Gem Diamonds reports Indonesian mining activities
Tuesday, February 5 2008 - 01:18 AM WIB
Indonesia
BDI Mining Corp (BDI Mining) was acquired by Gem Diamonds in May 2007. It owns 80% of the Cempaka alluvial diamond mine in South Kalimantan, Indonesia in partnership with the Government of Indonesia which owns the remaining 20%.
BDI Mining also owned the Woodlark Gold Exploration Project in Papua New Guinea, which was sold for a consideration of US$26.5 million.
The alluvial deposits at the Cempaka Mine consist of the Danau Seran and Cempaka paleochannels. The former was mined since the commencement of the operations in 2004 and is almost depleted. It was significantly smaller but of a higher grade than the Cempaka channel.
Minor gold and platinum is present in the diamondiferous gravels in both channels.
Production
Production for 2007 was as follows:
|
H107 |
H207 |
FY07 |
|
| Cts produced | 8,441 | 14,594 | 23,034 |
| Gravel treated bcm | 69,389 | 196,094 | 265,483 |
| Grade cts/bcm | 0.12 | 0.07 | 0.09 |
| Overburden stripped million bcm | 0.77 | 1.87 | 2.64 |
| Stripping ratio | 11.11 | 9.53 | 9.94 |
| Au/Pt conc produced kg | 6.0 | 10.8 | 16.8 |
Mining in the Cempaka channel commenced in Q406 and was the main source of gravel in 2007. Diamond production increased from 8 441 cts in H107 to 14 594 cts in H207 due to the higher volume of gravel treated offset by the lower grade of the Cempaka channel.
Limited overburden stripping in H107 prior to acquisition was addressed as a priority in H207 with overburden mining ramped up to 1.87 million bcm in H207 compared to 0.77 million bcm in H107. Significant progress was made during H207 to increase gravel treatment rates to the planned 80 000 bcm/ month. There was a steady build up in the gravel treated reaching 56 000 bcm in December 2007 with record associated production of 6 540 cts despite the onset of the wet season. It is expected that 80 000 bcm/ month will be achieved by early Q208.
Conversion from contactor to owner mining was initiated in H107 with an associated capital investment of US$9.9 million for mining equipment being made for this purpose
Sales
A total of 10 410 cts was sold during H107 for US$2.27 million or US$218/ct. All these sales took place prior to Gem Diamonds acquisition of BDI Mining. A revision of this sale process was undertaken by Gem Diamonds and the decision was taken to accumulate a large parcel of diamonds for tender to the market in January 2008. Some 15 000 cts were sold in this tender an average price of US$331 per ct, representing a 52% increase in average prices achieved in H107.
Expansion and development
The mining method currently employed at Cempaka is based on hydraulic excavators and trucks. Higher than usual rainfall in H107 adversely affected production and highlighted the need to modify the mining method in order to be able to operate better under heavy rainfall conditions. Accordingly a prefeasibility study into dredging has commenced and the results of this study are expected in H208.
Exploration drilling in the Cempaka channel was doubled to 5 000 metres per month in H207 with a view to increasing the level of confidence in the resource and for improved mine planning purposes. (end of excerpt)