Gem Diamonds to ramp up S. Kalimantan mine production

London Stock Exchange-listed diamond miner Gem Diamonds Limited plans to ramp up production at its Cempaka mine in South Kalimantan to 80 000 bank cubic metres (BCM) per month during H2 2007.

The company did not give detail, but in 2006 diamond sale from the mine reached a total of 50,821 carats and processing plant capacity to process 50,000 BCM input was completed by the end of 2006.

The company said in a statement released Thursday that the first batch of new mining equipment has been ordered and delivery is due in Q3 2007 as part of a move from contractor to owner mining.

Gem Diamonds completed the acquisition of BDI Mining Corp (BDI Mining) in June this year at a net cost of US$80 million. BDI Mining owns 80% of PT Galuh Cempaka, which holds the mining rights to the Cempaka alluvial diamond mine. The remaining 20% is held by state miner PT.Aneka Tambang.

The company said that first semester production from Cempaka, pre Gem Diamonds ownership, was adversely affected by a lack of capital which resulted in low levels of overburden stripping leading to diamondiferous gravel shortages for feed to the plant. The company, however, did not give numbers.

?Due to the size of the deposit Gem is evaluating upscaling the operation significantly beyond 80 000 BCM per month. Investigations into this have commenced alongside a review of the mining method with a view to reducing unit costs,? it said.

?Following a site inspection of Cempaka in April 2007, the existing fluvial geological model was further refined. Although the basal, quartzose gravels constitute the principal diamond placer, additional resource potential was identified in the overlying sand dominated package. Using the extensive drilling and sampling results generated from previous exploration campaigns, preliminary 3-D modelling of the Cempaka deposit has now commenced.? (alex)