Canadian miner to expand S. Kalimantan diamond output

Canadian diamond miner BDI Mining Corp. is planning expansion at its Cempaka alluvial mine in South Kalimantan to increase production to 100,000 carat per year.

The Cempaka diamond mine was commissioned in March 2005, and has since produced over 32,000 carats of gem quality diamonds. Despite occasional severe wet season conditions, production remains at steady state with monthly diamond recoveries presently averaging over 3,500 carats.

The company?s non-executive chairman David Lenigas in a report released Thursday said that the Phase II expansion project was scheduled to begin by the beginning of 2007.

?The market for diamonds is forecast to remain strong in the period ahead, and management is focused on expanding operations at Cempaka to optimise the mining of the resource and maximise profit. The transition from Phase I to the much larger Cempaka main channel in Phase II will see an increase in production to an eventual 100,000 carats per year,? he said.

Phase II production at Cempaka, will entail moving operations from the smaller Danau Seran channel to the north, to the 1.6km wide by 10km long Cempaka main channel. As part of this move, the existing processing plant will upgraded to allow an initial increase to approximately 50,000 bcm of gravels per month, with an eventual output target of over 1,000,000 bcm of gravels per year.

With average grades running at 0.12 carats per bcm, estimates (43-101 compliant) have so far defined resources of over 1.4 million carats allowing a mine life of over 10 years at the expanded Phase II production rate.

Since commercial shipments began, Cempaka diamonds have averaged US$299 per carat at tender.

The company has 75 percent stake in Cempaka mine. (alex)