Site visit could be critical for identifying the potential fatal flaws

The picturesque Serra da Canastra Kimberlite Province in southwest Minas Gerais is one of several diamondiferous locations in Brazil. The kimberlite bodies are mostly buried along the extensive valley floors and beneath scree deposits. The region has produced approximately 2 million carats of diamonds since the mid-1930s.

SRK and Mineral Services jointly completed a technical audit of the Canastra 1 kimberlite pipe. A small team of diamond mining specialists flew in to value the Canastra project in preparation for a possible bid.

With both time and cost constraints for this assessment, it was critical to concentrate on “big picture” issues material to the outcome.
Auditing diamond properties is one of the most challenging due diligence assignments, because the resource cannot be re-sampled or the grade/value verified within the audit time frame. However, identifying other issues and potential fatal flaws could provide critical information for the project acquisition.

The Canastra 1 pipe is located near the beautiful Casca d’Anta waterfall, on the steep valley floor, where regional rainfall is estimated between 1,300 – 1,700mm per year.

Although the stream running through the kimberlite at the bottom of the steep valley was identified as a potential problem during the desktop study, only the site visit revealed the magnitude of the problem. In the early morning hours, fifty minutes of hard tropical rain produced a flash flood that converted a peaceful crystal-clear stream into a raging current with flows estimated at 20-50m3 per second.

This event would certainly materially affect the mining approach and the capital to be spent upfront to manage surface water. Without the site visit, this flaw could not have been identified from the data provided.

Jarek Jakubec: jjakubec@srk.com



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