-alluvial units).
It is noteworthy that no Measured Resources are estimated on Rockwell properties. The CIM and SAMREC codes define Measured Resources as:
“that part of a Diamond Resource for which tonnage and volume, densities, shape, physical characteristics, grade and average diamond value can be estimated with a high
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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 drillholes. The locations are spaced closely enough to confirm geological and grade continuity and sufficient diamonds have been recovered to allow a confident estimate of average diamond value.”
Measured Resources, thus, cover the situation where all of these features can be estimated with a high level of confidence – sufficient to confirm geological and grade continuity.
Alluvial diamond deposits are well known for their extreme inhomogeneity and low grades (Fig. 13.1). The resulting scenario makes it extremely difficult to estimate the required parameters to a “high level of confidence” (with the exception of diamond value) without over-capitalising the project. Dr. M M Oosterveld, an acknowledged expert in the field of diamond distribution, has indicated that even kimberlite deposits may not be evaluated in terms of measured resources (Lock, 2003). He points to the Orapa kimberlite mine as an example where, although the grade over time has run at some 60cpht, the De Beers ore reserve managers still do not feel that they can claim a measured resource with full confidence.
Figure 13.1: The extremely low concentrations of diamonds, combined with low homogeneity results insignificant difficulties in the evaluation of alluvial diamond deposits (after Lock, 2003)
The industry standard for reserve estimation on alluvial diamond mines, based heavily on the De Beers alluvial deposits of Namaqualand and Namdeb, is to estimate slightly more than two years of Probable Reserves (at prevailing trial-mining production rates), two/three years of Indicated Resources and multiple years of Inferred Resources. As the reserves are consumed, there is a continuous cycle of resource/reserve rollover.
13.2.2 Volume
Estimation of resource volume is calculated in Gemcom Surpac (v 6.0.1): • All borehole data is imported into Surpac which has numerous internal validation routines, ensuring data integrity. Bedrock elevation and gravel thickness maps are created, primarily to identify first- pass targets and geological anomalies. • The data is then used to create DTM’s. Page 91
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• Separate DTM’s are created for the bottom and top contacts of the gravel units. All boreholes that do not have gravel intersections are excluded from the model. The envelope around the boreholes was extended to one-half of the drill interval. • Constraining strings (mined out areas, farm boundaries, for example) are created. During this process all isolated outlier points are deleted from the data, in order not to introduce spurious errors. • A block model is then created, based on the external limits of the DTM. The block size is based on the geology – 1m3 has been used for the fluvial-alluvial sequence and 1x1x0.3m was used for the Rooikoppie unit. All partial blocks are excluded from the model, resulting in a fairly conservative result • The model is then, further constrained by the two DTM’s and the constraining strings, producing a volume.
Based on the criteria described above, the gravel volumes identified in the drilling programme for the Klipdam/Holpan properties (section 10) were classified as Indicated or Inferred, or not classified as a resource, as appropriate. The figures for the mineral resources represent volumes available in the ground, fully depleted of material removed by the bulk-sampling and trial-mining programmes.
13.2.2.1 Specific Density
Specific Gravity (SG) measurements are not routinely completed on alluvial gravels. SG’s of gravels vary considerably from unit to unit due to moisture, clay and heavy mineral contents and conversion to tonnages tend to compound problems rather than simplify them. Regional averages for specific densities of alluvial gravels can vary from as low as 1.6T/m3 to over 2.4T/m3, where the gravels contain large percentages of Banded Iron Formation (BIF). Typically, fluvial-alluvial gravels average 1.8T/m3 and Rooikoppie deposits are somewhat higher, as 2T/m3.
All mining, processing and reconciliation on the Klipdam project is done using gravel volumes and not tonnages. However, for the purposes of individuals wishing to estimate tonnages, an average of 1.85T/m3 can be assumed for these deposits, as well as for other similar gravels along the middle Vaal River (the marginally higher value being due to the impact of the Rooikoppie gravels that are processed along with the fluvial-alluvial gravels).
13.2.3 Diamond Grade
The grade of a diamond deposit is the estimated number of carats contained in one hundred tonnes (cpht) or hundred cubic metres (ct/100m3) of gravel. Alluvial diamond grades are often measured in carats per unit of volume due to the problems associated with accurately predicting the bulk density of gravels, which are highly variable over short distances due to the relative pebble to sand content of the gravel and the pebble rock type. In this report, grades are reported in ct/100m3 and relate to the resources identified in this document and are based on grades recovered through Rockwell's production facility. It is vital to note that different processing plants and/or methods may not result in the same grades being recovered. In addition, it is noteworthy that, in this report, resource grades are based on bulk-sample and run-of mine recoveries – there is no such thing as “in-situ” grades, adjusted for processing parameters.
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13.2.3.1 Cut-off Grades
Cut-off grades are not entirely pertinent to alluvial diamond mines since grade is not the only gauge of profitability. A far more relevant measure is the cut-off sieve/screen size, as diamond size more closely approximates value. Although more stones may occur in the smaller size fractions, these do not make up the bulk of the value. Also, although the very large stones may contain high value, they may make up so small a percentage of the population that the additional cost of processing larger size fractions may tender their recovery uneconomical. Consequently, any mining operation has an optimum range of stone size recovery where realised value exceeds input costs. On both Klipdam and Holpan, Rockwell used a bottom cut-off (or minimum) sieve size of 2mm and a top cut-off (maximum) screen size of 40mm.
13.2.4 Diamond Value
Diamond values are quoted as USD/ct. Valuation of the better quality diamonds, which normally constitute most of the inherent value of the deposit, tends to be subjective and is best determined by sales values obtained on the open market in a free trading economy.
13.2.5 Resource Statement
The resources as at 30 April, 2012 (Table 13.7, Fig. 13.2) were estimated by Rockwell’s Manager, Resources, G. Norton, (Pr. Sci. Nat.), a qualified person who is not independent of the Company and reviewed by T.R. Marshall, PhD, (Pr. Sci. Nat.), a qualified person who is independent of the Company and is responsible for the estimate.
Table 13.7: Resources on the Klipdam/Holpan Mine, as estimated at 30 April, 2012
Property Gravel Type Indicated Inferred Grade Value Resource Resource (ct/100m3) (USD/ct) Fluvial alluvial Holpan Rooikoppie 1,378,401 4,858,938 0.80 962 Fluvial alluvial 989,100 1.03 Klipdam Rooikoppie 1,528,900 1,112,000 0.82 724 Erf 2004/1 Rooikoppie 684,800 1,851,000 0.87 TOTAL 4,581,200 7,822,000 0.84 751
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Figure 13.2: Resource estimation on the Klipdam project at 30 April 2012 13.2.6 Resource Reconciliation
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Since 2005, mining concentrated on the Rooikoppie deposits, although some 30% of fluvial-alluvial gravels have been mined more recently. Historically, these gravels have been known to have a lower average grade than the basal alluvial gravels of the palaeochannel, but the average diamond sizes have been higher in the Rooikoppie – hence the penchant for mining them ( HC van Wyk, pers.com). With additional prospecting on the fluvial-alluvial gravels, especially on Klipdam, combined with the mining of large-boulder colluvial gravels, the grade on Klipdam continued to increase – from 0.83ct/100m3 in 2006 to some 1.21ct/100m3 during 2007. During 2008 and 2009 the average grade on Holpan had decreased to 0.74ct/100m3 but then increased to 0.92ct/100m3 in 2010. Not only did this situation reflect the geology of the gravels mined on the two properties, but also the fact that processing efficiencies have improved greatly on both mines. With respect to the geological factors, more virgin fluvial-alluvial gravels (with higher average grade) were mined on Klipdam than on Holpan, combined with the fact that the known Rooikoppie on Klipdam contains larger boulders, a situation that, typically, traps more and larger diamonds. Then, during 2011/2012, the average grade increased dramatically to 1.03ct/100m3. This reflected the fact that, during this period, Rockwell only processed non-sandy colluvial material which had a much higher grade and was much easier to process through the plant without requiring significant modification (to deal with the sand). Without these constraints, the average grade for the same period would have been approximately 0.84ct/100m3 – similar values to those recovered from the Klipdam project since 2006. Further, in comparison with 2010 data, the 2012 resource inventory reflected a significant increase in resource volume. This was due to the fact that Rockwell was reporting only non-sandy colluvial gravels. However, when compared to the 2009 resource data, the volumes reflect normal depletion combined with increases attributable to additional drilling.
