Blina Diamond Project, Ellendale, Western Australia

Highlights

  • POZ Minerals Limited owns 100% of the Blina Diamond Project in the Ellendale Region of Western Australia.
  • Terrace 5 alluvial prospect includes historic bulk sampling of 40,613 cubic metres which recovered 1,432 carats of diamonds at a grade of 3.53 carats per hundred cubic metres and an average stone size of 0.42 carats.This included fancy yellow diamonds for which the Ellendale Field is renowned.
  • 40km strike of diamondiferous Terrace 5 alluvial gravels to target.
  • Diamond bearing lamproite pipeson acquired ground provide exploration upside.
  • Purchase of a parcel of Ellendale rough diamonds to assist exploration.
  • The Company has applied for four mining leases over key areas of Terrace 5 and is pursuing the grant of these leases to enable bulk sampling operations over the most prospective and shallowest parts of the diamondiferous gravels.
Figure 1: Blina Diamond Project, Tenements, Terrace 5 Alluvials and Lamproite Pipes
Blina Diamond Project, Tenements, Terrace 5 Alluvials and Lamproite Pipes

1.0 Introduction

POZ Minerals Limited (ASX: POZ or Company) controls the Blina Diamond Project in the Ellendale Diamond Province of the Kimberley Region, Western Australia.
 
The project is 100% owned by POZ and has no private royalty obligations. The Blina Diamond Project consists of two POZ tenement applications with a combined area of 161 km2 situated 100km east of Derby. There are four mining lease applications within these tenements (Figure 1).
 
A significant amount of historical exploration work has been carried out by various companies over the project area including:

1987 to 1993 Stockdale Prospecting Limited (subsidiary of DeBeers)
1994 to 1997 Diamond Ventures NL, Ellendale Resources NL and Auridiam Limited
1994 to 2007 Kimberley Diamond Company (KDC)
2007 to 2014 Blina Diamonds NL (BDI)
Previous work includes geophysical surveys, geochemical sampling, aircore drilling, Bauer drilling and bulk sampling operations. The data is currently being assessed by POZ geologists.

2.0 Terrace 5 Alluvial Diamond Prospect

Central to the Blina Diamond Project is a diamondiferous palaeo-channel, discovered in 1995 and named Terrace 5 (Figure 1). This channel has been tracked over a distance of some 40km and drains the central section of the diamondiferous Ellendale lamproite field. Gravels from this system are characterised by containing significant concentrations of relatively large diamonds2. It is likely that there are multiple lamproitic sources for these diamonds that remain to be identified.

Figure 2: Terrace 5 Stratigraphy
Terrace 5 Stratigraphy

Terrace 5 was once a major alluvial system with channel widths from 200-500m. Gravels (where present) are variable, but average about one metre in thickness. Diamonds recovered from the gravels are considered large, with an average stone size of around 0.42 carats. Most stones are of gem quality. The largest diamond recovered to date from Terrace 5 weighed 8.44 carats (from Pit 82)6, with stones larger than two carats common.1

2.1 Terrace 5 Bulk Sampling Program 2005

Any of the following which is italicised is taken from statutoryreports as referenced.

During 2005, two large cuts were excavated from within Terrace 5 (Cut 1 and Cut 2) as part of a program aimed at recovering sufficient diamonds to provide a 'run-of-mine' valuation for the Terrace 5 production. The cuts were excavated across the palaeo-channel at two locations (Figure 1). The Government Mines Department decided the bulk sampling operations be considered "trial mining"6.
 
The overlying Pindan dune sand was removed using scrapers and stock piled at the sides of the pit. Two rows of test pits were dug at 20m intervals, using a 30 tonne excavator, along each side of the pit to establish the depth to the gravel sequence, and the quality and thickness of the gravels. The barren sandy clay sequence was then removed down to the top of the gravel sequence. Figure 3 (re-drafted and amended from the original by POZ for clarity) shows the test pit locations and the lithologies encountered. 
 
The large-scale bulk sample was split into blocks based on gravel thickness and quality, and the gravels removed as sub-samples. This method was used to enable controls on grade correlations and to provide the plant with individual samples of around 2,000 tonnes. The samples were excavated using a 65 tonne machine and hauled to the ROM using D400 moxys. 
 
Once the 65 tonne excavator had removed the gravels, a 30 tonne machine with a blade on the bucket scraped the floor of the block and cleaned out any potholes of gravel remaining. This material was then hauled to the ROM and added to the main sample pile. About 10cm of overlying barren material, and 20cm of bedrock waste, was factored into the ore horizon removed. This precision was very much dependent on the skill of the excavator operator, and the proportion of waste in the sample increased greatly when the gravel horizon was less than 30cm in thickness. 
 
