Canadian Overseas mining diamonds

Just months after its revival on the Vancouver Stock Exchange, Toronto-based Canadian Overseas Exploration (VSE) has recovered 2,293 diamonds weighing a total of 1,096 carats from its joint venture operation off the coast of Namibia.

The gem-quality diamonds weigh an average of 0.42 carats each and are being sold at a rate of $250 per carat to Consolidated Diamond Mines (CDM), a division of De Beer’s.

In return for a 20% cut on revenues, CDM granted Canadian Overseas and its equal partner, South Africa-based Benguela Concessions, the right to mine the 650-km offshore concession. CDM processes the diamond-bearing gravel concentrates at one of its nearby recovery plants.

The joint venture is one of six outfits contracted to mine the shallow water and beach areas on the CDM-controlled “forbidden coast,” an extensive strip of Namibian shoreline where public access is severely restricted. The contractors produced a total of 42,120 carats in 1991 compared with 1.19 million carats produced by CDM, which concentrates on larger-scale operations onshore as well as 15-20 km out to sea.

Geologists estimate that 1.5 billion carats of diamonds were eroded from kimberlites in central southern Africa and transported to the west coast by the Orange River and its tributaries. By 1980, an estimated 75 million carats had been recovered, mainly from mining operations on the beach. Most of these alluvial diamonds are of high quality, since poorer-quality stones would have been preferentially destroyed during the long trip from inland Africa. The diamonds recovered so far by Canadian Overseas are the fruits of a sampling program designed to establish prime targets within and around Chameis Bay, an 80-sq.-km area of the concession that forms a natural entrapment for diamonds carried up the coast by longshore drift. If the sampling and subsequent feasibility study yield positive results, Canadian expects to start producing diamonds at a minimum rate of 200,000 carats per year by late 1993.

The joint venture is currently employing divers using suction hoses to sample the seabed. But part-time consultant Richard Garnett, who has had extensive international experience in marine and placer mining, said an “airlift” system designed for sampling at water depths greater than 25 metres would yield much larger samples. To this end, the partners intend to lease a larger boat capable of supporting a dense media concentration plant. The cost of the preproduction and exploration phase is estimated to be US$2.05 million, to be shared equally by Canadian Overseas and Benguela.