Figure 13.3 shows the correlation between sampled grade and recovered grade over the period January 2007 to February 2012, for the combined Klipdam project production. It is important to note that the monthly mine grade can vary significantly, as a result of internal variations in diamond concentrations, whereas the long-term average recovered mine grades (as depicted by the linear trend) are relatively smooth.
Mine Grade 43101 Grade Linear (Mine Grade)
2.00 1.80 1.60 1.40 1.20 1.00 0.80 0.60 0.40 0.20 0.00
Figure 13.3 Correlation between estimated and recovered grade on Klipdam/Holpan (January 2007 – February 2012) 13.2.7 Prospecting and Mining risks Page 95
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The prospecting and mining business is speculative. This Report identifies some of the factors that are most likely to affect the project. However, this is not an exhaustive list and investors should seek professional advice for further clarification of the risks involved before deciding whether to invest in the diamond mining industry.
Whether a diamond deposit will be commercially viable depends on a number of factors, some of which are the particular attributes of a deposit, such as the diamond resource (size, quantity and quality), proximity to infrastructure, water availability, financing cost and governmental regulations, including regulations relating to prices, taxes, royalties, land tenure, land use, importing and exporting of diamond and environmental protection. The exact effect of these factors cannot be accurately predicted, but the combination of these factors may result in the project not returning an adequate return on investment capital.
Further, general economic conditions may affect inflation and interest rates which, in turn, may impact upon the projects operating costs and financing. The future viability and profitability of the project is also dependent on a number of other factors affecting performance of all industries and not just the exploration and mining industries, including, but not limited to, the following: • General economic conditions and, in particular, inflation rates, interest rates, commodity supply and demand factors and industrial disruptions; • Natural disasters; • Social unrest or war on a local or global scale; • Financial failure or default by a participant in the project or other contractual relationship to which the company is, or may become, a party; • Insolvency or other managerial failure by any of the contractors used by the company in its activities; and • Industrial disputation.
Underlying strategic risks for prospecting and mining companies do not vary significantly over time. However, the acuteness, and hence the priority of these risks, changes depending on the economic environment (PWC, 2011). Ernst & Young (Hill, 2011) has identified the most significant strategic business risks for the mining and metals sector, for 2012, as: • Resource nationalism • Skills shortage • Infrastructure access • Social license to operate • Capital project execution • Price and currency volatility • Capital allocation • Cost management • Interruptions to supply • Fraud and corruption
13.2.8 Specific Mining risks
In addition to the general risks described above, the following specific issues may affect the economic extraction of the estimated resources: • The drilling grid does not identify every sand or clay lense that may occur in the gravel unit (since these lenses may occur on metre scale, detailed drilling to identify all such features is not considered feasible).
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Consequently, during production mining of a resource block, small non-diamondiferous (or lower grade) units may be excavated and processed along with run-of-mine gravels and result in a decrease in grade. • Where the footwall rocks are highly decomposed, mining typically includes the excavation of some 10- 20cm of the bedrock, since diamonds often sink into the soft, weathered surface. While drilling is able to identify the nature of the bedrock on a coarse scale, the amount of bedrock included in any mined unit may vary, causing dilution of the anticipated grade. This variation in the amount of bedrock included cannot be quantified. • Where the bedrock is friable, more inexperienced excavator operators may, inadvertently, take more of the bedrock than necessary. • Varying gravel clast or matrix composition may result in plant recovery issues. For example, if more clay occurs in the gravel matrix, then screens may blind and processing rates may have to be decreased in order not to lose diamonds. Furthermore, an increase in heavy minerals may increase the local specific gravity of the gravel, resulting in diamond loss. Limited variations will occur over time and space and cannot be identified during testing. • The regulatory authorities may introduce new legislation regarding new permits, rehabilitation requirements, additional BEE ownership or even (partial or total) resource nationalism. • South Africa’s electricity supply situation will be even tighter than originally forecast over the next five years because of further delays in bringing the Medupi and Kusile power stations on line. Commercial operation of the first generating set at Kusile - already delayed by a year to mid-2014 – was now only expected at the beginning of 2015. A research report based on the two studies on SA’s energy situation future recently released by the government highlighted the very real possibility of the country running short of power for the most part of the next five years. These potential shortages and associated increases in power prices may have significant impact on the ability to plan major expansions in production. • Unanticipated, major breakdowns can result in significant delays in production.
13.2.8.1 In South Africa
The greatest risks pertaining to the general minerals and mining industry in South Africa are perceived to be the uncertainties relating to the various mining-related Acts and Bills passed since 1994. Together with crime and the skills shortage, the inadequacy of Southern African infrastructure (and more specifically power and water infrastructure), increases in fuel/power prices, labour unrest and strike action, are all viewed as a material constraint to investment. Not to be forgotten, also, is the uncertainty of the effect of HIV/Aids on the workforce as well as the ever-present threat of resource nationalism.
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14 MINERAL RESERVE ESTIMATION
A ‘Mineral Reserve’ (Fig. 14.1) is the economically mineable material derived from a Measured and/or Indicated Mineral Resource. It includes diluting and contaminating materials and allows for losses that are expected to occur when the material is mined. Appropriate assessments to a minimum of a Pre- Feasibility Study for a project, or a Life of Mine Plan for an operation, must have been carried out, Mineral Reserves are reported as inclusive of diluting and contaminating uneconomic and waste material delivered for treatment or dispatched from the mine without treatment. To avoid confusion in reporting Mineral Reserves the definition of treatment is taken to include any beneficiation of the raw product that might take place prior to, or during, the metallurgical process.
Figure 14.1: Relationships between resources and reserves (SAMREC, 2007)
Mineral Reserves are sub-divided in order of increasing confidence into Probable and Proved Mineral Reserves (based on Indicated and measured resources respectively). CIM defines the Probable Reserve as: “A Mineral Reserve is the economically mineable part of a Measured or Indicated Mineral Resource demonstrated by at least a Preliminary Feasibility Study. This Study must include adequate information on mining, processing, metallurgical, and economic and other relevant factors that demonstrate, at the time of reporting, that economic extraction can be justified. A Mineral Reserve includes diluting materials and allowances for losses that may occur when the material is mined.”
Clause 33 of the 2007 SAMREC code defines a Probable (Diamond) Reserve as: “the economically mineable material derived from a Measured and/or Indicated
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Mineral Resource. It is estimated with a lower level of confidence than a Proved Mineral Reserve. It includes diluting and contaminating materials and allows for losses that are expected to occur when the material is mined. Appropriate assessments to a minimum of a Pre-Feasibility Study for a project, or a Life of Mine Plan for an operation, must have been carried out, including consideration of, and modification by, realistically assumed mining, metallurgical, economic, marketing, legal, environmental, social and governmental factors. Such modifying factors must be disclosed.”
The extent to which the estimates of mineral resources on a project may be mined commercially may be affected materially by various environmental, legal, financial, socio-economic, and marketing issues (the “Modifying Factors” referred to in both the CIM and SAMREC codes). In an attempt to quantify these variables, the following data (inter alia) is, generally, considered important in an economic consideration of a mineral deposit, through a Pre-Feasibility Study (“PFS”): • Mining and Production • Revenue • Operating Costs and Fees • Capital Costs • Taxes and royalties • Depreciation, interest and residual value
All of these “Modifying Factors” were considered by Rockwell during trial-mining on the Klipdam project in 2009/2010. Throughout this programme, mining and processing methods/plans were developed for Rockwell’s specific requirements. The results of the trial-mining programme and, subsequent, Preliminary Economic Assessment (“PEA”) are applicable only to the specific mining and processing methods applied by Rockwell during that period.
