A Hefty Pair of Sparklers Brightens up Lonrho’s Investors

on Aug 22, 2012
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Australian miner Lonrho Mining (ASX:LOM) confirmed on Tuesday (August 21) that it had found two massive diamonds at its 3,000-square-kilometer Lulo concession in the Cacuilo River valley, north-eastern Angola. The mining company announced the discovery of a 131.5-carat gem-quality diamond and a 38.3-carat rough stone. The bigger of the two diamonds, recovered from the BLK08 bulk sample at the site, is the largest to be found on the concession to date. The smaller stone is the third-biggest diamond uncovered since the opening of the diamond project two years ago.

Lonrho Mining did not specify colour or clarity, or how the stones would be sold, but said their size is impressive. And even though the pair is yet to be valued, Miles Kennedy, Lonrho’s managing director, said the discovery underscores the potential of the Lulo mining project and Angola as an emerging diamond market: “The latest diamond recoveries underline the world-class exploration potential of the Lulo concession,” Mr Kennedy said in a statement.

!m[](/uploads/story/282/thumbs/pic1_inline.png)The diamond discoveries come ahead of a proposed kimberlite drill programme of 61 prioritised target sites throughout the project. According to Mr Kennedy, the sheer size of the large diamond just found is a testament to the fact that its kimberlite, a volcanic rock containing diamonds, must be nearby. “The recovery of such a spectacular 131.5-carat diamond, in particular, highlights both the prospectively of the diamondiferous gravels in the Cacuilo River valley and, more significantly, the kimberlite pipe that has shed this stone,” he remarked.

Kimberlite ‘pipes’ are C02 and mineral species with peculiar chemical compositions rich. These rock formations originate at between 93 and 280 miles beneath the earth’s crust, deep in the mantle. The C02 and H20 composition means that the rock is prone to eruption in its lava form when it reaches around 1.5 miles from the surface producing vertical columns of rock which rise towards the earth’s surface, eventually forming the carrot-shaped ‘pipes’. The combination of their mineral and elemental composition, their depth of origin and their volcanic rise to the earth’s surface makes these rare rock formations particularly rich in diamond xenocrysts.

The Lulo concession is a joint venture between Lonrho Mining and Endiama, Angola’s government-owned diamond company. It is located in the country’s diamond-rich Lunda Norte province, some 750 kilometres from Angola’s capital city of Luanda and is only one of the mines and diamond projects present in the African country. Angola’s central and north-eastern regions are known for their massive diamond reserves. In fact, the diamond industry is a significant source of both domestic and foreign revenue for Angola. The stone’s production generates more than $650 million (£412 million) a year. The precise amount and the full potential of profit from mining, however, are unknown. According to a report from Consultancy Africa Intelligence, exact figures cannot be stated due to a high level of Illegal diamond mining and smuggling in the region.

Although the world’s fifth-largest diamond producer by value after Botswana, Russia, Canada and South Africa, Angola has faced difficulties trying to attract foreign investment due to wide-scale smuggling, alleged human rights violations and corruption. The African nation is now a member of the Kimberley Process, a joint government, industry and civil society initiative to stem the flow of “conflict diamonds” — rough diamonds used by rebel movements to finance wars against legitimate governments. Yet, critics have been calling for a review of the scheme, as concerns have risen over human-rights abuses in diamond territory controlled by governments themselves. Lonrho’s recent diamond discoveries, however, have brightened up the outlook for the local industry, promising investors profitable mining in Angola.

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