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this could be a doozy

  1. stelep7

    3,024 posts.
    SKR - to acquire former merlin diamond mine from rio tinto
    COMNEWS SKR
    SKR - Company Announcement
    Netquote Comnews - netquote.com.au
    to acquire former merlin diamond mine from rio tinto
    Part 1 / 1
    --------
    STRIKER RESOURCES
    -----------------


    30th March 2004

    ASX Announcement

    STRIKER TO ACQUIRE THE FORMER MERLIN DIAMOND
    MINE FROM RIO TINTO
    TARGETS IMMEDIATE +A$200M DIAMOND RESOURCE
    POTENTIAL

    Striker Resources N.L. advises that the Company has entered into a Letter of Intent with Ashton Mining
    Limited (wholly owned subsidiary of the Rio Tinto Group) to acquire 100% of Mining Lease 1154
    covering the former Merlin Diamond Mine operations in the Northern Territory.

    ¾ The Merlin Diamond Mining Lease encompasses 11 of the 13 known kimberlite pipes (of which
    9 were subject to open-pit operations, producing approximately 500,000 carats of diamonds with
    an average value over US$100 per carat. Two pipes with potential economic ore grades remain to
    be evaluated.

    ¾ Striker’s primary focus will be to assess the Palomides, Sacramore and Launfal diamond pipes
    which are part of the southern pipe cluster. Ashton has identified an inferred resource of 7.8
    million tonnes at 20cpht with an approximate insitu value of A$200m based on an average
    value of US$100 per carat and US Dollar exchange rate of $0.75 cents. This resource extends
    277m from the base of the existing pit for Palomides/Sacramore and 198m below the base of the
    existing pit for Launfal. These three pipes are in close proximity and are clearly on the same
    geological structure.

    ¾ Drilling to date has shown that Palomides and Sacramore coalesce (join together) to form a single
    elongated pipe at a depth of approximately 120m. Striker expects that, as a result of further
    drill evaluation, Launfal will be found to be a part of this same pipe structure and, if so, the
    potential diamond resource would be significantly increased

    ¾ A drilling program, aimed at confirming the identified and potential new resources at depth, will
    commence as a prelude to pre-feasibility studies to investigate recommencing mining operations.
    This program will coincide with drilling activities on anomalies identified as potential new
    kimberlite pipes in the southern portion of the exploration tenements.

    ¾ This tendency of pipes that are in close proximity to each other to coalesce at depth is a
    characteristic of the Merlin Field. Striker will be testing other pipes in the field for this
    characteristic with a view to identifying additional new diamond resources.

    1

    STRIKER RESOURCES NL ABN 86 009 153 119
    10th Floor, 256 Adelaide Terrace ? Perth WA 6000 ? Telephone: 08 9221 3355 ?Facsimile: 08 9221 1730
    [email protected] ? www.striker.com.au


    ¾ The Merlin Diamond Mine was discovered by Striker’s General Manager Mr Tom Reddicliffe
    while he was Australian Exploration Manager for Ashton prior to Ashton’s takeover in 2000 by
    Rio Tinto. Two of Striker’s directors Messrs Ewen Tyler and Bill Duchatel were also directors of
    Ashton during the discovery and commencement of mining of the Merlin pipes.

    ¾ The largest diamond recovered from Merlin (Gareth pipe) weighed 104.73 carats (approximate
    value-US$525,000) which to date is the largest diamond recovered in Australia.

    ¾ The agreement places Striker in a position of now controlling the majority of the Merlin
    Diamond Province (see map). This area includes 1,800 km2 of tenements surrounding the Mining
    Lease. This acquisition consolidates Striker’s position with significant near-term production
    potential at Merlin complimenting its current trial mining operations at Seppelt in the Kimberley
    region of Western Australia.

    The principle terms of the Letter of Intent with Ashton, which are similar to the Merlin Orbit
    Agreement, include:

    ? a payment of A$2,000,000 at the commissioning of a mine.
    ? Ashton will have an option to claw back a 51% interest in a discovery at pre-feasibility whereby
    the insitu value of the resource exceeds A$1billion, by refunding to Striker an amount equalling
    three times exploration expenditure on the lease. If Ashton exercises its option, Striker and
    Ashton will enter into a joint venture to develop and mine the resource.
    ? Ashton will receive a 1% gross revenue royalty on mineral production, but not in the event it re-
    acquires a 51% interest in the project.
    ? in the event that Ashton has exercised its option and re-acquired a 51% interest in the project, Rio
    Tinto will have commercial marketing rights to production of all diamonds, otherwise Striker will
    market its own production.

    The acquisition is subject to the parties entering into a formal agreement incorporating the framework
    of terms contained in the Letter of Intent.

    Striker will assume all rights and obligations attaching to the mining lease, including those arising
    under the terms of the Native Title agreement and Royalty agreements.

    Yours faithfully

    Clayton Dodd
    Managing Director

    Cpht = carats per 100 tonne

    2
    This information in this report, which relates to mineral resources, is based on a information compiled by Mr Tom
    Reddicliffe, a full time employee of the company. Mr Reddicliffe has relevant experience in relation to the
    mineralisation being reported on to qualify as a competent person as defined in the Australasian Code for
    Reporting of Identified Mineral Resources and Ore Reserves. He has consented to the inclusion of this
    information in the form and context in which it appears in this report.


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