All samples were processed through Blina’s 50 tonne per hour DMS processing plant. This plant was built by Mine Plant Constructions in May 2005, and commissioned in early July. Concentrate from the samples was processed at KDC’s Recovery section using Flowsort X-ray machines, with hand-sorting of the final product.3

2.2 Geology of Bulk Sample Zone

Figures 4 and 5 (redrafted and amended from original datafor clarity) shows sections from test pits at Cut 1 and Cut 2 which were logged prior to the bulk sampling. The overburden (waste) consists of Quaternary Pindan (wind-blown dune) Sand, then Miocene clays, sands and sandy clays with minor lateritic horizons. Below these lie the Miocene diamondiferous gravels. Below the gravels lies the unconformable basement (bedrock) consisting of Mesozoic and Proterozoic sandstones and siltstones. This unconformity surface at the base of the gravels is the most prospective area for diamonds, especially within natural trap sites such as gutters or potholes.

2.2.1 Cut 1 Geology

The Pindan Sand was pre-stripped from Cut 1 prior to logging of the test pits. The depth of the Pindan Sand was between 3.50m and 5.25m. Below the Pindan Sand, the additional sandy-clay overburden was between 2m and 4m deep. The overall depth of overburden in Cut 1 is between 7.5m and 9.0m. 
 
Three main types of gravel were logged, matrix supported gravel, clast supported gravel with mostly quartzite cobbles and clast supported gravel with mostly ferruginised sandstone cobbles. The pit logging indicated that gravel thicknesses varied across the pit.
 
Cut 1 was the eastern-most excavation. The cut had dimensions at its base of 350m long, 70m wide and up to 12m in depth. A discrete gutter with gravels up to 3m thick was located towards the southern end of the cut. This gutter contained a significant proportion of the diamonds recovered from this excavation. Cut 1 became the tailings dam for BDI's processing operations.2

2.2.2 Cut 2 Geology

In Cut 2 the depth of the Pindan Sand is between 1.0 and 3.0m. Below the Pindan Sand, the additional overburden depth is between 2m and 4m deep. The overall depth of overburden in Cut 2 is between 1.4m and 6.4m.
 
In the north-west of Pit 2 there was a bedrock high with no gravel, this area was used to store overburden. Test pitting indicated the gravel sequence comprised two clast-supported horizons with a variable layer (up to a metre thick) of sandy clay with minor cobbles in between. This layer of sandy clay was mined together with the gravels and resulted in significant sample dilution. This may account for the lower grades in Cut 2 than Cut 1 and could be addressed by more selective mining. 
 
2Cut 2 was located 3.5 km west of Cut 1 and had base dimensions of 450m long and up to 8m deep. Cut 2 contained several gutters and bedrock bars with diamonds again concentrated near the southern end of the Cut.2

2.3 Bulk Sampling Test Results from Cut 1 and Cut 2
 
A total of 72,050 tonnes was reported as being mined and treated. This equates to 40,613 cubic metres. The average grade from cut 1 was 4.36 carats per hundred cubic metres (ct/100m3) and from Cut 2 a grade of 2.71 ct/100m3
 
An overall average grade was 3.53 ct/100m3 with an average stone size of 0.42 carats. A total of 1,432 carats were recovered from the two cuts. 

Table 1: Summary of Bulk Sampling Results Cut 1 & Cut 2

Cut Volume (m3) Tonnes (t) Size Distribution* Number Diamonds Total Carats Average Size (ct)
Grade ct/100m3
 
Grade ct/100t Largest Diamond (ct)
+3.35mm -3.35mm
C1 22,006 40,445 676 1,698 2,363 959.2 0.41 4.36 2.37 5.92
C2 18,607 31,605 336 757 1,093 472.3 0.43 2.71 1.49 7.00
Total 40,613A 72,050 1,012 2,455 3,456 1,432 0.42 3.53 2.00 7.00
* Diamonds to 1.5-16mm range recovered for these samples 
A Includes Metallurgical and other bulk samples collected from the Cut 2 area for which volumes were not recorded. Diamonds to 1.2-14.0mm range recovered for these samples. 
All weights are pre-cleaning

Due to restrictions within the JORC Code, POZ is not able to report the valuation placed on these diamonds. However, to ensure as full a disclosure as possible, the following information (which is publicly available via the ASX website2) is reproduced below:
 
The diamonds (recovered from Cut 1 and Cut 2) were largely consistent with typical Ellendale Field diamonds and contained a significant proportion of fancy yellow stones - particularly in the larger stone sizes. The diamonds were considered of high quality and have a larger stone size distribution than Ellendale 9. The diamond population is distinguished from Ellendale 9 material by the presence of a significant proportion of angular octahedral stones.2
 
The best result from Cut 1 was 7.34 carats per hundred cubic metres (sample block C1WB 008) and the largest stone size recovered was 5.92 carats (sample block C1CB004B).
 
