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| | |   Over the last six years, Etruscan, through its subsidiary, Etruscan Diamonds (Pty) Limited ("Etruscan Diamonds"), has acquired strategic properties in the Ventersdorp and Lichtenberg alluvial diamond districts, located approximately 150 kilometers and 200 kilometers respectively west of Johannesburg, South Africa. Until February, 2007, Etruscan Diamonds was effectively owned 51% by Etruscan, 25% by Mountain Lake Resources Inc. ("Mountain Lake") and 24% by various other third parties. In February, 2007, Etruscan and Mountain Lake together with the other third parties formed a new Canadian company, Etruscan Diamonds Limited, to hold their respective interests in the diamond assets in South Africa. These parties transferred all of their interests (both debt and equity) in Etruscan Diamonds to Etruscan Diamonds Limited in exchange for shares. In March 2007, Etruscan Diamonds Limited completed an $11 million private placement financing. CIBC World Markets acted as the private placement agent in relation to the financing. The proceeds of the private placement are being used primarily to continue the exploration program and undertake a pre-feasibility study on the Blue Gum Project property described below. Etruscan presently owns 53.7% of Etruscan Diamonds Ltd. The restructuring and financing was undertaken to realize the value of the diamond assets and to allow Etruscan Diamonds to more aggressively pursue the exploration and development of the diamond assets while Etruscan focuses on the exploration and development of its gold properties in West Africa and Mountain Lake focuses on exploration of its gold and base metals properties in Eastern Canada. Ventersdorp Alluvial Diamond District
The Ventersdorp Alluvial Diamond District is located approximately 150 kilometers west of Johannesburg and covers over 5,000 square kilometers. The area has not been commercially exploited on a large scale. From 1926 to 1984 over 667,000 carats were produced from the District. Over the past six years, Etruscan Diamonds has been acquiring strategic properties throughout the Ventersdorp district and presently holds two mining permits and 13 prospecting permits covering approximately 2,100 km2 with an additional two prospecting permits under application. Etruscan Diamonds' efforts to prioritize its land holdings in the Ventersdorp District have been assisted by the results of an airborne gravity survey conducted over an area of approximately 4,000 square kilometers. The survey was conducted by Bell Geospace Ltd. of Aberdeen, Scotland for Etruscan Diamonds using its proprietary Air-FTG™ system. The survey identified a number of prospective sinkhole features and Etruscan Diamonds has initiated follow up ground surveys and drilling on several of these targets. This work has confirmed the presence of large sinkhole features as identified by the airborne survey, and the next step will be to determine the gravel volumes and undertake bulk samples to determine the grade.
Geology Alluvial diamonds in the Ventersdorp District are found in gravel "runs" that are hosted by predominantly dolomitic bedrock of the Transvaal Supergroup. Gravel deposition has occurred in a karst environment where the dolomite walls of the host-rock are vertical; the mode of gravel deposition is not typical fluvial alluvial; periodic subsidence has taken place during deposition; and deposition has taken place over a long time (since, at least, the Mesozoic) resulting in a build-up of a very thick gravel sequence. The deepest drilling indicates that the lower gravels extend down at least to 117 meters (without intersecting bedrock). Geophysical interpretation, however, indicates that final depths of the sinkholes may be in excess of 120 meters and, potentially, up to 200 meters in places. Mineralisation is confined to the gravel packages in-filling karst caverns etched out of the chert-rich dolomites of the Malmani Group. A general stratigraphy has been recognized in the gravel packages characterized by a clay-poor Lower Gravel Package, a Pebbly Clay Package, an Upper Gravel Package and a Clay Package. The Lower Gravel Package and the Upper Gravel Package are the principal units of economic significance as the diamond grades encountered in these units have, historically, supported commercial mining ventures. Alluvial diamond deposits in the Ventersdorp district all share similar characteristics. The diamonds occur in a series of alluvial gravel deposits that extend for distances in excess of 12 kilometers with widths of up to 1,000
meters. The diamonds from the Ventersdorp district typically average one carat in size using a conventional two
millimeter screen.
Blue Gum Diamond Deposit
Etruscan Diamonds holds one mining permit and three prospecting permits over three adjacent properties in the Ventersdorp alluvial diamond district (Nooitgedacht, Hartbeestlaagte and Zwartrand properties) known as the Blue Gum Project. The Tirisano Diamond Mine, located on the Nooitgedacht property, represented the first phase of development for the Blue Gum Project. The Tirisano Diamond Mine was initially operated by Etruscan Diamonds. In May 2004, Etruscan Diamonds entered into an agreement with Mvelaphanda Exploration to facilitate the expansion of the Tirisano Diamond Mine and Mvelaphanda Exploration became the operator of the Mine. In June 2005, Mvelaphanda Exploration earned a 50% interest in the Tirisano Diamond Mine by commissioning a plant with a design capacity of 300 cubic metric tons per hour throughput and a 50/50 joint venture between Etruscan Diamonds and Mvelaphanda Exploration was formed with Mvelaphanda Exploration continuing as operator. Total diamond production from the Tirisano Diamond Mine up to the end of November 2005 when production ceased was in excess of 23,000 carats. In October, 2007, Mvelaphanda Exploration transferred its 50% interest in the Tirisano Diamond Mine Joint Venture to Etruscan Diamonds. In 2007, Etruscan Diamonds also concluded an agreement with Mogopa Minerals (Pty) Ltd. ("Mogopa") transferring a 26% interest in the Tirisano Diamond Mine to Mogopa. Mogopa replaces Mvelaphanda Exploration as the entity providing the Black Economic Empowerment ("BEE") for the project as required by South African mineral legislation. Mogopa is also Etruscan Diamonds' BEE partner on the Hartbeestlaagte and Zwartrand properties. Having control of the Tirisano Diamond Mine operation and surrounding Nooitgedacht property allows Etruscan Diamonds to consolidate the development of the diamond resources on the Nooitgedacht property with those on the adjacent Hartbeestlaagte and Zwartrand properties. A National Instrument 43-101 compliant independent technical report dated January 31, 2008 prepared by Dr. Tania Marshall of Explorations Unlimited estimated the in situ indicated diamond resources on the Blue Gum Project to be 20.5 million cubic meters and the in situ inferred diamond resources on the Blue Gum Project to be 17 million cubic meters as follows:
Etruscan Diamonds is presently undertaking a pre-feasibility study on the Blue Gum Diamond Project which is scheduled to be completed in April 2008. The pre-feasibility study is being led by MDM Engineering of South Africa. Upon successful completion of the pre-feasibility study, a public offering is planned together with an application for a stock exchange listing in order to advance the Blue Gum Diamond Project to full scale production. While the pre-feasibility study is underway, Etruscan Diamonds has recommenced mining at the Tirisano Diamond Mine. The gravel from the mine is being processed at the Tirisano plant, which can efficiently treat 50,000 cubic meters of gravel per month. Etruscan Diamonds has also installed four 16 foot pan plants, which add an additional 50,000 cubic meters per month capacity to the Tirisano operations. Maps and Photos
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|  | © 2006 Etruscan Resources Inc. All Rights Reserved. | Disclaimer | | |
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