The “Modifying Factors” used in the 2010 PEA are not valid going forward under a different mining plan and, as a result, no economic study is presented in this report. A PFS has not been completed on the project properties and no Mineral Reserves are estimated for the Klipdam properties as at the date of this report.
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15 ADJACENT PROPERTIES
Diamondiferous alluvial deposits are known from the entire middle and lower Vaal River region. Mining of these deposits have taken place more-or-less continuously since the late 1800’s (Plate 14.1).
Plate 14.1: Mining of alluvial diamonds along the Vaal River prior to the turn of the 20th century (de Wit, 2008)
Small-scale diamond mining operations are taking place, or have been recently active, on several properties in the vicinity of Holpan/Klipdam (Fig. 14.1). Although satellite interpretation, geophysical modelling and surface mapping appears to indicate that all these properties fall on related palaeodrainage systems, the mineralisation on these properties is not necessarily indicative of the mineralisation on Klipdam and Holpan. The author has not independently verified the resource information on any of these properties.
Extending southwards from Holpan, both calcreted fluvial-alluvial and Rooikoppie gravels are mined on what is assumed to be part of the same palaeodrainage system that is present on Klipdam and Holpan. Due to the informal and private nature of these operations, acquiring reliable information regarding tonnage, grade and diamond values has not been possible. • Holpan Hotel 364 – this property, which has been in the Wakeford family for many generations, is also currently being operated by Messrs C. & D. M. Wakeford • Harrisdale 226 – currently operated by Springfit Estates (Pty) Limited (owned by the Snyman brothers) • Ventersvilla 164, operated by D. Corms and W Mason. • Slangheuwel 160 (also known as Snydersrush) operated by K.D. Mining (Pty) Limited and Thunderstone Investments (Pty) Limited.
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Figure 14.1 Location of properties where alluvial diamonds have been mined economically between Windsorton and Kantien Koppie at Barkly West (Source: Google Earth)
The farm Van Zoelenslaagte 158 has a long history of mining. Portions have been mined historically by artisanal diggers and by professional operators (Zoutpan Diamonds CC in the mid 1990’s) and more recently, prospected for kimberlite by KimCor Diamonds PLC. This property is currently being operated by Evening Star Trading CC. The fluvial-alluvial gravel deposits on Van Zoelenslaagte (Plate 14.2) are, for the most part, somewhat younger than the Holpan/Klipdam assemblage, comprising Proksch Koppie and Wedburg terrace gravels. However, older Rooikoppie gravels are known to occur in the northwest quadrant of the property.
The Leicester kimberlite pipe and its satellites occur on Farm 159 to the SE of Holpan. This pipe was evaluated by SouthernEra in the early 1990’s and since then has been operated sporadically by a string of smaller companies.
Between Klipdam and Holpan are a number of small claims (“Van Zyl claims”), currently being mined by a professional digger (alluvial miner), who is currently processing Rooikoppie gravel (Plate 14.3)
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Plate 14.2: Fluvial alluvial gravels on Van Zoelens Laagte (photo courtesy of Rockwell)
Plate 14.3: Rooikoppie operations on the Van Zyl’s claims between Klipdam & Holpan
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15.1 Slypklip North
During December 2000, a geological and topographic survey was completed over portion of Slypklip North fruit farm (Fig. 14.4) by Geoventures (Pty) Ltd (Slade, 2001). This documented the presence of two distinct terrace gravel deposits (Wedburg and Riverton) as well as a third (Rietputs) terrace on which no gravel was obvious. The Rooikoppie gravels on the Wedburg terrace on the adjacent property to the north had been partially mined out historically, but no records were available.
A wide-spaced drilling and pitting programme estimated the potential presence of some 440,000m3 of gravel on the upper, Wedburg terrace and some 300,000m3 of gravel on the lower terrace – these estimates of volume would not be consistent with any resource classification. The drilling work focussed on the low terrace adjacent to the Vaal River, comprising a gravel bed which was identified as Rietputs gravels. A pothole feature, containing gravel 12 m thick, was also identified during this work, resulting in the expectation of large diamonds and grades in excess of 1-2 cpht.
Figure 14.2 Location of the Slypklip North project (www.paramountmining.com)
Subsequently, Paramount Mining Corporation Ltd (ASX – PCP) entered into an option agreement with the holder of the Mining Permit to investigate the alluvial diamond potential of Slypklip North Fruit Farm further. All the information from this project is available on the company’s website (www.paramountmining.com). The technical report on this property was compiled (9 October 2003) by Dr Manfred Marx of Manfred R Marx and Associates (Pty) Ltd, a competent person in terms of the JORC resource estimation code.
A small bulk sample of this gravel was treated by a local Kimberley digger on the farm during 2001. A total of 9.87 carats of diamonds was recovered from this bulk sample (sample size of 1,436T). A grade
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The grades recovered from this test were thought to be are on the low side of expectations for such deposits. Coupled with the small average stone size (and, consequently, relatively low carat value), Paramount considered that the deposit would not be economically viable at a small scale mining level. To test for commercial viability for larger scale mining, a much larger bulk sample would be necessary (Paramount Annual Report, October, 2009). Since then, no further work has been carried out on this project (Paramount Half yearly report, March 2010).
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16 OTHER RELEVANT DATA AND INFORMATION
16.1 Exploration Targets
Exploration targets on the Klipdam project cover some 448 ha, where little prospecting has taken place (Fig. 13.2). Anticipated grade ranges are 0.5-0.9ct/100m3, based on historic sampling data. It is important to note that the statements of potential quantity and grade (of the exploration targets) are conceptual in nature, that there has been insufficient exploration in these areas to define a mineral resource and that it is uncertain if further exploration will results in the targets being delineated as a mineral resource.
16.2 South African Economy
South Africa is a middle-income developing country, with strong financial and manufacturing sectors (South Africa, 2010). It is a leading exporter of minerals, and tourism is a key source of foreign exchange. However, many South Africans remain poor, and unemployment and crime levels are high. In addition, the country has one of the highest rates of HIV/AIDS prevalence in the world, with around one in seven South Africans infected. The country is relatively stable compared with many African countries, but growing corruption scandals surrounding top members of the ruling party is proving detrimental for the business environment; however, the country has a skilful labour force and a well- developed banking system.
Following the economic downturn of 2009, South Africa’s economy grew 2.8% in 2010 and by 3.7% in 2011 and is expected to grow by 3% in 2012 (Economy to grow at 3% in 2012: Busa, 2011). The main economic indicators of the South African economy are shown below (Table 16.1), as at February 2012 (South Africa - National Statistical Data, 2012)
Table 16.1: Economic indicators for South Africa (February, 2012)
Interest Rate Growth Rate Inflation Rate Unemployment Rate Exchange Rate
5.5% 3.2% 6.3% 23.9% 7.59
16.2.1 The Mining Industry
Mining in South Africa has been the main driving force behind the history and development of Africa's most advanced and richest economy. Large scale and profitable mining started with the discovery of a diamond on the banks of the Orange River in 1867, and the subsequent discovery and exploitation of the Kimberley pipes a few years later. Gold rushes to Pilgrim's Rest and Barberton were precursors to the biggest discovery of all, the Witwatersrand Gold field in 1886
Diamond and gold production may now be well down from their peaks, though South Africa is still no. 2 in gold but South Africa remains a cornucopia of mineral riches. It is the world's largest producer of chrome, manganese, platinum, vanadium and vermiculite. It is the second largest producer of ilmenite, palladium, rutile and zirconium. It is also the world's third largest coal exporter.
