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Tango Mining’s Angola acquisition should be providing cashflow within months

Tango Mining has signed a deal to go mining diamonds in Angola, and there could be more to come
 Tango Mining’s Angola acquisition should be providing cashflow within months
Tango is building a specialism in the mining of alluvial stones

It’s now becoming clear what the modus operandi for Tango Mining Limited (CVE:TGV) will be for the foreseeable future.

The company has just signed an agreement to mine an alluvial diamond property in the Lunda Norte district of northern Angola, and according to chief executive Samer Khalaf, there could be more deals to come.

READ: Tango Mining takes control at Oena, and is now planning further expansion in Africa

“This is the first of the project deals that we hope to be closing,” he says. “It fits into our pattern of acquiring alluvial properties.”

As it stands, Tango’s diamond operations have hitherto been centred around the alluvial mining of the Oena project in South Africa, near the Orange River.

This project lies just south of the Namibian border, and it has allowed Tango to cut its teeth in alluvial diamond mining, to acquire expertise and know-how.

The jump north into Angola is ambitious, since Angola is known as one of the great diamond producing countries of the world.

“We like Angola,” says Khalaf. “We think Angola has a lot of potential. This asset is our entry point into Angola. And it’s certainly not the last transaction that we will do there. This will be our platform.”

Txapemba project

So, with such a clear statement of intent, what is it about the Txapemba project that allows for such confidence?

First, there’s the deal structure. Some juniors, and even historically mid-tiers like Petra, have come unstuck in Angola because they sought too much control.

But Angola’s history is complex, involving the layering of Portuguese, Cuban and Soviet cultures on top of those of the indigenous tribes, all of which was mixed up in a civil war that raged throughout the 1980s, and in which diamonds played no small part.

As such, it’s an operating environment that requires an understanding of what’s expected on the part of the investor.

READ: Tango Mining says 312 carats produced from Oena diamond mine in latest period

“We will be acting as the operator to the license and not actually acquiring the license,” explains Khalaf. In this way, both government and company can avoid both the danger and the perception of danger of sequestration and get on with the actual business in hand of making money.

“It’s one of the less risky transactions that we’ve been looking at,” says Khalaf. “We like the asset, we like the data, and we hope to start producing in three-to-six months.

That’s the beauty of alluvials, of course, you can just scoop them out of the sand or gravel and send them through a processing plant that can be as big or as small as you want it.

Location favourable

Exactly what the parameters of the operation at Txapemba will be isn’t yet clear. But the address is certainly favourable, and the presence of artisanal miners on the ground indicates that there’s certainly prospectivity.

Lunda Norte overall is known as Angola’s most prolific diamond producing province. The world’s fourth biggest diamond mine is located less than 200 miles southwest of Txapemba, and is operated by one of the world’s largest diamond companies, the Russian giant Alrosa.

De Beers, the great South Africa diamond company, also has a presence in the wider region, while the Luembe River basin, in which Txapemba is located, has a long history of alluvial production, and some kimberlites too.

More deals?

So all in all, Tango looks well set up.

Under the terms of the deal it has struck with the local co-operative it will receive 60% of the sale proceeds from stones produced at Txapemba, with all operating costs deductible.

“The area is known for its high quality diamonds and has produced a lot of diamonds in the past,” says Khalaf.

And the money to get Txapemba into production has been secured. On that score, says Khalaf, “we’re comfortable.”

So, what remains to Tango is to source the equipment, undertake the necessary geological work, design the mine and get its second diamond mine into production.

And after that, there could be many more.

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