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DIAMOND CORE RESOURCES LIMITED - PROGRESS REPORT
DIAMOND CORE RESOURCES LIMITED
(Formerly Mazal Mining and Exploration Limited)
(Incorporated in the Republic of South Africa)
(Registration number 1998/013468/06)
Share code: DMR ISIN Number: ZAE000045688
("Diamond Core" or "the company")
Progress report
Recent developments in the company
Geological
Geoventures (Pty) Limited has conducted a geological due diligence and limited
additional exploration on Paardeberg East and has reported an inferred resource
of 3 million tons on the P1 kimberlite down to 150 metres and an inferred
resource of 3.5 million tons down to 50 metres on the P3 kimberlite body. The
kimberlites will be bulk sampled to determine the grade and size:frequency
distribution curves once the exploration over the whole of Paardeberg East has
been concluded.
Several additional targets have been identified by means of geophysical work
carried out, and these will be explored further as part of the ongoing
exploration programme.
Financial
The share capital and balance sheet of the company have been significantly re-
structured. The 144 million preference shares issued in February 2003, which
were convertible into ordinary shares, have been cancelled in terms of the
subscription agreement between the company and the parties holding such shares.
In addition, the R2 million loan from Orevest plc has been written off.
Liquidation order
The provisional liquidation order against a subsidiary of the company, Diamond
Core Mining & Exploration (Pty) Limited ("DCME"), was discharged on 18 November
2003.
General
It is important that shareholders are aware of the following facts regarding the
Paardeberg East project:
i. the lack of proper mine planning by previous mine management has in all
probability resulted in a significant portion of the P1 kimberlite resource
having been sterilized;
ii. the existing plant and metallurgical equipment is not appropriately
designed for the project and must be replaced; and
iii. in excess of R0.5 million has already been spent by the company on
repairing earth moving equipment which was found to have been damaged.
The perception that "production" from the P1 kimberlite would be relatively
simple to obtain, as the necessary metallurgical plant and earthmoving equipment
are available on site, and the opinion that the operation needs minor re-
engineering to become commercially viable for the production of diamonds are
therefore not correct. The final phase of the company"s restructuring and
ongoing exploration work will require additional capital as well as the ongoing
dedication of current management working in conjunction with consultants of
various disciplines.
Planned actions
During the period between the placing of DCME into provisional liquidation in
September 2003, and its subsequent discharge from provisional liquidation in
November 2003, the directors have re-assessed the company"s strategy and
structures. The following actions are planned:
Geological
* To map the area and to continue the exploration programme on the Paardeberg
East project. Management has entered into negotiations with MSA Geoservices,
a company experienced in exploration for kimberlite structures, to conduct
the exploration programme on a contractor basis;
* To scan and digitise the pit profiles on the lease area, over which the 3-D
models of the kimberlites will be superimposed, in order to calculate
mineable volumes of kimberlite and to conduct a pit optimisation exercise;
* To dispose of the current DMS plant on the Paardeberg East site as, in the
opinion of management, it is not appropriately designed to meet the future
requirements of the project. Shareholders will be kept appraised of the
progress of such disposal;
* To design and engineer a new metallurgical plant specifically to meet the
requirements of the kimberlite resource on Paardeberg East utilising
information from the ongoing exploration programme;
* To determine the capital requirements for the Paardeberg East project and
develop a one, two and five year mine plan on the P1 kimberlite pipe;
* To conduct bulk sampling/trial mining exercise in order to formalise a
reserve/resource statement to enable the mineral assets of the company to be
more accurately valued;
* To commence exploration in February 2004 on the Skeyfontein property, through
the joint venture with the Skeyfontein Communal Property Association.
Management intends to retain MSA Geoservices to conduct this exploration
programme; and
* To progress the other prospecting permit applications which the company has
submitted for areas which are considered to be prospective for kimberlites.
Financial
* To proceed with litigation against previous mine management, for and on behalf
of shareholders, in respect of damage to the ore body, environmental damage,
infrastructural damage and damage to plant and machinery at Paardeberg East
as a result of negligent and irresponsible management;
* To raise a minimum of R2.5 million in order to continue the exploration
programme on Paardeberg East and to initiate exploration on the Skeyfontein
property;
* To implement a share consolidation;
* To commence the audit for the 2003 financial year early in January 2004;
* To post the 2002 and 2003 annual reports by mid-February 2004.
The lifting of the suspension of the listing of the company"s shares
Once the 2002 and 2003 annual reports have been finalised and distributed to
shareholders, the company will apply to the JSE Securities Exchange South Africa
to lift the suspension in trading in the company"s shares.
Hyde Park
9 December 2003
Corporate adviser
QuestCo (Pty) Limited
Sponsor
Sasfin Corporate Finance
A division of Sasfin Bank Limited
Date: 09/12/2003 01:00:06 PM Supplied by www.sharenet.co.za
Produced by the JSE SENS Department
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