With the growth of South Africa's secondary and tertiary industries, the relative contribution of mining to South Africa's gross domestic product (GDP) has declined over the past 10-20 years. Nonetheless, the industry remains a cornerstone of the economy, making a significant contribution to economic
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In 2009, South Africa's mining industry was the largest contributor by value to black economic empowerment (BEE) in the economy, in terms of the value of BEE transactions completed. Further, during the same period, according to the Chamber of Mines of South Africa, the industry contributed: 8.8% directly, and another 10% indirectly, to the country's gross domestic product (GDP). • Over 50% of merchandise exports, if secondary beneficiated mineral exports are counted. • About 1-million jobs (500 000 directly). • About 18% of gross investment (10% directly). • Approximately 30% of capital inflows into the economy via the financial account of the balance of payments. • 93% of the country's electricity generating capacity. • About 30% of the country's liquid fuel supply. • Between 10% and 20% of direct corporate tax receipts (together worth R10.5-billion).
16.2.2 South Africa’s Mineral Legislative Environment
16.2.2.1 Mineral Policy
South Africa has endorsed the principles of private enterprise within a free-market system, offering equal opportunities for all the people. The state's influence within the mineral industry has, thus far, been confined to the goal of orderly regulation and the promotion of equal opportunity for all citizens. The Minerals and Petroleum Resources Development Act (MPRDA Act 28 of 2002) was introduced to legislate the official policy concerning the exploitation of the country's minerals. Previously, South African mineral rights were owned by either the State or the private sector. This dual ownership system represented an entry barrier to potential new investors. The new MPRDA was introduced with the objective for all mineral rights to be vested in the State, with due regard to constitutional ownership rights and security of tenure.
In an attempt to assist junior exploration/mining companies, in July 2009 the National Treasury introduced a tax incentive for investors through the introduction of venture capital company (VCC) funds. This is an attempt to assist bottom-end juniors (engaged in mineral exploration, mining and/or refining) in accessing equity funding, in a similar manner to that which the Canadian flow-through share system. The subsequent tax-break allows for both individual and listed company to invest in the junior; the individual is eligible for a 100% tax deduction of the amount invested, which is limited to R750,000/year with a maximum of R2.25M and listed companies (and their group subsidiaries) are eligible for a 100% deduction with no monetary limit. However, these corporate entities do not receive any deductions for share investments that push their holdings above a 10% equity share interest in a VCC. The VCC must be a South African resident company that is unlisted or a junior mining company that may be listed on the Alt-X and must not be a controlled group subsidiary. The VCC is, further, required to invest 80% of their funds in mining juniors with book assets of not more than R100M after capital raising, and small non-mining companies with assets of not more than R10M after capital raising. The junior would also be required to use all the money received for purposes of its trade within 18 months of receipt and would be required to be producing revenue within 36 months.
Arguably the subject that dominated the minds of most mining executives and mining industry investors in 2011 was nationalisation. While calls to nationalise at least 60% of all mining companies were proposed by the Youth League of the African National Congress (ANC), final policy decisions will only be
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16.2.2.2 Mineral and Petroleum Resource Development Act 28 of 2002 (“MPRDA”)
The Mineral and Petroleum Resources Development Act (MPRDA), 2002 aims to: • recognise that mineral resources are the common heritage of all South Africans • promote the beneficiation of minerals • guarantee security of tenure for existing prospecting and mining operations • ensure that historically disadvantaged individuals participate more meaningfully • promote junior and small-scale mining.
In terms of the Act, new order rights may be registered, transferred and traded, while existing operators are guaranteed security of tenure. Mining rights are valid for a maximum of 30 years and renewable for another 30 years, while prospecting rights are valid for up to five years and renewable for another three.
DRAFT versions of the amended Mineral and Petroleum Resources Development Act (MPRDA) would not be finalised prior to the ANC National Policy Conference in June 2012, as the revisions would be informed by the ruling party’s resolutions on the role of the state in mining. It would also be at this time when changes to the ANC’s policy on mining, if any, would be incorporated with the amendments.(Janse van Vuuren, MPRDA on hold for ANC mines plan, 2011).
The envisaged time frame for tabling the MPRDA amendments to parliament is during the last quarter of the 2012 legislative program. The DMR has indicated the proposed law changes would also allow for a single licensing system – incorporating applications for water usage and environmental permits – as well as the partitioning of mineral rights. The revised MPRDA would, in addition, make provision for the state’s newly adopted beneficiation strategy. Also, should parliament only debate on the proposed changes to the Act after June, it could allow for proposals made at the ANC’s policy conference, where the governing party is expected to adopt policy stemming from its investigation into nationalisation and the state’s involvement in the industry.(Janse van Vuuren, Revised MPRDA at least a year away, 2011).
16.2.2.3 Broad Based Black Economic Empowerment (BBBEE) and the Mining Charter
The Broad-Based Socio-Economic Empowerment Charter for the South African mining and minerals industry - updated and released in September last year - is being viewed with interest by the industry. While the objectives of the charter remain largely unchanged, the manner of achieving them is being provided for differently. Not only is it couched in more prescriptive terms, but it also contains an emphasis shift away from equity participation issues towards broad-based/socio-economic/skills transfer/procurement-related issues, and contains a sting in the tail for failure to comply with the regime it now imposes (Cornish, 2011)
It can be argued that the Charter is no more than a policy document containing the goals to be achieved by the mining industry in the foreseeable future. But this ignores the flavour of subordinate legislation added to the Charter – particularly in its revised form. It is accepted in certain circles that the Charter
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The charter retains the 2014 26% BEE ownership target level. It is the method by which this target is to be achieved which has changed. The charter now contains the concept of ‘meaningful economic participation’ – whereby historically disadvantaged South Africans (HDSAs) must, notwithstanding funding commitments to the vendor/third parties, receive a portion of any cash flow generated from the underlying mining asset. Accordingly, “trickle dividends”, which used to be an optional feature in HDSA transactions, will now have to form part and parcel of any HDSA transaction where vendor/third party funding is involved (Cornish, 2011).
The sector is in desperate need of skills development to realise the government’s objective of sustainable transformation and development. • To this end, a skills levy has been incorporated into the charter. For 2010, 3% of annual payroll must be contributed towards such levy. Thereafter, the levy increases by 0.5% a year until 2014. • The charter also introduces clear procurement targets. By 2014, mining companies will be obliged to procure 40% of their capital goods, 70% of their services and 50% of their consumer goods from BEE entities.” • With immediate effect, multinational suppliers of capital goods are obliged to contribute 0.5% of their South African mining companies’ annual income into a social development fund to be utilised for the socioeconomic development of communities. • The above targets exclude any non-discretionary procurement expenditure.
Two of the most prominent social aims of the Charter are mine community development and housing and living conditions of mine workers. It is not insignificant that these concepts were expressly incorporated into the Charter (Badenhorst, W, 2011): • Mine communities form an integral part of mining development. The Charter’s aim is to ensure a meaningful contribution towards community development is made. Mining companies are required to identify projects for their contribution to community development and the financial investments therein must be proportional to the size of the mining investment. • In addition to community development, the Charter highlights that human dignity and privacy for mineworkers are the hallmarks to enhance productivity and to expedite transformation in the mining industry in terms of housing and living conditions. Mining companies are compelled to improve standards of housing and living conditions - and here the Charter gets specific in requiring the following by 2014: o convert and upgrade hostels to family units; o attain an occupancy rate of one person per room; and o facilitate home ownership options for mine workers.
16.2.2.4 The Minerals and Petroleum Resources Royalty Bill
The royalty bill was introduced on May 1, 2009. In terms of the currently applicable formulae, the applicable royalty rates will vary according to the profitability of the mining company, subject to a minimum rate of 0.5% and maximum rate of 7.0% for diamonds (unrefined minerals). The profitability parameter in the formulae is EBIT and it also allows for 100% capital expensing which is an acknowledgement of the high capital costs associated with mining.
Y (u) = 0.5 + { EBIT / (Gross sales x 7) }
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Where: Y (u) = Royalty percentage rate; EBIT = Earnings before interest and taxes (but EBIT can never go below zero).
