Paramount plan to acquire key stake in diamond JV

Paramount Mining Corporation has announced its most significant venture....

  Paramount Mining Corporation has announced its most significant venture to date with an option agreement to jointly explore one of South Africa’s prolific diamond producing provinces.Paramount said it had reached the option agreement to acquire 50% of the Peakstar Diamond Project, located in Free State in central South Africa, from Peakstar Diamonds Pty Ltd, by spending approximately $600,000 on mining and prospecting operations.The Australian company’s JV agreement also includes an option to increase its stake to 75% with the investment of a further US$1 million (A$1.14 million) within 12 months of achieving the 50% interest.Paramount’s Chief Executive Officer, Maureen Muggeridge, said the Peakstar agreement provided the company with access to a project that was close to long-standing diamond mines and has already yielded diamonds in sampling to date.“Concluding this Peakstar acquisition agreement is the culmination of a long search by Paramount for participation in an advanced project of genuine near-term mining potential,” Ms Muggeridge said.“Peakstar is an outstanding project, for which we commenced negotiations in May this year, and has all the hallmarks of leading to a mining operation and cash-flow for Paramount in the near future,” she said.“Through the Peakstar project, our company has a significant chance of becoming a producer of high quality gem diamonds. We feel that Paramount is a particularly attractive investment opportunity, in view of its current low market capitalisation.” Ms Muggeridge said among early recoveries from the Peakstar operation are clear white diamonds weighing 8.2 carats and 4.6 carats. The Peakstar Diamond Project is located on the same kimberlite fissure system that hosts the Star Diamond Mine, operated by Petra Diamonds, and the Rex Diamond Mine. The Rex Diamond Mine has been intermittently mined since 1912, whereas Star Mine has been in continuous production for the past 50 years.Peakstar lies in a strategic position between these two mines on a farm called Vergelegen, held under tenure by Peakstar Diamonds. No modern mining has previously taken place at Peakstar.The Star Diamond Mine fissure system (known as the Theron fissure zone) is well known for yielding diamonds of high quality, with the majority being clear white stones of high carat value. Diamonds recovered to date from Peakstar (including the large stones referred to above) are mainly octahedral, clear white stones, which match expectations for the Star fissure system. Valuation of the initial parcel of 82 diamonds (combined weight of 32.2 carats) recovered from operations at Peakstar gave an average value of US$488 per carat. “This is an extremely high valuation by any standards, and gives an indication of the order of value that may be expected when larger parcels are evaluated in future,” Ms Muggeridge said. Paramount conducted an independent test for micro diamonds on a 37.8 kilogram kimberlite sample collected from a depth of 29 metres on the Peakstar fissure. A total of 142 micro diamonds and 2 macro diamonds (> 0.8 mm diameter) were recovered. “While this result does not prove the fissure to be economically viable, the exceptionally high count of diamonds is a very encouraging sign of the commercial potential of the Peakstar project,” Ms Muggeridge said.