DMS plant saves Hudson cash in Greenland

The economics of Hudson Resources (HUD-V, HUDRF-O) diamond hunt in western Greenland improved last month with the startup of the companys dense media separation plant.

Mineral concentrate from the new $1-million plant will be shipped to Canada in November for final processing and diamond picking.

We can put a plant on the site for the same amount it would cost to ship out 200 tonnes of kimberlite, explains Jim Cambon, Hudsons vice-president of corporate development.

Having a plant on-site also lets the company more effectively manage diamond extraction. Every kimberlite is different and the plant gives us more control over how we can process the rock and maximize the liberation of diamonds, he says.

Several hundred tonnes of kimberlite have been extracted from Hudsons Garnet Lake kimberlite dyke and is stockpiled outside the plant for processing.

So far about 2.5 tonnes of kimberlite are being processed each hour, generating a 6% concentrate. The plant has a three-stage crushing circuit with a 5-tonne-per-hour operating capacity.

Processing involves producing a concentrate of material from an initial kimberlite sample that has been crushed to a minus 12.0 mm. The tailings are then re-crushed to minus 6.0 mm and reprocessed through the plant.

Earlier this year, Hudson grabbed headlines after discovering a 2.4-carat diamond at the Garnet Lake kimberlite dyke. Diamond picking of the concentrate from the initial phase yielded 236 diamonds, including 12 diamonds weighing more than 0.10 carat.

Hudson holds a 100% interest in 2,500 sq. km. in the Sarfartoq region near Kangerlussuaq, Greenland. The area is situated on the same archaean craton that hosts major diamond discoveries in Canada.

The company says Greenland is an excellent place to search for diamonds given its stable political environment, excellent mineral tenure regulations, lack of land claims issues and numerous in-situ kimberlite dykes and sills.

Simple procedures make getting permits and moving into development fairly easy in Greenland. The most recent mine in Greenland got a permit in just six months from start to finish, Cambon notes. By contrast, it took many years and tens of millions of dollars to get permits for the Snap Lake diamond mine in Canada.

Cambon says the government of Greenland is very proactive and development oriented and wants to see more investment in the country. Weve got a government that really wants to see mineral development so theyre taking out any kind of roadblocks that youd see in Canada, he explains.

On other fronts, Hudson says there are signs that Alcoa (AA-N) is studying the feasibility of starting a hydroelectric project and aluminum smelter near Garnet Lake. The hydroelectric facility would be just 15 km away from Hudsons property.

If that happened it would change the economics of our project significantly, Cambon says. For one thing, it would send the price of power to below $0.05 a kilowatt, down from the current $0.40 a kilowatt Hudson currently budgets to run diesel generators.

In Toronto, Hudson shares closed at $0.70 apiece, down $0.07, on a trading volume of 95,850.