The formula contains four parameters: (1) an intercept term, 0.5, (2) EBIT, earnings before interest and taxes, (3) gross sales and (4) 7 as a constant: • The 0.5 essentially acts as a minimum royalty percentage rate (0.5%) in order to ensure that Government (as custodian) always receives some level of royalty payments for the permanent loss of non-renewable resources. • EBIT essentially measures an extractor’s net operating mining profits in relation to recovered mineral resources to be eventually transferred. Taxes and other Government charges, such as the royalty, are excluded because EBIT is part of the royalty determination. The exclusion of interest effectively neutralises how key methods of financing (i.e. debt or equity) mineral operations are undertaken. EBIT for mineral resources transferred is conceptually viewed as the aggregate amount of: (1) Gross sales for all transferred mineral resources; PLUS (2) Recoupment in respect of the disposal of assets used to develop mineral resources to the extent the depreciation on those assets offset EBIT; LESS (2) Operating expenditure incurred (and depreciation allowances applicable to capital expenditure) relating to the extraction and development of mineral resources to the extent those expenditures are both: (i) deductible under the Income Tax Act, and (ii) bring those minerals to a Schedule 1 or Schedule 2 condition (as applicable).
16.2.2.5 The Diamond Amendment Bill
The 2005 amendments to the Diamonds Act, viz., Diamonds Amendment Act, 2005 and the Diamonds Second Amendment Act, 2005 as well as the 2007 amendment to Regulations under the Diamonds Act took effect on 1 July 2007. These Regulations were also, subsequently, amended on 4 April 2008. The object of the Regulator (SADPMR) in terms of the Diamonds Act, 1986 (as amended) is to ensure equitable and regular supply of rough diamonds to local beneficiators. It makes provision for the establishment of the State Diamond Trader who will facilitate the supply of rough diamonds equitably and a Precious Metals and Diamonds Regulator to promote equitable access to rough diamonds to licensees. The objects of the amendments are to: • Promote a culture of value addition of minerals by maximising the value of economic benefit of South Africa's mineral wealth; • Recognise the fact that beneficiating our minerals locally contributes to South Africa's economy; • Prevent and abolish restrictive and unfair practices with regard to accessibility and availability of minerals and access to markets; and • Create an internationally competitive and efficient administrative and regulatory regime by means of national licensing system.
In this regard the regulators functions include the implementing, administering and controlling all matters relating to the purchase, sale, beneficiation, import and export of diamonds; and establishing diamond exchange and export centres, which shall facilitate the buying, selling, export and import of diamonds and matters connected therewith.
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16.2.2.6 Diamond Export Levy Bill 2007
The Diamond Export Levy Bill was required to give effect to certain provisions of the Diamonds Act, 1986, as amended. The Diamond Export Levy Bill’s main objective is to support the local beneficiation of rough diamonds. The beneficiation of rough diamonds is seen as important to encourage the development of the local economy, skills and employment creation. The Bill proposes a 5% export levy on rough diamonds that should contribute towards local beneficiation, but is low enough so as not to unduly encourage smuggling. The 5% levy applies to all rough (natural unpolished) diamonds that are exported, while synthetic diamonds are exempted. The levy amount will be equal to 5% of the value of a rough diamond exported, as specified on a return described in Section 61 of the Diamonds Act, 1986 or of the value as assessed by the Diamond and Precious Metals Regulator described in section 65 of the Diamonds Act, 1986.
The Bill contains relief measures that may offset the 5% levy in full or in part. A producer is entitled to receive a credit for imported rough diamonds. This credit will offset (in full or in part) a producer’s export duty liabilities. The Minister of Minerals and Energy may also exempt a producer from the 5% export levy if a producer’s activities are supportive of local diamond beneficiation, or the producer has a annual turnover of less than R10 million, and such a producer has offered his or her rough diamonds for sale at the Diamond Exchange and Export Centre but there were no local buyers. However, the diamonds must subsequently be sold for an amount at least equal to the reserve price at which such diamonds were offered at the centre. These conditions preserve South African’s “right of first refusal” with respect to bidding on any rough diamond intended for export.
16.2.2.7 Precious Metals Bill and the Beneficiation Strategy
The Precious Metals Bill amends Chapter XVI of the Mining Rights Act, No 20 of 1967, so as to eliminate the barriers to local beneficiation of precious metals and to rationalise the regulation of matters pertaining to the downstream development of precious metals. The objects of the Bill include: • To allow for the acquisition and possession of precious metals for the local beneficiation; • To regulate the precious metal industry; • To repeal the legislations that create barriers to beneficiation; and • To amend the over-regulation of the industry by centralising the issuing of jewellers' permits within the Department of Minerals and Energy.
The Beneficiation Strategy, which has been under discussion for some 16 years, is a product of an interdepartmental task team consisting of representatives from the DMMR, DTI (Department of Trade & Industry), the Department of Science & Technology, the Department of Public Enterprises, the National Treasury and the Presidency. A draft (White Paper) was approved by cabinet in June 2011.
Five "pilot commodity value chains" are being developed by the DMR (Leon, P; Veeran, J, 2011). The beneficiation strategy identifies ten strategic mineral commodities and selects five value chains from these, which are intended to demonstrate the inherent value for South Africa in embracing beneficiation in relation to all strategic mineral commodities. The first two commodity value chains were presented to cabinet in October 2011 and will cover the iron and steel industry (which has already been drafted) as well as "energy commodities" (which is still being developed and includes coal, uranium and thorium). These plans were approved on 11 November 2011 (SAPA, 2011). The remaining three commodity chains cover: autocatalytic converters and diesel particulate filters, jewellery fabrication, (including gold, platinum and diamonds) and titanium metal and pigment production.
In order implement beneficiation strategies, mining licences may, in future, be granted with attached
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conditions, to ensure a supply of raw material for local industries seeking to further refine, or beneficiate, the extracted minerals (SAPA, 2011). However, for South Africa to succeed in its endeavours, it needs to create the necessary skilled labour force and to establish the necessary industrial development zones with attractive tax advantages and low tariff regimes. Customs systems would also have to be streamlined and harbours decongested to facilitate efficient trading conditions.
16.2.2.8 Kimberley Process
The Kimberley Process is a joint governments, industry and civil society initiative to stem the flow of conflict diamonds – rough diamonds used by rebel movements to finance wars against legitimate governments. The trade in these illicit stones has fuelled decades of devastating conflicts in countries such as Angola, Cote d'Ivoire, the Democratic Republic of the Congo and Sierra Leone. The Kimberley Process Certification Scheme (“KPCS”) imposes extensive requirements on its members to enable them to certify shipments of rough diamonds as ‘conflict-free’. The core mandate of the KPSC is to guarantee consumers that the organisation is aware of the origin of the diamonds that the consumers buy.
As of December 2009, the KP has 49 members, representing 75 countries, with the European Community and its Member States counting as an individual participant. In essence, the participants in the KPSC have agreed that they will only allow for the import and export of rough diamonds if those rough diamonds come from or are being exported to another Kimberley Process participant. The KPSC requires that each shipment of rough diamonds being exported and crossing an international border be transported in a tamper-resistant container and accompanied by a government-validated Kimberley Process Certificate. Each certificate should be resistant to forgery, uniquely numbered and include data describing the shipment’s content. The shipment can only be exported to a co-participant country in the Kimberley Process. No uncertified shipments of rough diamonds will be permitted to enter a participant’s country. Once a certified shipment has entered its country of destination it may be traded – in whole or part – and mixed with other parcels of rough diamonds as long as all subsequent transactions are accompanied by the necessary warranties. Failure to adhere to these procedures can lead to confiscation or rejection of parcels and/or criminal sanctions. Any rough diamonds being re- exported will also require Kimberley Process Certificates, which will be issued in the exporting country. These re-exports can comprise any combination of rough diamonds that have been previously imported through the Kimberley Process Certification Scheme.
