Battlefield says previous operators overlooked S. Kalimantan diamond project potential

Canadian junior mining firm Battlefield Minerals Corporation said Tuesday it had completed the acquisition of an 80 percent interest in Cempaka Diamond Project in South Kalimantan from Malaysian Mining Corporation Bhd and Rio Tinto?s unit Ashton Mining and its personnel are now in place on site and have taken possession and management of the assets.

Following the acquisition the company?s name would be changed to BM Diamondcorp Limited.

The company said following the Cempaka acquisition, it commissioned Dr Richard Garnett, one of Canada's most experienced and respected consultants of alluvial diamond deposits to review the property and the results supported the company's proposed program of in-fill drilling and trial mining at Cempaka and concludes the property possesses a potential for diamond production which has not been realized by the previous operators.

Excerpt of the report said ? The writer believes that (a) the previous trial mining was badly conducted and did not reveal the production potential of the property, and (b) the integrity of the original exploration and the technical skills which Battlefield can bring to the property justify the planned work program.?

Battlefield is currently working with its contract mining company to refine the initial 12-month trial mining blocks comprising approximately 600,000 bank cubic metres (bcm) of diamondiferous gravels. A program of in-fill drilling for pit optimization has been planned and will commence next month. The initial mining blocks are forecast to yield approximately 62,000 carats of diamonds (0.1 cts/ bcm recovered) based on the 1987 bulk test results, which achieved a recovered grade of 0.149 cts/bcm adjacent to the proposed initial mining block.

The company further said that 4656 carats of gem diamond, which recovered during previous trial mining, is currently being transported to Antwerp for pre-sale valuation.

?Management is currently evaluating a number of options for financing the working capital requirements for the in-fill drilling and trial mining program. Total working capital required is approximately Can$2.8 million, comprising Can$1.6 million in new plant and equipment, Can$420,000 in drilling and pit preparation and Can$780,000 for the pre-strip. Management proposes to fund this requirement through a combination of equity by way of private placement, sale of the diamonds in inventory and debt,? said Chuck Forrest, Battlefield?s director & chief financial officer.

Ashton Mining and Malaysian Mining Corp sold their 80 percent interest in PT Galuh Cempaka, the Diamond project operator to Battlefield after trial-mining results were far lower than expected.

State miner PT Aneka Tambang Tbk, holds the remaining 20 percent of the project. (alex)