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Diamonds – Oena

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Coal – Metallurgical & Mining Projects

Diamonds – Oena

Location

The Oena Project (“Oena” or “Property”) consists of one New Order Mining Lease located on the lower Orange River, Northern Cape Province, South Africa. The New Order Mining Lease (MPT24/2014MR) was granted in 2009 and is secured with a notarial lease over the property for 99 years and matures in 2090. An application for the renewal of the mining right for a further 30 years has been lodged with the Department of Mineral Resources for the period ending 2045.

Oena is 8,800 hectares (“ha”) in size and covers a 4.8 kilometre (“km”) wide strip along a 15 km length of the Orange River. The center of the Property is located at longitude 28°03’58” S and latitude 17°01’07” E.

Ownership

The original Oena Mining Licence (ML 7/92) was issued in 1992 to Kuboes Diamante (Proprietary) Limited (“Kuboes”) and then was converted to the current New Order Mining Lease in 2009. African Star Minerals (Proprietary) Limited (“ASM”) acquired 100% of Kuboes in 2013. As per an agreement in October 2014 Tango purchased a controlling interest of African Star, a subsidiary that holds a 100% interest in the Oena Project which consists of Mining Right MPT 58/2014 (MR), a portion of Richtersveld No 11, Administrative District of Namaqualand. Specifically, the section 11 (1) Ministerial approval under the Mineral and Petroleum Resources Development Act, 2002 (Act 28 of 2002), Republic of South Africa was granted on 24 April 2015, which allowed for the sale of the controlling 51% interest in African Star to Tango (completed on 18 June 2015).

Geology and Deposit Type

Oena, a past producing alluvial diamond property, is located within a well established alluvial diamond mining province 50 km upstream of Namdeb’s Auchas and Daberas alluvial diamond mines, located on the Namibian or north bank of the Orange River, and 15 km and 60 km upstream of Trans Hex’s Reuning and Baken alluvial diamond mines, respectively, located on the South African or south bank of the Orange River.

Two separate and distinctly different aged diamondiferous bearing paleochannel gravels are present on the Property and have been named as follows:

  1. Proto‐terraces (dated as Miocene and 17 – 19 mybp in age) are higher‐level and are located greater than 40 metres (“m”) above the current Orange River level.
  2. Meso‐terraces – (dated as Pliocece and Pleistocene and are 2 – 5 mybp in age) which are lower‐level and are located between 10 m to 12 m above the current Orange River level. There are five meso‐terraces on the Property including the Oena, Sandberg, Blokwerf, Fishriver and Kabies Sections. Most of the historical exploration has been concentrated on the Oena and Sandberg Sections and none has been completed at the Fishriver and Kabies Sections.

Historical Mining Activities

The Property has seen various forms of exploration and mining activities that started in 1992 with work by independent mining companies who mined the proto‐terraces at the Oena Section until 1995, producing some 30,000 carats with an average stone size of some 2 carats. The largest stone recovered was 79 carats.

Between 1995 and 2000 various contractors were employed to test mine the Property. Small pits, trenches and bulk sample pits were excavated and treated through a conventional pan plant. The results of this test mining are not known. Between 2000 and January 2006 systematic drilling was focused on the meso‐terraces and a bulk-sampling program. Between February 2006 and August 2007 trial mining was performed with results documented in daily mining and plant treatment reports. These results were used to measure average diamond sizes and expected grades in basal and suspended gravels over the Oena meso‐terraces. These verifiable results have been used to estimate average grades for the gravel remaining at Oena. The systematic drilling results have been used in sections and volumes of gravel, both suspended and basal have been estimated using a polygonal block method.

The historical bulk sampling and trial mining results completed:

Bulk Sampling Trial Mining
48 months
30 Jan 2002 to 30 Jan 2006
19 months
1 Feb 2006 to 30 Aug 2007
Average pricing achieved per carat (“Cts”) – USD/Cts $1,503 (Av 2006) $1,790 (Av 2007)
Carats recovered 4,768 741
Metric tonnes treated 1,153,818 459,677
Grade recovered (carats per hundred metric tonnes (“cpht”) of material mined and processed) 0.41 0.16
Number of stones (“st”) recovered 3,253 609
Average stone size (“Cts/st”) 1.47 1.22

Resource Report

A National Instrument (“NI”) 43-101 report, dated and effective 31 October 2014, by Peter W.A. Walker B.Sc. (Hons.) MBA Pr.Sci.Nat. F.S.E.G. of VP3 GeoServices (Pty) Ltd has been prepared for Oena. The report records a historically estimated Inferred Resource within the six remaining blocks in the Oena Section.

Table 1: Oena Inferred Resource

Volume cubic meters (“m“)
tonnes
Grade
Oena Section blocks 2-6 1,075,000 ( ~2,795,000 tonnes) 0.295 carats / 100 m3
(
~ 0,12 cpht)

In addition to this historical Inferred Resource, systematic Reverse Circulation drilling of the Sandberg terrace was completed and has shown an estimated 4.5 to 5.75 million cubic metres (~14 Million tons) of basal and suspended gravel is present and was shown by two bulk samples to be diamondiferous, however, these sample volumes are too small to estimate diamond grades at a sufficiently predictable level of accuracy; please note that although the Sandberg gravels are expected to yield similar grades to the Oena section gravels, further bulk sampling may not result in the target being defined as a Mineral Resource. The potential quantity and grade is conceptual in nature. There has been insufficient exploration to define a mineral resource.

It is uncertain if further exploration will result in the target being delineated as a mineral resource. The Blokwerf, Visrivier and Kabies terraces require systematic drilling to estimate the total volume of gravels on the Property although historical small-scale sampling has shown them to be diamondiferous; again, further bulk sampling may not result in these targets being defined as Mineral Resources.

Current Operations

Tango has entered into a Contract Mining and Diamond Recovery Agreement (the “Agreement”) with Bluedust 7 Proprietary Limited (“Bluedust”) at Oena Diamond Mine (“Oena”), South Africa. Bluedust will develop the Oena alluvial diamond mine using Bourevestnik X-ray machines (“BVX”) and/or pan plants (the “Mining Services”). Bluedust, at its own cost and expense, will provide and maintain all the Plant and Equipment as required to perform the Mining Services.

The diamonds produced by Bluedust at Oena will be sold via a designated Tender Facility in South Africa and 75% of the gross income of net diamond sales, less commission, will be paid to Bluedust for the duration of the 60-month contract. For any individual stones recovered with a gross selling price, less commission, of greater that US500,000 Bluedust will be paid 70% of the gross income.

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