Etruscan Diamonds Assessing Options for Blue Gum Project
12 Diciembre 2008 - 3:59PM
Marketwired
Mountain Lake Resources Inc. (TSX-V: MOA) ("Mountain Lake" or the
"Company") reports that, due to the severe drop in rough diamond
prices, its minority owned subsidiary Etruscan Diamonds Ltd.
("Etruscan Diamonds") announced today it is assessing various
options for the Blue Gum Diamond Project including possible
alternatives for financing to provide sustaining capital for
operations or a potential temporary suspension of production until
such time as market conditions improve.
During the first quarter of 2008, Etruscan Diamonds recommenced
mining and processing operations at the Tirisano Diamond Mine
located on the Blue Gum property. The gravel from the mine was
being processed through the Tirisano dense media separation (DMS)
plant and through four 16 foot pan plants with the objective of
achieving a monthly throughput of 100,000 cubic meters of gravel
per month. The DMS has a capacity of 40,000 cubic meters and the
pan plants 60,000 cubic meters per month.
In an effort to reduce costs, during the month of November
Etruscan Diamonds scaled back staff and operations at Blue Gum to
process 60,000 cubic meters per month through the pan plants and
suspended processing at the DMS plant. Concurrently, application
was made to the Industrial Development Corporation ("IDC") for a
loan of R30 million (approximately Cdn$3.6 million) to provide
Etruscan Diamonds with the required working capital to continue
operations during these turbulent economic times. The global
economic downturn, coupled with the seasonal slowdown in the rough
diamond market, has placed severe pressure on rough diamond prices
which have dropped as much as 50% from those seen earlier in the
year.
Yesterday, the IDC advised Etruscan Diamonds that it would not
be in a position to provide further funding to the Company at this
time. The IDC indicated that its decision was not based on a
negative assessment of the assets of Etruscan Diamonds but rather
on the concern regarding the uncertainty of the timeframe for rough
diamond price recovery. Etruscan Diamonds has a loan outstanding
with the IDC in the amount of R15 million (approximately Cdn$1.8
million) and management is now in discussions with the IDC and
other creditors to restructure existing obligations. At the same
time, management is assessing various operational alternatives to
further reduce costs (including temporary suspension of operations)
together with various financing alternatives to assist Etruscan
Diamonds through these difficult market conditions.
Kevin MacNeill, President of Etruscan Diamonds, stated:
"Given the current global economic climate and its impact on
rough diamond prices, our near term focus is on restructuring our
operations and obligations to ensure the long-term viability of the
Blue Gum Project.
"In the longer term, we believe that the price of rough diamonds
will recover and Etruscan Diamonds will be well positioned to take
advantage of such a recovery. The geological foundation of the Blue
Gum Project remains strong with an indicated diamond resource that
could support a +10 year mining operation at 100,000 cubic meters
per month. Our recent production statistics continue to confirm the
geological model concerning grade and volumes. The pan plants have
been operating well and we are confident design throughputs can be
achieved."
Production at the Tirisano Diamond Mine for the three month
period ending August 31, 2008 was approximately 150,000 cubic
meters yielding 4,099 carats for an overall grade of 2.74 carats
per hundred cubic meters and a rough tender average value of US$589
per carat.
Production at the Tirisano Diamond Mine for the three month
period ending November 30, 2008 was approximately 156,000 cubic
meters yielding 4,250 carats for an overall grade of 2.70 carats
per hundred cubic meters and a rough tender average value of US$381
per carat.
As previously announced, Etruscan Diamonds received a National
Instrument 43-101 compliant independent resource update on the Blue
Gum Project titled Technical Report on the BlueGum Alluvial Diamond
Project (Nooitgedacht 131, Hartbeestlaagte 146 and Zwartrand 145
properties), Ventersdorp District, Republic of South Africa,
prepared by Dr. Tania Marshall of Explorations Unlimited as of June
30, 2008. This independent report estimated that the Blue Gum
Project contains 25.5 million cubic meters of indicated diamond
resource and 15.3 million cubic meters of inferred diamond
resources at grades ranging from 1.77 to 2.85 carats per hundred
cubic meters of gravel.
The Blue Gum Diamond Project is operated through Blue Gum
Diamonds (Pty) Limited, which is owned 74% by Etruscan Diamonds and
26% by Mogopa Blue Gum (Pty) Limited ("Mogopa"). Mogopa is Etruscan
Diamond's Black Economic Empowerment partner for the project as
required by South African mineral legislation. The Mogopa community
consists of about 350 families located near the Blue Gum Diamond
Project. Etruscan Diamonds and the Mogopa community have shared a
long positive working relationship.
Robert Harris, P.Eng., Vice President of Operations of Etruscan,
is the Qualified Person overseeing production and development in
South Africa and has reviewed and approved this press release.
About Mountain Lake Resources Inc.
Mountain Lake Resources Inc. (TSX-V: MOA) is a diversified
junior mining and exploration company whose corporate strategy is
to build shareholder value through the exploration and development
of economically viable mineral properties. Current projects
include: a 100% interest in the Bobby's Pond base metals project
(Newfoundland) as well as an option to acquire initially a 51%
interest in the surrounding claims from Cornerstone Resources; a
30% interest in the Valentine Lake gold project (Newfoundland), a
joint venture with Richmont Mines Inc.; a 13.07% stake in Etruscan
Diamonds Limited, a producing diamond miner (South Africa); and
options to acquire a 100% interest in the Falls Grid (New
Brunswick) and Little River (Newfoundland) gold exploration
properties. For more information visit: www.mountain-lake.com
On Behalf Of the Board of Directors
s/"Gary Woods"
President & CEO
The TSX venture exchange has not reviewed and does not accept
responsibility for the adequacy or accuracy of the content of this
news release.
Distributed by Filing Services Canada and retransmitted by
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