LATIN AMERICA — Trans Hex explores for alluvial diamonds in Brazil — Company owns non-South African alluvial diamond projects

Toronto-based Trans Hex International (THI-T) is nearing the advanced stage of exploration at its Acordo alluvial diamond project in central Brazil.

THI is a 65%-owned subsidiary of Trans Hex Group, South Africa’s second-largest diamond producer after De Beers Consolidated Mines.

Incorporated in late 1995, THI now owns all the non-South African, alluvial-diamond exploration projects of Trans Hex Group.

THI was incorporated in Ontario, rather than South Africa, in a move to escape restrictive exchange-control regulations imposed by South Africa’s Central Bank on firms investing outside the country.

“We’re probably going to build a bigger office in Toronto and end up with most THI personnel operating out of there,” says Peter Walker, THI’s vice-president of exploration. Even Niel Hoogenhout, THI’s president, relocated to Toronto from South Africa.

THI is active in Brazil through its 80%-held joint-Venture company Acordo Diamonds, which was formed in 1995 with private partner Myers International.

That company holds the remaining 20%.

Acordo holds a 260,000-ha exploration concession along the Sono River and its tributaries, Balsas, Soninho, and Vermelho. It is situated some 625 km north of the national capital Brasilia.

In the Sono River system, diamonds are found primarily in alluvial gravels, which develop in the Sono River flat below the confluence with the Vermelho.

Other diamonds are found in the residual gravels derived from the Cabecas formation in the Lajeado Valley and from the Poti formation near the Vermelho River valley. The Upper Devonian Cabecas formation is described as a pressure-deformed sandstone intercalated with silty clay reminiscent of varving and suggestive of glacial origin. Overlying the Cabecas is the Pennsylvanian-Permian Poti formation consisting of sandstone, conglomerate and tillite units.

To date at the Acordo concession, THI has used two large-diameter auger drills to sink 951 holes over 3,500 metres, for a sample of 5,000 cu. metres.

The regional program confirmed the presence of gravels in three paleochannels 5 km long, 300 to 500 metres wide and 1 to 5 metres thick. They lie beneath 5 metres of overburden.

Paleochannels

THI first employed ground-penetrating radar in order to delineate the paleochannels. However, results proved unsatisfactory and the program was later abandoned.

Jigging of the first 21 drill samples returned an estimated 0.5 carat of diamonds, with the largest stone weighing 0.06 carat. The remaining samples are expected to be processed by April.

An environmental impact study was recently completed, and the company is currently awaiting excavation permits before proceeding with a bulk-sampling program. Once the permits are obtained, a 30-Tonne-per-hour plant will be shipped from South Africa to treat the bulk samples.

“The plant is kind of half-and-half,” says Walker, explaining that the South African-designed and

-built plant has been stripped of components that could be acquired in Brazil, such as electric motors and pumps, in order to sidestep import duties.

The plant includes an X-ray machine and a new Wolff sorter, which Walker describes as smaller, cheaper and more effective than the traditional De Beers sorter.

THI will probably process two or three 5,000-cu.-metre bulk samples, the results of which are expected in June.

Although an exploration budget for the upcoming fiscal year has yet to be announced, Walker says the firm could spend between $2 million and $3 million on the Acordo project in 1997-98.

Elsewhere in Brazil, THI is considering exploration projects in Minas Gerais and Matto Grasso states.