Diagem develops new diamond plant

- Tuesday, July 30, 2002

Diagem develops new diamond plant

Vancouver-based precious stone company Diagem (TSX: DGM) has developed a new plant to eliminate precious mineral waste at its Brazilian operations, business daily Gazeta Mercantil reported.

After witnessing conventional techniques result in losses of up to 50%, the company's engineers decided to develop their own alluvial diamond plant. "Recently, a garimpeiro [artisan miner] found a 60-carat diamond in waste material that had been treated four times by a company," Jose Aldo Duarte Ferraz, a Diagem engineer who developed the new industrial plant, was quoted as saying.

The US$2mn plant includes 10 processing units including a digger, dredger, conveyors and an X-ray machine. To reach zero losses, the extracted material passes through a triage process in which sand, clay and gravel are eliminated using conventional processes. "Since the diamond's density is close to other heavy minerals, when these are discarded, precious stones end up being thrown away too," Ferraz said.

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The X-ray machine, called Sortex, the only item not manufactured locally, carries out the final separation at the end of the process. The machine will begin operations in three months, according to the report.

DECREASING RESERVES

Developing better techniques is important for Diagem to continue extracting large quantities of diamonds from its Juina properties located in the center-west state of Mato Grosso. Amoss de Melo Oliveira, a geologist with the national department of mineral research (DNPM), said that due to the exhaustion of high quality alluvial reserves the state's diamond production fell 10% from 2000 to 2001.

The official said that close to 95% of Mato Grosso's production comes from garimpeiros and the rest from large companies. "Only those companies with resources to carry out exploration will stay in the business, since alluvial diamonds, which are easier to discover, are being exhausted," Oliveira said.

ON-GOING INVESTMENTS

Diagem, in fact, is investing US$10mn in exploring kimberlite bodies and alluvial deposits at its Juina properties. The district is the country's largest producer of diamonds, turning out 400,000 carats of the 700,000 carats reported nationally in 2000. Last year's figures still have not been released by the DNPM.

Oliveira said that 90% of the Juina district's production is lower value gems selling for US$25/carat. The remaining 10% is sold at a high premium of US$120/carat. Diagem's Ferraz disagrees, saying that 20% are high quality stones. "There have already been extracted stones of more than 400 carats worth US$10mn," the company engineer said.

Since Diagem established itself in Juina in 1995, it has spent US$10mn on mineral exploration. Over the next three months, the company will begin production at secondary reserves despite not having concluded economic feasibility studies. "We will begin the work because we have other indications that they are economically feasible," Ferraz said.

Earlier this month, the company reported that it recovered 262 diamonds with a total weight of 130.56 carats at one of its Juina properties.

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