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Xceldiam ready to spread its wings
Allan Seccombe
Posted: Mon, 21 Aug 2006

[miningmx.com] -- XCELDIAM is ready to start looking for other concessions or projects in Angola as its exploration projects on kimberlite and alluvial projects bed down satisfactorily, CEO Tim George said on Monday.

Xceldiam has two shallow alluvial deposits it is exploring. It should know within the next six months whether these deposits could be viably exploited. It also exploring 20 kimberlite prospects, George told Miningmx.

Xceldiam holds 40% and 39% interests in the alluvial and kimberlite deposits respectively in a 3,000 square kilometre concession known as the Luangue project. State-owned diamond company Endiama holds the majority stake, with a group of private Angolan investors holding the remainder.

Xceldiam is providing all the funding for exploration and is doing all the work, George said, raising the possibility of an increased stakes if and when a new mining company is formed to exploit them.
we are comfortable that things are on track
“We’ve always maintained that we will focus on Luangue until the exploration programme is properly bedded in and it is reasonably bedded in now. We do look at other projects, but they have to complement the existing project,” George said.

“We’ve been Angola focussed to date, getting this project properly bedded down, staffed up and moving forward so that we are not diluting our management time across too many projects.

“Now we are comfortable that things are on track there is scope for looking at one or two more, bearing in mind we are committed to funding the Angolan commitments as we said we would do.”

He did not rule out other projects in sub-Saharan Africa, saying interest in those would depend very much on how prospective they were if they were in exploration phase or what the practicalities would be if it was a near-mine project.

If any of the 20 kimberlite deposits Xceldiam is exploring turns out to be of significant size then the company might look for a joint venture arrangement with a major company such as BHP Billiton or De Beers to exploit it because of the tremendous cost of bringing a large kimberlite into production, he said.

Xceldiam has a cooperation agreement with Petra Diamonds, which is working on the Alto Cuilo deposit neighbouring the southern border of the AIM-listed company’s concession in northeastern Angola. Petra has BHP Billiton as a partner.

Mining costs in Angola are substantially higher than elsewhere in sub-Saharan Africa because of the difficult logistics and high set up costs, which means the deposit has to be very lucrative to make them viable, George said.

“The foreign partner bears the cost in Angola. It is highly unusual to be in a situation where you are forced to be the funder and the operator and still hold a minority stake,” he said of the way exploration and mining is conducted in the south west African country.

There is the potential of negotiating a higher stake in the operating company but not a controlling stake because Endiama makes it a rule to retain a majority stake in mining companies operating in Angola.

“There will be cash calls for capital commitments and start up costs (when setting up an operational company), so at that point in time the partners will have to decide how they will fund it. Perhaps there is an opportunity there,” George said. Endiama would have to decide what projects to invest in and focus on its priorities.

The partnership in Angola has sufficient expertise to bring the alluvial deposits into deposit if they prove to be viable. Work has been conducted on the alluvial deposits since April last year and the understanding of them is far more advanced than that of the kimberlites, where work started in April this year.

There are a 70 tonnes per hour sampling plant and 20 tonnes per hour dense media separation plant on sight. There is also a small prospecting plant.
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“Those are processing alluvial gravels. It will take us about six months to evaluate those deposits and by the end of this year we should have a good idea of whether they are exciting. Indications so far are that we are in the right place,” George said.

Xceldiam will decide then whether traditional mining techniques are viable or perhaps alternative mining methods to extract gravels from thicker overburdens than shifting it through mechanical means alone, he said.

Further alluvial deposits are being sought in the vicinity, he said.

There are sufficient funds for the next year of planned exploration, he said.

About half of the costs so far have gone towards putting in infrastructure like roads and bridges across one of the many rivers flowing through the concession. Diesel, food, spares and material is brought in by road in a five-day trip from Luanda, 700 km to the west.

De Beers recently returned to Angola after pulling out in May 2001 after a dispute with the government. The presence of De Beers and BHP Billiton has increased confidence in smaller exploration companies operating there, George said.