Higher output from Diamond Fields

The recovery of 4,700 carats of gem-quality diamonds from the Marshall Fork deposit has prompted Diamond Fields International (DFI-T) to add a second mining vessel to its Luderitz Blue Bay grant off the shore of Namibia.

The move comes at a time when the contracted mining vessel M.V. Anya is producing recovery grades 250% better than those outlined in a 2001 feasibility study. The improvement reflects the use of dual 24-inch airlifts equipped with pebble-jetting, whereas previously a single, 20-inch airlift system was used.

The new M.V. Lady S also employs pebble-jetting technology but has only one 24-inch airlift. Diamonds are recovered in a 50-ton-per-hour dense media separation plant.

Both vessels are operated by the same contractor.

DFI recently sold 3,532 carats of diamonds for an average of US$132.52 per carat. The sale was conducted in Antwerp through Diamond Tenders Belgium, in which DFI owns a 24% stake and which is controlled by the company’s largest shareholder and current chairman, Jean-Raymond Boulle.

Last summer, DFI’s former partner, the Trans Hex Group, withdrew its MV Namakwa airlift mining vessel from the Marshall Fork marine deposit and terminated its joint-venture participation. The move, which resulted from a dispute related to recovery rates for which Trans Hex was financially liable, brought an abrupt halt to production.

DFI responded by filing a claim with the High Court of South Africa seeking US$19.5 million in damages from Trans Hex. A settlement, spurred by Boulle’s subsequent election to the board, has since seen DFI receive about US$500,000, including US$300,000 in cash as payment of all penalties. The remaining US$200,000 represents forgiveness of debt due Trans Hex from DFI for past diamond sales.

Prior to its departure, Trans Hex had recovered 39,198 carats from the western and eastern arms of Marshall Fork, most of it in the first six months of 2002. The average grade for the bunch rang in at 0.9 carat per square metre, and the stones fetched an average US$139 per carat on the market. Mining resumed in early December.

Meanwhile, Chief Geologist Randal Cullen points out that re-mining in one area of the Marshall Fork deposit recovered 0.5 carat per square metre and that DFI plans to test recoveries from other previously mined areas. That’s well above the assumed cutoff grade of 0.15 carat per square metre.

In November 2002, an independent review put Marshall Fork’s unmined reserves at 342,617 carats, spread over some 7,855 sq. km. This excludes areas slated for re-mining and an inferred resource of 132,200 carats, spread over 49 hectares.

Based on the latest results, DFI plans to resample other features on tighter grids to prove up known resources. The Diaz Reef and Conical Beach deposits alone are believed to host enough material to keep production going for 15 years, assuming the daily mining rates of 500 sq. metres and 75% availability rates for the vessels are maintained.

In October 2001, DFI revised its estimates for Diaz Reef to 469,376 carats in the indicated category and 77,600 carats in the inferred category. Similarly, indicated resources at Conical Beach were changed to 151,000 carats, and inferred resources to 74,000 carats.

The estimates for indicated resources are based on a cutoff grade of 0.15 carat per square metre, half a carat less than that used for Marshall Fork in the recent independent report. Both companies used a diamond price of US$150 per carat.

DFI’s main concession covers more than 70 km of coastal waters between Hottentot Point to the north and Diaz Point to the south, centred at Luderitz. Within that area are the diamondiferous Marshall Fork, Diaz Reef and Conical Beach features.