Positive scoping study for Vaaldiam’s B3

Brazil-focused Vaaldiam Mining (VAA-T) has released a scoping study for its Braüna JV, in Bahia state, that estimates it would cost US$25 million to build a mine that would produce a total of 573,000 carats over a five-year mine life.

The project’s net present value (NPV) is forecast at US$33.6 million with an internal rate of return (IRR) of 42%, using a 10%  discount rate and a diamond value of US$338 per carat, and based on a production rate of 720,000 tonnes a year. The open-pit  operation would exploit one of 22 kimberlites identified at Braüna, the 3-hectare B3 pipe, down to 200 metres.

The base case numbers are based on a modified resource estimate by Coffey, prepared as part of the scoping study. That resource looks at the South Lobe of B3 only, and adjusted the grade to account for differences in density between saprolitic  samples taken from surface and the harder, fresh kimerlite at depth. The indicated resource was pegged at 24,200 tonnes  grading 27.7 cpht for a total of 6,700 carats, plus inferred resources of 4.4 million tonnes grading 16.6 cpht for 733,000 carats.

A second mining scenario is based on a resource released in January for B3, completed by Howe. That estimate pegged the resource at 630,000 indicated tonnes (to a depth of 40 metres) grading 24.58 cpht in the South Lobe and 670,000 tonnes  grading 4.72 cpht in the North. Inferred resources (to 200 metres depth) stand at 3.75 milliontonnes grading 24.58 cpht in the  South Lobe and 1 million tonnes grading 4.72 cpht in the North Lobe. Using this resource, and with North Lobe diamonds  valued at US$100 a carat and South Lobe at US$338 per carat, life-of-mine production rises to 839,000 carats, lifting the NPV to US$101 million and the IRR to 107%.

The company has several other projects in Brazil, including the Chapada mine, which is on care and maintenance and the Duas Barras alluvial operation, but Braüna is its focus, says president and CEO Robert Jackson.

“Now, instead of working with smallerscale alluvial operations, we’re focused on really good quality kimberlite diamond  properties in a very easy to develop part of Brazil,” he says. “We’ve got a good resource, very high-value diamonds, we’ve  negotiated the acquisition of 51%, moving us up from 20%, the price is quite reasonable – it’s spread out over time.”

At presstime, Vaaldiam had not yet released an update of its 2011 work plan, but it will likely involve a 100-metre shaft for bulk sampling and 5,000 metres of delineation drilling. A feasibility study could be under way on the project before the end of the year. If that pans out, the company would arrange financing for the project and begin construction in 2012, with production  starting in 2013/14.

Vaaldiam sees a lot of upside at Braüna – at B3 at depth, and at other kimberlites identified on the property.

While Vaaldiam did own 100% of the project, it was forced to sell 80% of it in 2009, during the recession to a group of Belgian diamantaires for $5 million.

Following Tiomin Resources’ acquisition of Vaaldiam Resources, which was completed early last year, the company agreed to pay US$6.5 million and finance the project to production to regain control. The agreement stipulates that if the project is  developed, Vaaldiam will get its invested capital back first, before its partners begin to see their share of profits.