Seahawk plans emerald mine in Brazil — Gross revenue projected to reach US$30 million per year

With encouraging drill results and a strong prefeasibility study, Seahawk Minerals (SKM-V) is moving ahead with development of its emerald project in eastern Brazil.

The Englewood, Colo.-based company owns a 51% interest in the 312-ha Piteiras property, 110 km east of Belo Horizonte in Minas Gerais state. The property lies between the Belmont and Capoeirana emerald mines in the Nova Era district. The remaining interest is held by Cavan Engenharia de Desmontes. To proceed with development, Seahawk needs to raise about US$2.3 million in financing.

Emeralds, or beryl, are more valuable than diamonds and also more rare. Their distinctive, deep-green colour is caused by minor impurities of chromium and vanadium. Emeralds are also known to occur in Colombia, Egypt, Zambia and Zaire, and, in most cases, were discovered fortuitously.

“As far as I know, Piteiras is the first discovery of emeralds done by scientific methods,” says Seahawk President Christopher Taylor.

No generally accepted method for delineating emerald deposits exists; nor is there an established method for calculating reserves or assaying. As is the case with diamonds, the only way to establish a representative resource is through test mining or bulk-sampling.

However, unlike diamonds, which occur in discrete pipe-like structures, the paragenesis of emeralds is less clear. Usually, they are formed in high-temperature pegmatites, but some are also formed in high-grade metamorphic rocks. The emeralds from Colombia’s famous Muzo mine occur in calcite veins in limestones and marbles.

As at Muzo, hundreds of artisanal miners at Piteiras wield picks and shovels to uncover the emeralds, with little in the way of mechanized mining.

The prefeasibility study concluded that mining could be carried out profitably following an investment of US$4.6 million. Using base-case assumptions, Seahawk estimates an internal rate-of-return topping 400%, which would ensure payback in just over seven months — hardly the sort of numbers one is likely to encounter in the traditional world of hard rock mining.

Seahawk plans to sink a 182-metre shaft into the emerald-bearing Coqueiro zone, a 2.7-metre-thick structure of potentially emerald-bearing phlogopite schist, in a package of moderately dipping Archean ultramafic rocks overlying a large granitic pluton.

Construction is expected to last six months, with another six months elapsing before startup. Initially, Seahawk will mine 100 tonnes per day of schist from underground using room-and-pillar methods, expanding to 200 tonnes in the second year.

Ore will be blasted underground, hoisted to the surface and run through a wet grizzly. On a slow-speed conveyor, the material will be scrutinized by two inspectors who will pick out bits that appear as if they might contain emeralds. These bits will be placed in buckets for further hand-sorting. The remaining material will go to a jaw crusher, later to be sorted by mechanical and physical means.

Seahawk estimates that each tonne of material will contain an average of 42 grams of emeralds, and of the emeralds recovered, 20% are expected to be of gem quality.

The neighbouring Belmont mine sells its emeralds for US$150 per carat. However, Seahawk has yet to test its gem stones for their quality, and, in its calculations, assumes a conservative average sale price of US$75 per carat.

With an estimated annual production of 400,000 gem-quality carats, gross revenue is projected to reach US$30 million per year.

Using methods adapted from Canadian and American industry standards, Seahawk estimates that Coqueiro contains 426,000 tonnes of emerald-bearing material. However, this estimate is based on only three drill holes, which intersect the thin layer of emerald-bearing phlogopite schist. Two of the holes encountered emeralds in the core.

Seahawk recently cut the phlogopite schist in three additional holes, stepping out 100 metres from the known intersections. The company has now intercepted the schist over an area measuring 600 by 400 metres. Two of the new holes contained no emeralds in the core (results from the third have not been received). However, Taylor says the tonnage of potentially emerald-bearing material has been enlarged, adding: “We’re going to mine this thing and see what we get.”

Seahawk acquired its 51% interest in July 1998 and proceeded to carry out geochemical sampling for indicator elements such as beryllium, chromium, vanadium and nickel. The company also drilled 89 deep auger holes and dug several pits and adits.

In March, Seahawk signed a letter-of-intent to acquire a half-interest in the nearby Capoeirana mine, which has been producing for the past three years. The agreement allows Seahawk the right to explore the 4-ha property on which the mine is situated. To acquire the interest, the company must pay US$2 million in cash and stock in four instalments, beginning in January 2000.

Seahawk also hopes to tie up 7,500 ha of prospective ground elsewhere in the district.

Aside from its emerald projects, the company is exploring for gold in Brazil, as well as in Guyana. It controls the 42,300-ha Lavras property in southernmost Brazil, and can acquire the property outright by paying US$4 million to Companhia Brasileira do Cobre. In Guyana, Seahawk controls three major properties, the most advanced of which is Blackwater Creek, which covers 15,300 ha in the Potaro mining district. In 1998, the company drilled 14 core holes on the Potaro property, 11 of which encountered significant gold mineralization. However, in light of the current low price of gold, Seahawk has been concentrating its efforts instead on Piteiras.