In order to strengthen the credibility of the Kimberley Process agreement, as well as to provide the means by which consumers might more effectively be assured of the origin of their diamonds, the World Diamond Council proposed that the industry create and implement a System of Warranties for diamonds. Under this system, which has been endorsed by all Kimberley Process participants, all buyers and sellers of both rough and polished diamonds must warrant that, for each parcel of diamonds “The diamonds herein invoiced have been purchased from legitimate sources not involved in funding conflict and in compliance with United Nations resolutions. The seller hereby guarantees that these diamonds are conflict free, based on personal knowledge and/or written guarantees provided by the supplier of these diamonds.” In addition, each company trading in rough and polished diamonds is obliged to keep records of the warranty invoices received and the warranty invoices issued when buying or selling diamonds. This flow of warranties in and warranties out must be audited and reconciled on an annual basis by the company’s own auditors. Failure to abide by the aforementioned principles exposes the member to expulsion from industry organizations.
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17 CONCLUSIONS
During February 2009 to April 2012, trial-mining operations were conducted on the Klipdam/Holpan mine. Throughout this period, some 4,115,811m3 was processed by Rockwell. During 2011/2012, 9,967.33cts were sold from the Klipdam project for an average of USD751/ct (8,823.24ct at USD724/ct from Klipdam mine and 1,144.09ct at USD962/ct from Holpan mine). Included in these parcels were some 43 stones (+9.8ct/st), which sold for over USD2,500/ct.
Bulk-sampling and trial-mining operations have proceeded along very similar methods – except for the volumes involved.
The mining of the gravels at Holpan-Klipdam was undertaken using mechanised, shallow opencast earthmoving techniques. The topsoil (which is generally minimal to non-existent) is removed and stored separately for use in later rehabilitation activities. The top layer of Rooikoppie gravel is then loaded into Articulated Dump Trucks (ADT’s) by either excavator or front-end loader for transport to the plant. The calcretised overburden to the fluvial-alluvial gravel is removed so that the gravels are exposed and can be mined by bulldozers and excavators. Care is taken to ensure the sterile excavation of the gravels such that no contamination by the footwall lithologies occurs. Excavation continues to the base of the gravels where higher basal grades are expected to occur. The shales and tillites forming the bedrock in the project area are friable and are a distinctive greyish-green colour, while the lavas tend to present as large blocky units. Where the bedrock is soft, approximately 20cm of bedrock is excavated with the gravels, so that any diamonds in the weathered rock will be recovered.
The fluvial alluvial gravels are transported by ADT’s to the diamond recovery plants. Surveying of the box cuts is undertaken on a monthly basis by the mine surveyor in order to obtain precise volumes for the fluvial-alluvial gravel, the calcrete and the Rooikoppie gravels, against which diamond production could be reconciled and grade determined.
A double-18 ft rotary pan-plant system was used to process gravels on Klipdam and a Dense Media Separation (DMS) plant on Holpan. Processing volumes (ROM) on the two plants were approximately 360 tph each. Concentrates are processed through FLOWSORT X-Ray recovery and grease-belt systems, before final hand-sort in secure glove-boxes. QA/QC is maintained through the use of tracers – both bort diamonds (supplied by Steinmetz) and ceramic balls. These tracers are introduced into different parts of the plant to ensure optimum diamond recovery. Fluorescent slingshot tracers and bort diamonds are used to continuously test for maximum equipment performance. Daily, 20 tracers are inserted into each FlowSort machine. Recoveries are monitored and problems with tracer recoveries are reported immediately to the plant superintendent who deals with the matter directly.
A total of some 8,632,582m3 of gravel has been processed from the Klipdam project during Rockwell’s bulk-sampling and trial-mining programmes (2006-2012). The weighted average grade over this period has been 0.9ct/100m3. During this time, Rockwell concentrated on the higher grade fluvial-alluvial gravels where they were present and also on the non-sandy colluvial gravels.
Rockwell has estimated the following Indicated and Inferred resources for the project as at 30 April 2012. They were estimated by Rockwell’s Manager, Resources, G. Norton, (Pr. Sci. Nat.), a qualified person who is not independent of the Company and reviewed by T.R. Marshall, PhD, (Pr. Sci. Nat.), a qualified person who is independent of the Company and is responsible for the estimate.
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Property Gravel Type Indicated Inferred Grade Value Resource Resource (ct/100m3) (USD/ct) Fluvial alluvial Holpan Rooikoppie 1,378,401 4,858,938 0.80 962 Fluvial alluvial 989,100 ------1.03 Klipdam Rooikoppie 1,528,900 1,112,000 0.82 724 Erf 2004/1 Rooikoppie 684,800 1,851,000 0.87 TOTAL 4,581,200 7,822,000 0.84 751 ∗ Volumes fully diluted of sampling and mining for the period 2008-Nov 2012 (Totals rounded off to reflect the fact that it is an approximation.) # Grade estimated with bottom cut-off stone size at 2mm
In addition to the Mineral Resources, Rockwell has also identified some 448 ha of exploration potential.
During 2009 a trial-mining programme was initiated on both Klipdam and Holpan to determine the most effective method of mining the gravels (particular to Rockwell’s specifications). The results of the trial- mining programme and, subsequent, Preliminary Economic Assessment (“PEA”) were applicable only to the specific mining and processing methods applied by Rockwell during the period. These economic factors (the “Modifying Factors) are not valid going forward and, as a result, no Mineral Resources have been converted to Mineral Reserves are estimated for the Klipdam properties as at the date of this report and, consequently, no economic study or Discounted Cash Flow (“DCF”) is presented in this report.
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18 REFERENCES
Beet, G. (1931): The Grand Old Days of the diamond Fields. Maskew Miller, Cape Town. Beaumont, P. and Morris, D. (1990): Guide to Archaeological sites in the Northern Cape. McGregor Museum, Kimberley Butzer K W, Helgren D M, Fock G J and Struckenrath R (1973): Alluvial terraces of the lower Vaal River, South Africa: A reappraisal and re-investigation. Journal of Geology, 81, 341-362. Colliston, W.P. and Saner, M. G. (2000). Exploration results on the new discovery palaeo-fluvial system gravel resource and Plateau gravel (Rooikoppie) Reserve on the farm Klipdam 157. Unpublished report compiled for Klipdam Diamond Mining Company Limited. July 2000. Cooke, H.B.S. (1949): Fossil Mammals of the Vaal River Deposits. Geological Survey of Union of South Africa, Memoire 35 (part 3), 117 pp. Cooke, R. (1995). Geological report on the alluvial diamond deposits occurring on Klipdam and a portion of Holpan 161. Unpublished report compiled for Klipdam Diamond Mining Company Limited. April, 1995. Gerryts, E. (1996). Geological report on the alluvial diamond deposits occurring on the farms Klipdam 157 and Holpan 161. Unpublished report compiled for Klipdam Mining Company Limited. January, 1996. Cooke, R. (1997). Report on the Terrace Gravels occurring on the farms Klipdam 157 and Holpan 161. Unpublished report compiled for Klipdam Mining Company Limited. July, 1996. De Wit, M C J (1996): The distribution and stratigraphy of inland alluvial diamond deposits in South Africa. Africa Geoscience Review, 3(2), 175-190 De Wit, M C J (2004): The diamondiferous sediments on the farm Nooitgedacht (66), Kimberley, South Africa. S.Afr. J Geol., 107, 477-488 De Wit, M. C.J., Ward J.D., Jacob, J.R., Spaggiari, R. and van der Westhuizen, A. (1997): Diamond-bearing deposits of the Vaal and Orange River systems. 