Following up on an in-house scoping study, Denver-based
Over an 18-month period, beginning in 1999, Seahawk drilled 45 holes at the property and uncovered two biotite-schist zones, named Coqueiro and JML. The Coqueiro zone averages 2.5 metres in thickness and rests at an average depth of 170 metres below surface, whereas the JML zone, 250 metres southeast of Coqueiro, has been intersected at a depth as shallow as 20 metres.
The 36 holes that intersected the two zones were either completely barren of emeralds or contained valueless, small emerald fragments. The only exception was hole 21, drilled into the Coqueiro zone, which contained an emerald weighing 37.5 carats in rough form.
At that time, says Seahawk President Christopher Taylor, it was “recommended by the CDNX [Canadian-Venture-Exchange regulators] that we entertain the possibility of having a stone certified and appraised in North America.”
The Gemological Institute of America certified that the 37.5-carat stone was a genuine emerald, and Seahawk says it was worth at least US$20 per carat in rough form.
It was cut and polished at an undisclosed cost to produce a 4.6-carat, low-value cabochon and a 2.4-carat oval brilliant. The oval was appraised at a full retail value of US$4,500 by Kevin Murphy of Los Angeles-based Avanti Jewellers.
To this day, that emerald remains the only stone from Piteiras that has ever been cut, polished, independently appraised and then had the results announced publicly.
Seahawk is now extracting a minimum 1,000-tonne bulk sample from the JML zone by driving a decline 125 metres into a hillside to a depth of 29 metres. The decline will end within a 5.3-metre-thick intercept, from hole 37, which contained 1,400 emerald fragments weighing an aggregate 15.5 carats.
Seahawk has hired two Brazilian firms for the work: mining contractor J. Dantas Engenharia e Constructes, which will excavate the decline and carry out the bulk sampling; and engineering firm Minere Engenharia, which will act as supervisor.
The ongoing excavation recently uncovered, within 20 metres of the new portal, four large emeralds weighing a combined 7,500 carats.
The bulk sample will be processed not by an independent laboratory but by Seahawk at its own on-site, 40-tonne-per-day processing plant. The facility is expected to be up and running by December. The chosen processing technique will include the hand-picking of emeralds from a conveyor belt. Seahawk has hired Brazilian firm PPM Processos e Projetos Minerais to supervise construction of the plant.
After processing the bulk sample, Seahawk intends to release tonnage and grade figures, a stone curve, and a resource estimate, even though an emerald grade has little economic relevance without a dollar value attached the contained emeralds.
Taylor is unapologetic: “We have no intention of sending the entire volume of emeralds, as extracted from the bulk sample, out to be appraised. That doesn’t make any sense. It’s not going to serve any useful purpose, nor, I believe, provide a meaningful figure into the public. The actual value of those emeralds will likely not be disclosed for some time.”
Furthermore, Taylor claims that there exists no precedent for the calculation of resources or reserves for an emerald deposit.
“The CDNX is unclear as to how to proceed with the release of grades, tonnages, etcetera,” he says. “They have indicated to us that the closest thing they have, in terms of precedent, would be a diamond deposit. In fact, that may not be overly representative.
“What the CDNX has said is, ‘We are going to treat you like a diamond company; go get us a bulk sample.’ The CDNX is not at all comfortable with this process, given that it has never happened before.”
[When later contacted by The Northern Miner, the CDNX responded by saying that its policies require factual and balanced disclosure from all companies listed on the exchange and that it expects companies to comply with existing guidelines for the disclosure of resource estimates.]
Emeralds are being mined at two small-scale operations near the Piteiras property. To the north is the Belmont mine, in operation since the late 1970s, and to the south is the less-successful Capoeirana mine, in operation since the late 1980s.
Belmont and Capoeirana each exploit a biotite schist layer — reportedly 30 metres thick at Belmont — and both mines have found that higher-quality emeralds have come from underground operations rather than open pits.
Still, Taylor says, in order to save money, Seahawk prefers to bulk-sample from the shallower JML zone rather than the deeper Coqueiro zone, where the 37.5-carat stone was found.
Taylor says it is well-known that emeralds from Colombia typically are of the highest quality, whereas those from Brazil are “smaller and not as deeply coloured, and therefore not as valuable — but valuable nonetheless.”
To fund the bulk-sampling program, cover its debts and increase its ownership in Piteiras, Seahawk managed to raise $4 million in May 2000 by privately placing 2.6 million special warrants at $1.55 apiece. A single warrant entitles the holder to one share and the right to buy another share for $1.75 over two years.
In August 1999, Seahawk borrowed $2 million in the form of an unsecured convertible debenture with a 3-year term and bearing interest at 9% annually. Each $1,000 principal amount can be converted, at the option of the holder, into 667 common shares for a deemed issue price of $1.50 per share.
Seahawk now owns a 75% stake in the 313-ha Piteiras property, with the remainder held by private Brazilian interests.
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