Adelaide Hills

Regional Setting

The regional setting of the Adelaide Hills Project is similar to the Springfield Project, being astride the G2 Gravity Corridor immediately to the east of Adelaide (Figure 1). Diamonds were found during alluvial gold mining near Echunga in 1859. Over 200 diamonds were discovered with about 50 of marketable size up to 5.3 carats. Several of the better cut and polished stones were exhibited at Crystal Palace in London, prior to the discovery of diamonds in South Africa.

A selection of Echunga diamonds recovered during alluvial gold mining in the 1850's.

Tenements

The Adelaide Hills Project consists of four tenements totalling 2,130 square kilometres (Figure 7). Tenement statistics are given below:

Agreements

There are three types of ownership for the four tenements.

EL 2585 is the retained portion of the former EL 1869 which was previously held by a Joint Venture consisting of Capricorn Resources Australia NL, Australian Kimberley Diamonds NL (AKD) and Statelink Holdings Pty Ltd. Capricorn withdrew and Flinders then negotiated a farm-in deal with AKD, the brief terms of which are that Flinders can earn a 51% equity for the expenditure of $500,000 and has the right to earn a 75% equity for the total expenditure of one million dollars. This is not affected by the Springfield Joint Venture.

EL 2663 is registered in the name of Kelaray Pty Ltd (a 100% owned subsidiary of Pima Mining NL) and Messrs Allender and Le Brun and Inca Resources Pty Ltd. Flinders has obtained 75% of the diamond rights to EL 2663 under the terms of the agreement on the Springfield Project tenements originally owned by Allender, Le Brun and Inca Resources.

The Echunga EL 2739, which includes the locality of the Echunga Diamonds, and EL 2786 are registered in the name of Flinders Diamonds Limited.

Following the exercising of the Springfield Option Agreement and the commencement of the Springfield Joint Venture, Flinders Diamonds now owns 75% of ELs 2663 (diamond rights only), 2739 and 2786, while Messrs Allender and Le Brun and Inca Resources Pty Ltd ( the Initial Licence Holders - ILH) have a 25% interest in them.

Land Tenure

The Adelaide Hills project consists almost entirely of freehold land and various minor reserves and conservation parks. Some parts of the project area will be difficult to explore due to concentrations of small landholdings around country towns. However, the majority of the land is farmed, and with sensible land access practices it should be possible to conduct a diamond exploration program.

Previous Exploration

There is no documented modern diamond exploration activity in the area until the late 1970s when Britas Diamonds NL processed 75 tonnes of tailings from the Old Echunga workings. This work used a diamond pan and gave negative results. However, Britas' regional indicator sampling located several chromite anomalies and some picroilmenites southeast of Gumeracha.

In 1980 Dampier Mining Company (BHP) carried out limited bulk sampling of Tertiary gravels southwest of Echunga, but no diamonds nor indicators were recovered. The association of metamorphic heavy minerals with the Tertiary Echunga Gravels led to the conclusion that the likely source area was to the northeast where several Mesoproterozoic inliers of the Barossa Complex are located (Figure 7).

In 1984 CRA Exploration Pty Ltd (now Rio Tinto) re-interpreted the magnetic data and selected 12 of 34 magnetic anomalies for follow up. After further field assessment, three anomalies were drilled, again with negative results for kimberlite.

As part of the Capricorn - AKD - Statelink JV in 1993, consultant geomorphologist Dr Richard Russell carried out a photo-geological study of the project area. This led to the conclusion that the likely source of the Tertiary gravels was to the northeast along the southwest-flowing paleo Onkaparinga River Valley. The JV also contracted John Ashley of Southern Geoscience to interpret the May 1994 South Australian Exploration Initiative airborne magnetic data. Eleven anomalies thought to be caused by intrusive bodies were identified and examined in the field, but none have yet been drill tested.

For AKD's 1995 Prospectus, independent consulting geologist Dr John Garlick carried out a review of previous exploration. He concluded that "modern diamond exploration has been terminated before the prospectivity of the area has been fully determined." As little new work has been carried out since Garlick's review, Flinders believes this view remains valid.

Proposed Program

Flinders believes that the essential ingredient necessary to locate the source of the Echunga Diamonds is a new high-quality drainage indicator mineral survey. Previous chromite, olivine and picroilmenite anomalies need to be repeated and their kimberlitic affinity checked by microprobe analysis. Together with a thorough appraisal of previous work, including field checking, it is thought that a new indicator survey will provide the essential clues on which areas to focus on.

Indicator mineral and aeromagnetic anomaly and radiometric data bases have been established. Gravel sampling has been planned and field inspection of sampling sites has been carried out. Exploration of the Echunga Gravels is planned.

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