AFRICA SPECIAL — Starpoint Goldfields shoots for summer diamond production

Starpoint Goldfields (STS-V) is aiming for a summer startup at the Yetwene alluvial diamond project in northwestern Angola.

The company now holds a 52% interest in the 550-sq.-km concession, which straddles the Chicapa and Lumanha Rivers.

Some 15% of the concession was drilled by DeBeers Consolidated Mines between 1970 and 1974.

“They had to leave because of the Angolan civil war,” says Starpoint President Richard Ilott. “But we have obtained all their reports and drill maps.”

Based on more than 2,000 holes drilled by DeBeers, Starpoint estimates that the explored portion of Yetwene has an indicated resource base of 900,000 carats, or 1.8 million cubic metres grading 0.51 carat per cubic metre.

Starpoint itself has so far conducted no work on the property, relying on exploration by DeBeers.

Production for the first year is projected at 500 cubic metres per day.

Thereafter, and for the remainder of the mine’s life, daily output is expected to average 1,500 cubic metres.

Operating costs are projected at US$28.93 per cubic metre in year one, and US$14.99 per cubic metre thereafter.

A diamond royalty of 12.5% will be taken from revenue before partnership allocation. Forty per cent of revenue generated by the first 750,000 carats will go to the Angolan partners, with the remainder going to Starpoint.

Operating and capital costs for the production that follows will be split 48%-52%, respectively, between the Angolan partners and Starpoint.

Management rights are held by Starpoint, which is also liable for operating costs for the first 750,000 carats.

“We have to invest US$7 million to put in a plant,” Ilott says. “We also require about US$1 million in working capital. But cash flow is almost immediate. We’ll pay off infrastructure costs in slightly more than one year.” The company has $1 million cash on hand, following a recent private placement.