Investment in Kopane Diamond

RNS Number : 6618P

Obtala Resources PLC

30 March 2009

 



30 March 2009

OBTALA RESOURCES PLC ('Obtala' or the 'Company')

Obtala Completes Private Placing with Kopane Diamond Developments Plc  

The Board of Obtala, the AIM quoted mineral exploration and development company, is pleased to announce the completion of a private placing subscription ('Placing') with Kopane Diamond Developments ('Kopane'), an AIM quoted diamond mining company with its main assets in Lesotho. 

Obtala has subscribed for 50,000,000 ordinary shares at a share price of 3.5p (three and half British pence) for a total consideration of £1,750,000. Following this Placing Obtala will hold a 23% interest in Kopane. The funds are being raised to finance work in respect of the Definitive Feasibility Study ('DFS') and Environmental and Social Impact Assessment of Kopane's Main Pipe Project at Liqhobong in Lesotho and for general working capital purposes. Under the terms of the Placing, Francesco Scolaro will on completion of the Placing be appointed to the Board of Kopane and will assume the role of Non-Executive Chairman. Mr Scolaro will continue in his role as Executive Chairman of Obtala.

Background on Kopane

Kopane's principal focus is the development of the Main Pipe project, in Liqhobong, Lesotho. This kimberlite pipe has a surface area of 8.6 hectares, with the potential to produce at a rate of over one million carats per annum for 20 years. Kopane owns a 75% interest in Liqhobong Mining Development Company ('LMDC') the local operator and license holder. The remaining 25% is owned by the Government of Lesotho ('GoL'). Production at the Satellite Plant was suspended on 1 December 2008 due to a decline in rough diamond prices. Prior to the suspension of production, the Liqhobong Plant was running at a rate of 420,000 tonnes/year while treating weathered Main Pipe kimberlite ahead of the bulk sampling. 

Kopane has completed the Pre-Feasibility Study (PFS) which demonstrated the economic viability of the pipe to an appropriate level of accuracy and is now well advanced on the DFS. On 17 November 2008, Kopane issued an Interim Resource Statement which showed a major increase in Main Pipe size, grade and value from previous studies. The salient features from this work were:

• Total resource tonnage of 76 million tonnes, up 79 % on the Pre-Feasibility Study ('PFS') statement published last year of 42 million tonnes. 

• Increase in the average grade to 39.1 carats per hundred tonnes ('cpht') (PFS - 27.8 cpht). 

• Increase of 156 % in the gross diamond resource of 29.6 million carats (PFS - 11.5 million carats). 

• Increase in the average run of mine carat value to $86 (PFS - $70). 

• Increase in the indicative value of the Main Pipe by 213% to $2.5 billion. 

• Completion of a 25 hole Large Diameter Drilling ('LDD') programme.

Kopane has also signed a definitive Joint Venture agreement with Mantle Diamonds Ltd ('Mantle') under which, Mantle can earn up to 70% of Kopane's diamond assets in Finland by spending $5 million on exploration and evaluation of the properties, including producing a definitive feasibility study on the Lahtojoki Project and issuing Kopane with 10 million shares in Mantle, with a pre-IPO value of £2 million. 

The Joint Venture in Finland comprises 28 mineral exploration claims and reservations, including the assets at Lahtojoki, Kuusamo and Lentiira. The agreement with Mantle Diamonds allows Kopane to focus attention on its producing and advanced exploration assets in Lesotho while retaining a significant interest in the Finnish assets.

Frank Scolaro, Chairman of Obtala, commented that 'I am confident that this investment will be value enhancing for our shareholders. Kopane's main asset is acknowledged as a world class diamond deposit. As the challenging times which we all face improve, and the diamond market returns to justifiable levels in the future, both Kopane and Obtala will reap the benefits and rewards of the seeds sown now. I am delighted to be involved in this project.'

Contact:

Simon Rollason - Managing Director Frank Scolaro - Chairman www.obtalaresources.co.uk	[phone]
Obtala Resources plc
Ray Zimmerman/Jonathan Evans	[phone]
Zimmerman Adams International Ltd - Nominated Adviser and Broker

 

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