The best result from Cut 2 was 4.62 carats per hundred cubic metres (sample block C2CB 005) and the largest stone size recovered was 4.63 carats (sample block C2CB001).
 
Figure 3 and Appendix B details the full results of the bulk sampling program.
 
Appendix C provides details of sampling techniques and data.

Figure 3: Bulk sampling Results Cut 1 & Cut 2 (Plan Views)
 Bulk sampling Results Cut 1 & Cut 2


Figure 4: Cut 1 Geology Section View (Overlying Bulk sampling Block Number)
Cut 1 Geology Section View


Figure 5: Cut 2 Geology Section View (Overlying Bulk sampling Block Number)
Cut 2 Geology Section View


3.0 Further Exploration Targets

Previous work has outlined a number of diamond bearing lamproite pipes on the tenement area. Data is currently being reviewed with a view to prioritising which pipes may be the most prospective for further sampling work. 
 
In addition, geophysical and geochemical surveys have been previously conducted over the area and some new pipes were identified by KDC and BDI. There is the potential to discover further new pipes which may have only a minimal geophysical signature. 

4.0 Ellendale Diamonds
 
The Ellendale diamond mining project on Mining Lease M04/372 (which adjoins POZ tenements, Figure 1) was until recently operated by Kimberley Diamonds Pty Ltd (KDC) a wholly owned subsidiary of Kimberley Diamonds Limited (ASX: KDL). On 1 July 2015, KDC was placed into voluntary administration by KDL.3
 
KDL reported (ASX Release dated 31 December 2014) that the Ellendale mine was the world's leading source of rare fancy yellow diamonds, contributing 'an estimated 50% of global supply'.4
 
With the recent closure of the Ellendale mine, this supply of fancy yellows has now ceased. The majority of the diamonds within the Terrace 5 prospect are almost certainly sourced from lamproite pipes within M04/372 and POZ believes Terrace 5 could be a potentially significant new source for these fancy yellow diamonds.2

4.1 Ellendale Diamond Purchase
 
To assist in the search for new lamproite pipes, a parcel of diamonds was recently purchased from the administrators of Kimberley Diamond Company Pty Ltd. This parcel includes some stones from the Blina Diamonds NL's work which took place over the area currently covered by POZ tenements. These diamonds may prove useful in searching for new, as yet undiscovered, lamproite pipes.
 
The diamonds cost $64,947 (plus GST), and remain an asset of the Company.

Some of the Ellendale Diamonds Purchased by POZ


POZ Directors examine the recently purchased rough diamonds and associated exploration data.

Total diamond weight (in carats) written at bottom right of notes
 
NB: The diamonds above were mined from the adjoining Ellendale Mining Lease M04/372 (Figure 1) and were not mined from the POZ tenements. They are not representative of any 'run-of-mine'. 
 
Terrace 5 has been reported as containing a 'significant proportion of fancy yellow stones'(para 2.3). It is this type of high quality rough which is being targeted by POZ's Blina Diamond Project.
 
5.0 Summary
 
The Blina Diamond Project is the kind of undertaking which interests POZ due to the following key factors:
 
  1. The project is situated within a highly endowed diamond belt with excellent logistics and significant exploration upside.
  2. A considerable amount of historic exploration has been done on the POZ permits and the Company has access to this data.
  3. The potential for finding high value fancy yellow diamonds is very high.
  4. Any diamonds produced would be conflict free and could represent an opportunity for branding and premium pricing.
  5. The setting up of an alluvial diamond mining operation would be relatively modest in terms of capital cost.
  6. Acquisition costs were minimal.
  7. The project is 100% owned and carries no private royalties.
POZ Minerals is pleased with this acquisition and is now seeking permiting to explore the project.
 
Table 1 (JORC Code, 2012 Edition), references (numbered above) and supporting information to this report is available on the POZ ASX Release dated 9 October 2015: