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EXECUTIVE SUMMARY
Tsodilo Resources Limited ("Tsodilo") is exploring in northwest Botswana for diamonds derived from primary kimberlite intrusives. Our licences are held in two Botswana registered subsidiary companies, Newdico (Pty) Limited ("Newdico") and Gcwihaba Resources (Pty) Limited ("Gcwihaba"). Tsodilo Resources has a 89% interest in Newdico, while Trans Hex Group, a South African diamond mining and marketing company, holds the remaining 11%. Gcwihaba is 100% owned by Tsodilo.
The licences held by Newdico in northern Ngamiland cover the major part of the Angola / Congo craton in Botswana while the southern Gcwihaba block of licenses covers the craton margin. Exploration of the Newdico licenses is now well advanced and is centred on an area where a previous exploration program discovered 19 kimberlites near the village of Nxau Nxau. Four of these Nxau Nxau kimberlites carried micro-diamonds. Tsodilo's review of the previous program suggested that further work in this kimberlite cluster might be rewarding for very good reasons:
Macro diamonds and G10 garnets found at two sites down-slope (west and southwest) from Nxau Nxau are associated with alluvial systems and have a distal source.
The previous work program failed to investigate a number of large aeromagnetic anomalies close to the Nxau Nxau cluster.
Exploration techniques such as gravity surveys as a means of locating kimberlites were not employed.
This portion of the Congo craton has characteristics that are favourable to the emplacement of diamondiferous kimberlite.
Tsodilo has explored the Ngamiland project area by taking soil samples on a widely spaced grid (5Km x 5Km) and examined these samples for the presence of kimberlite indicator minerals ("KIM's"). This broad scan of the entire licence area resulted in three regions being defined; the Nxau Nxau area; the Guma area situated in the eastern part of the license block; and a location termed the Central area.
Tsodilo has continued regional exploration of the licenses by selecting some 110 airborne magnetic anomalies and sampling over these for KIM's. The results of this program further emphasized the importance of both the Nxau Nxau and Guma areas.
Detailed ground magnetic and gravity surveys in both the Nxau Nxau and Guma areas and a detailed 2Km x 2Km KIM sampling grid at Nxau Nxau has been followed by three drilling campaigns in the Nxau Nxau area. This has resulted in the discovery of a further 5 kimberlites, bringing the total number of known kimberlites in this field to 24. One of these kimberlites, A15, is very different from the other kimberlites discovered in the Nxau Nxau field in that it is garnet rich whereas the remaining 23 kimberlites drilled to date are ilmenite rich. Mineral chemistry studies of the first A15 drillhole samples indicated good diamond potential and three further RC drillholes into A15 were completed to obtain 500Kg of sample for micro-diamond analysis.
Further drill evaluation of four magnetic targets in the Nxau Nxau field that have similar geophysical expressions to A15 is planned for 2005 before moving the drill team to the Guma area to evaluate the priority targets there.
Tsodilo plans to explore the broad swathe of ground just south of both the Nxau Nxau and Guma areas where a concentration of NW-trending dolerite dykes, called the "dyke swarm", masks the subtle magnetic responses normally associated with kimberlites. This dyke swarm is closely associated with both the Orapa and Venetia kimberlite clusters, which together produce some 25 million carats per annum which represent 16% of the world's annual production by carat weight and nearly 20% (US$2 billion per annum) by value. In early 2006, new geophysical technology will be tested by Tsodilo in an attempt to distinguish between the highly responsive dykes and the subtle kimberlite magnetic signatures.
In the Gcwihaba licences, KIM sampling over 53 selected airborne magnetic anomalies has been completed and 5 of these anomalies were followed up with ground magnetic and gravity surveys. Two RC drillholes into one of these anomalies failed to intersect kimberlite. Drilling on the anomalies is planned.
Following a review of all available geophysical and geochemical data in mid-2005, it was decided that four base metal Prospecting Licenses covering an area of 3,750 square kilometres, should be applied for in Gcwihaba's name and these licenses were granted as of October 1, 2005.
Tsodilo is at a very exciting stage of its exploration program and through the application of both proven and new exploration technologies is justifying the hopes and expectations of its technical advisors and most of all its loyal shareholders.
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