DIAMOND PAGE — Seahawk nabs Brazilian emerald play

In a departure from its focus on gold exploration, Seahawk Minerals (SKM-V) has acquired an emerald property in Brazil.

The company is putting together a land package south of Belo Horizonte in Minas Gerais state and hopes to begin producing gem quality stones within a year.

To date, the company has acquired a stake in two properties that together comprise more than 1,200 ha. The 313-ha Piteiras property lies between two existing hardrock emerald operations (one run by a private company; the other by a group of local miners), whereas the Cachoeira claim consists of 995 ha, several kilometres to the north.

Seahawk can earn a 51% interest in the two properties by completing a feasibility study. The remaining interest would be held by a local company, Cavan Engenharia De Desmontes, with the underlying land owner retaining a 50% net profits interest. As a result, Seahawk, acting as the operator, would realize a 25.5% interest in profits.

Seahawk President Christopher Taylor says Piteiras could “generate substantial internal profits and cash flows within a short time.” The company plans to put Piteiras in operation by June 1999, following an exploration program consisting of a geochemical survey, as well as pitting along major lithologic contacts. The emeralds, formed in a metamorphic environment, are often found in pods along lithologic contacts between granitic or pegmatitic rocks and ultramafic schists at Piteiras. Seahawk plans to dig pits along the contacts to arrive at a bulk sample.

A 2,000-metre diamond drilling program is expected to follow, results from which will be used to provide a resource estimate for the gem stone potential. Seahawk will then begin digging shafts to depths of 50-100 metres.

The company expects it can move 70,000 tons to produce 20 kg of gem quality emeralds annually. Based on an estimate of US$150 per carat, the company forecasts cash flow of up to US$50 million a year.

All development funds would come from Seahawk and Cavan.

Typical emeralds from the Piteiras area range in size from 1 to 3 cm and, like other Brazilian emeralds, contain significant vanadium. Seahawk has also begun looking for a market for the stones, which can be sold either as rough stones or polished gems.

The company plans to continue acquiring other claim blocks in the area, while continuing to explore its various gold projects in Guyana and Brazil.