Glencairn scheduled to begin diamond production in Brazil

The decision was made after the company completed a private placement with a European investor of 450,000 units priced at 70 cents per unit. The units consist of one share and a warrant to buy another share at 75 cents for a 1-year period.

Glencairn has the option to buy a 50% interest in MPL, a Brazilian company, which owns a 100% interest in the Feijao Cru project. MPL has signed an operating agreement with Dragagem Fluvial, an alluvial mining company with interests in two diamond and two gold mining projects in Brazil. Prior to 1988, the company was a wholly owned affiliate of Hanna Mining, a U.S. company.

Under the terms of the agreement with MPL, Dragagem will operate the mine on a contract basis for $9,000(US) per month plus 10% of on site operating profits. The fee includes the services of six technical staff at Dragagem.

MPL also plans to lease a separation plant and other equipment from Dragagem which will result in lower capital costs. Dragagem estimates start-up costs at $265,000(US) and operating costs at $8.60(US) per cubic metre.

Mining will begin in an area near a test pit completed in 1987. Bulk sampling from the pit yielded 669.69 carats of diamonds for an average grade of 1.24 carats per cubic metre. About 80% of the diamonds are gem quality, selling for $125 (US) per carat. The stripping ratio in the pit is 10:1.

With probable reserves of 239,118 cubic metres, the project has a 3- year mine life. Additional work is required to confirm possible reserves of 373,266 cubic metres.

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