American Diamonds, Firestone ink JV in US

American Diamonds and Firestone Diamonds (FDI-L) are joining forces to explore for diamonds in the U.S. The former is jointly owned by Dunsmuir Ventures (DW-V) and Majescor Resources (MAJ-V).

U.K.-based Firestone has been exploring for diamonds in the U.S. for more than two years, and has narrowed its search to two adjacent states (undisclosed) that have hitherto been unexplored for kimberlites.

Firestone has collected and analyzed 768 heavy mineral samples. More than a third of these contained kimberlitic indicator minerals, and microprobe analyses have identified some minerals as originating from the diamond stability field. Trace-element analysis indicates a cool geothermal gradient — encouraging for diamond stability. Targets have been generated for further work. Some samples have contained in excess of 1,000 indicator minerals grains.

Firestone’s U.S. project has focused on five states and is subject to a 4% carried interest by two individuals, Howard Coopersmith and Bram Janse, who selected the areas to be explored. Firestone can buy back a 2% carried interest in the project at any time for US$2 million.

Firestone produces alluvial diamonds at two projects in western South Africa, namely Avontuur and Oena.

The 10.5-sq.-km Avontuur mine, in the coastal region of Namaqualand, near the town of Hondeklip Bay, has total reserves and resources of 885,000 carats. The gravel treatment capacity is 320 tonnes per day, and diamonds average 0.2 carat in weight. In the year ended June 30, 2003, the mine produced 2,038 carats of diamonds with an average value of US$110 per carat. A dense-media-separation plant was built last year.

Since 2000, Firestone has owned 87.5% of the Oena mine, which covers a 4.8-km-wide strip along the Lower Orange River. The mine had been dormant since 1995, but Firestone has been sampling a resource in younger gravel terraces along the river, and the average overall grade is estimated at 0.5 carat per tonne. In the year ended June 30, 2003, 1,989 carats of diamonds were produced with an average value of $852 per carat. (In the 1990s, the mine produced diamonds with an average weight of 2 carats, and the largest stone recovered was 70 carats.)

American Diamonds will operate the joint venture and has the right to earn up to a 60% interest incrementally before Firestone will be required to pay any further exploration costs.