BM Diamondcorp to commence S. Kalimantan diamond mining in 2003

Canadian diamond prospector BM Diamondcorp. Inc. reported on Monday that it had completed feasibility study for the commencement commercial production of Galuh Cempaka diamond mine in South Kalimantan in the first half of 2003 at an average production rate of 41,000 carats per annum over an 18-year mine.

BM Diamondcorp said the feasibility study was completed in the current period and concluded that the Danau Seran and Cempaka deposits could be economically developed in two stages.

Danau Seran would be mined over two years, starting with an initial six month dry mining followed by 18 months of dredge mining for the total projected recovery of 82,051 carats. While mining of Danau Seran is completed, detailed in-fill drilling will be undertaken on the adjoining Cempaka deposit, where inferred resources delineated to date would be sufficient for a further 16 years of mining for the projected recovery of 633,450 carats.

The feasibility is based on mining the indicated highest grade zones of the Danau Seran and Cempaka deposits using the existing 2.5 million cubic meter per annum bucket line dredge and 180 tonne per hour dense media (DMS) diamond recovery plant acquired from Rio Tinto and MMC as part of the project purchase, said BM Diamondcorp..

The company said economic analysis completed as part of the feasibility study concludes the project has a net present value of US$14.9 million using a 10 percent discount rate after start-up capital of US$2.27 million, comprising US$764,000 of new plant and equipment and US$1.51 million of pre-production costs capitalized, including working capital for the mining pre-strip.

The project is estimated to generate positive cash flow of US$30.8 million over the 18-year mine life, of which BM Diamondcorp is entitled to the first US$24.7 million.

BM Diamondcorp has 80 percent stake in the project, while state miner PT. Aneka Tambang Tbk. Has the remaining 20 percent. (alex)