6th International Fluvial Sedimentological Conference. Pre-Conference Field Excursion, University of Cape Town. De Wit, M.C.J, Marshall T.R. & Partridge, T.C (2000): Fluvial deposits and drainage systems, p55-72. In, T C Partridge and RR Maud, The Cenozoic of Southern Africa. Oxford Monographs on Geology and Geophysics No 40. Oxford University Press, New York, 406pp. Esterhuise C, (2010): A Preliminary Geohydrological Assessment of the Groundwater Resources of the Holpan/Klipdam Area. District Barkley West, Northern Cape Province. Prepared for Rockwell diamonds Inc by SRK Consulting (Pty) Ltd, May 2010, 41pp Gurney, J.J, Moore, R.O, Otter, M.L, Kirkley, M.B, Hops, J.J and McCandless, T.E (1991): Southern African kimberlites and their xenoliths., p495-536 In: AB Kampunzu and RT Lubala (Eds), Magmatism in Extensional Structural Settings. The Palaeozoic African Plate. Springer-Verlag, Berlin, 619pp. Helgren, D.M. (1979). River of Diamonds – An Alluvial History of the Lower Vaal Basin, South Africa. The University of Chicago, Department of Geography, Research paper No. 185, 1979. Jacob, R. J (2005): The erosional and Cainozoic depositional history of the lower Orange River, southwestern Africa. PhD Thesis, University of Glasgow, 167pp. JORC (1999): Australian Code for Reporting of Identified Mineral Resources and Ore Reserves, issued by the Joint Ore Reserve Committee (JORC), comprising Australasian Institute of Mining and Metallurgy (AusIMM), Australian Institute of Geoscientists (AIM) and Minerals Council of Australia (MCA), September 1999. Kilalea, D., (2008). Diamonds: Losing Lustre or Still Sparkling? http://www.seekingalpha. com. Lock, N (2003): Comparing carats to kilograms. Mining Mirror, October 2003, 36-38 Mac Vicar C.N (1986): Land types of the maps 2720 Witdraai, 2722 Kuruman, 2724 Christiana, 2820
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Upington, 2822 Postmasburg and 2824 Kimberley. Mem. Dept. Agriculture and natural Res. S. Afr. 3, 269pp Marshall, T.R. (1987): Alluvial diamond occurrences of the Western and south- Western Transvaal - a compilation of production data. Inf. Circ. No 194, Econ. Geol. Res. Unit, Jhb. 200 pp. Marshall, T R (2004): Rooikoppie Deposits of South Africa. Rough Diamond Review (September), p21- 25. Matheyss, F.G. (1990): The alluvial diamond deposits of the lower Vaal River between Barkly West and the Vaal Harts confluence in the northern Cape Province, South Africa. (Unpubl.) M.Sc. Thesis. Rhodes University, Grahamstown. Norman, N.G. & Cooke, R. (2001). Report on the exploration of the diamondiferous gravels on the farm Holpan 161. Unpublished report for H.C. van Wyk Diamonds (Pty) Limited. September, 2001. Partridge T C and Brink, A B A (1967): Gravels and terraces of the lower Vaal basin. SAGJ, 49, 21-38. Partridge, T. C. and Maud, R.R (1987): Geomorphic evolution of southern Africa since the Mesozoic. S. Afr. J. Geol., 90(2), 179-208. Oosterveld, M.M. (2008): Wouterspan, Holpan and Klipdam, Saxendrift – size frequency and large stones for 2005-2008 period. Internal report for Rockwell Ventures Inc (November, 2008). Oosterveld, M M (2010): Holpan and Klipdam 2007 – 2009, Large Stone Recovery and Modelling. Internal report for Rockwell Ventures Inc (February 2010). Picton, J (2006): Mining Research. Diamond Update #5. W H Ireland Stockbrokers, May, 2006 Read, G.H., Janse, A.J.A.(2009): Diamonds: Exploration, mines and marketing, Lithos (in Press), Rombouts, L (1987): Evaluation of Low Grade/High Value Diamond Deposits. Mining Magazine (September, 1987), 217-220. SACS (1980): Stratigraphy of South Africa Part 1 (Comp L E Kent). Lithostratigraphy of the Republic of South Africa, South West Africa/Namibia, and the Republics of Bophuthatswana, Transkei and Venda: Handb. Geol. Surv. S. Afr., 8, 690pp. SAMREC (2000): South African Code for Reporting of Mineral Resources and Mineral Reserves. Prepared by the South African Mineral Resources Committee (SAMREC), under the auspices of the South African Institute of Mining and Metallurgy (SAIMM). Effective March 2000. SAMREC (2006): South African Code for Reporting of Mineral Resources and Mineral Reserves. Prepared by the South African Mineral Resources Committee (SAMREC), under the auspices of the South African Institute of Mining and Metallurgy (SAIMM). Exposure Draft June 2006. Spaggiari, R. (1993): Reconstruction of the palaeodrainage from the gravels on the farm Droogeveldt 292, Barkly West, Northern Cape Province. M.Sc. Thesis (unpubl.) Rhodes University, Grahamstown. Steyn, T. And Terbrugge, P. T. (2008): Klipdam Bench Stability Assessment. SRK Project Number 388468, for Rockwell Diamonds Inc (January 2008), 56pp. Van der Merwe, F.J. (2005). Report on Holpan-Klipdam gravels mined and calculated gravel resources as at 6 July 2005. Unpublished reports compiled for H.C. van Wyk Diamonds (Pty) Limited. July 2000. Van Rooyen, T.H. and Burger, R. du T (1974): Plant ecological significance of the soils of the central Orange River basin. S Afr Geogr J, 56, 60-66.
Sundry Documents
Rockwell production data Sundry hardcopy and electronic technical and production plans and data.
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Additional Works Cited
Badenhorst, W. (2011). Legislating social responsibility and the standing of the Mining Charter in achieving this aim. Johannesburg: Werksmans Attorneys. Cornish, L. (2011, January). Mining Charter Revised - No room for non-compliance. S A Mining , pp. 67- 68. Economy to grow at 3% in 2012: Busa. (2011, December 07). Retrieved from SouthAfrica.info: http://www.southafrica.info/business/economy/busagdp-061211.htm Hill, M. (2011, September 23-29). Major Headache. Mining Weekly , p. 17. Janisch, P. (2011, June 06). Black Economic Empowerment Blog. Retrieved December 17, 2011, from http://bbbee.typepad.com/paul_janisch/2011/06/overview-of-the-mining-charter-from- werksmans.html Janse van Vuuren, A. (2011, December 02). MPRDA on hold for ANC mines plan. Retrieved from miningmx.com: http://www.miningmx.com/news/markets/MPRDA-on-hold-for-ANC-mines-plan.htm Janse van Vuuren, A. (2011, November 28). Revised MPRDA at least a year away. Retrieved December 17, 2011, from miningmx: http://www.miningmx.com/news/markets/Revised-MPRDA-at-least-a- year-away.htm Leon, P; Veeran, J. (2011, September 05). Further conditions to be imposed on the grant of new mining rights. Retrieved December 17, 2011, from Polity: http://www.polity.org.za/article/further- conditions-to-be-imposed-on-the-grant-of-new-mining-rights-2011-09-05 Mining and minerals in South Africa. (2011, December 16). Retrieved from SouthAfrica.info: http://www.southafrica.info/business/economy/sectors/mining.htm Mkokeli, S. (2011, December 02). ANC ‘unlikely’ to go for full nationalisation. Business Day . PWC. (2011, October). Mine 2011. The game has changed. Review of global trends in the mining industry. Retrieved from PriceWaterhouseCoopers: www.pwc.com/mining SAPA. (2011, November 10). Fin24. Retrieved December 17, 2011, from m.news24. SAPA. (2011, August 30). Fin24. Retrieved December 17, 2011, from m.news24: http://m.news24.com/fin24/Companies/Mining/Terms-to-be-attached-to-mining-licences-20110830 South Africa - National Statistical Data. (2012, March). Retrieved March 8, 2012, from Economics: http://www.tradingeconomics.com/south-africa/indicators South Africa. (2010, January). Retrieved December 16, 2011, from D&B Country RiskLine Report: http://www.dnbcountryrisk.com/FreeSamples/samplefiles/SampleGlob30110.htm
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DATE AND SIGNATURE PAGE
Respectfully Submitted,
______Tania R Marshall (Dr) Glenn A Norton, B.Sc. Hons,
Geological Consultant (Pr. Sci. Nat) Mineral Resource Manager (Pr. Sci. Nat.) SACNASP registration number 400112/96 SACNASP registration number 400042/06
P O Box 6578 Level 1, “Wilds View”, Isle of Houghton Homestead, 1412 Cnr: Boundary & Carse O’Gowrie Road Republic of South Africa Houghton Estate, Johannesburg Tel/Fax: +2711 828-2989 South Africa, 2198 E-mail: [email protected] [email protected]
Date of Signature: 14 June, 2012
Effective Date : 30 April, 2012
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19 CERTIFICATE OF AUTHORS
19.1 Tania Ruth Marshall
I, Tania Ruth Marshall (Pr. Sci. Nat.) do hereby certify that:
1. I am a Geological Consultant with: Explorations Unlimited P O Box 6578 Homestead, 1412 South Africa 2. I graduated with a degree in Bachelor of Science from the University of Witwatersrand in 1982. In addition, I have obtained a Bachelor of Science (Honours) in Geology in 1984, a Master of Science in Geology in 1987 and a Doctor of Philosophy (Geology) in 1990. 3. I am a member, in good standing, of the Geological Society of South Africa (#38829) and am registered with the South African Council for Natural Scientific Professions (Pr. Sci. Nat.) as a Geological Scientist since 1996 (SACNASP registration number 400112/96). 4. I have worked as a geologist since my graduation from university in 1987. During this period I have been involved in the exploration and exploitation of alluvial diamond deposits throughout Africa, including the evaluation and valuation of a number of such deposits for both private and public companies. Such operations involving mining and financial analysis (together with mine planning and costing) include the Cangandala alluvial diamond mine in Angola, the Cayco alluvial diamond project in Akwatia, Ghana, the Aredor alluvial diamond mine in Guinea, the Lorelei alluvial diamond mine in Namibia, the Krugersdal/Morgenzon and Roodepan alluvial diamond mines in the Ventersdorp district of South Africa, the Schmidtsdrift and Sydney-on- Vaal alluvial diamond mines along the lower Vaal River in South Africa, the London alluvial diamond mine in the Schweizer Reneke district of South Africa, the Kameelfontein alluvial diamond project in the Cullinan district of South Africa, as well as various small-scale alluvial diamond projects in South Africa and Namibia. 5. My experience on alluvial diamond deposits is both as operator and as consultant, during which I have prepared costing estimates for mining and processing operations. In addition, as consultant, I have seen and reviewed operations and their various cost centres. 6. I have read the definition of “qualified person” set out in National Instrument 43-101 (“NI 43- 101”) and certify that by reason of my education, affiliation with a professional association (as defined in NI 43-101) and past relevant work experience, I fulfil the requirements to be an independent “qualified person” for the purposes of NI 43-101. 7. I am responsible for the preparation of this geological report entitled “Geological Report on the Klipdam/Holpan Alluvial Diamond Mine, Barkly West District, The Republic of South Africa”, for Rockwell Diamonds Inc.(effective date 30 April, 2012). 8. I have visited the Klipdam/Holpan properties during the period 30 August – 2 September 2010. 9. My previous involvements with the Klipdam/Holpan property is as author (or co-author with G A Norton) of the technical reports entitled: i. “Technical Report on The Klipdam and Holpan Alluvial Diamond Properties, Barkly West District, The Republic Of South Africa” dated 30 March 2007 ii. “Technical Report on The Klipdam and Holpan Alluvial Diamond Properties, Barkly West District, The Republic Of South Africa” updated on 31 October 2007 iii. “Technical Report on The Klipdam and Holpan Alluvial Diamond Properties, Barkly
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West District, The Republic Of South Africa” updated on 31 March 2008 (in conjunction with G Norton) iv. “Technical Report on the Klipdam/Holpan Alluvial Diamond Properties, Barkly West District, The Republic of South Africa”, for Rockwell Diamonds Inc., effective date 28 February 2009 (in conjunction with G Norton) v. “Technical Report on the Klipdam/Holpan Alluvial Diamond Properties, Barkly West District, The Republic of South Africa”, for Rockwell Diamonds Inc., updated 22 December 2009 (in conjunction with G Norton) vi. “Technical Report on the Klipdam/Holpan Alluvial Diamond Properties, Barkly West District, The Republic of South Africa”, for Rockwell Diamonds Inc., effective date 30 November 2010 (in conjunction with G Norton)
10. I am independent of the issuer applying all of the tests of both National Instrument 43-101 and SAMREC 11. At the date of signature, to the best of my knowledge, information and belief, this report contains all the scientific and technical information that is required to be disclosed so as to make the report accurate and not misleading.
Dated this 14 June, 2012
______Tania Ruth Marshall (Dr)
Geological Consultant (Pr. Sci. Nat.) SACNASP registration number 400112/96
P O Box 6578 Homestead, 1412 Republic of South Africa Tel/Fax: +2711 828-2989 E-mail: [email protected]
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19.2 Glenn Alan Norton
I, Glenn Alan Norton (Pr. Sci. Nat.) do hereby certify that:
1. I am the Mineral Resources Manager of Rockwell Diamonds Inc. of: Level 0, “Wilds View”, Isle of Houghton Cnr: Boundary & Carse O’Gowrie Road Houghton Estate, Johannesburg South Africa, 2198
2. I graduated with a degree in Bachelor of Science from Rand Afrikaans University in 1998. In addition, I have obtained a Bachelor of Science (Honours) in Geology in 1999.
3. I am a member, in good standing, of the Geological Society of South Africa (# 965050) and the South African Institute of Mining and Metallurgy (SAIMM) # 703861. I am also registered with the South African Council for Natural Scientific Professions as a Geological Scientist since 2006 (SACNASP registration number 400042/06).
4. I have worked as a geologist continuously since my graduation from university in 1999. During this period I have been involved, inter alia, in the exploration and exploitation of alluvial diamond deposits throughout Africa.
5. As the Group Technical Manager of Rockwell, I am not independent of the issuer.
6. I am the co-author of this technical report entitled “Technical Report on the Klipdam/Holpan Alluvial Diamond Mine, Barkly West District, The Republic of South Africa”, for Rockwell Diamonds Inc. (effective date 30 April, 2012).
7. My previous involvements with the Klipdam/Holpan property is as co-author of the technical reports entitled: i. “Technical Report on the Klipdam/Holpan Alluvial Diamond Properties, Barkly West District, The Republic of South Africa”, for Rockwell Diamonds Inc., effective date 28 February 2009 ii. “Technical Report on the Klipdam/Holpan Alluvial Diamond Properties, Barkly West District, The Republic of South Africa”, for Rockwell Diamonds Inc., updated 22 December 2009 iii. “Technical Report on the Klipdam/Holpan Alluvial Diamond Properties, Barkly West District, The Republic of South Africa”, for Rockwell Diamonds Inc., effective date 30 November 2010
8. As the Group Technical Manager of Rockwell Diamonds Inc, I oversee the corporate strategy with regards to the exploitation of the company’s resources. This includes the day to day mining and long term mine planning. Incorporated in to these duties is also the acquisition of new resources either through exploration or through the purchase of existing resources and operations. It is also my duties to ensure that all the company’s resources and rights are maintained in compliance with the exchanges as well as the various governing bodies in South Africa.
9. I visit the Klipdam/Holpan Mine for a minimum of one day each week.
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10. At the date of signature, to the best of my knowledge, information and belief, the information presented in this report is accurate and not misleading.
Dated this 14 June, 2012
______Glenn A Norton, B.Sc.Hons,
Mineral Resource Manager (Pr. Sci. Nat.) SACNASP registration number 400042/06
Level 1, “Wilds View”, Isle of Houghton Cnr: Boundary & Carse O’Gowrie Road Houghton Estate, Johannesburg South Africa, 2198 [email protected]
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