Koolgarra Mining

Diamonds

HISTORICAL REVIEW of DIAMOND GEOLOGY and MINING
In the year 1851 diamonds were discovered in one or two of the Australian gold-fields, and later on in a few of the stanniferous gravels of the same continent. They are present in not altogether insignificant numbers, and up to the year 1890 a total of 50,000 diamonds had been found. New South Wales has up to the present time furnished the greater part of the yield, but a few stones have been found in Victoria and Queensland as well as in South Australia and Western Australia.

Australian diamonds are decidedly small, the largest stone yet found, which came from New South Wales, was an octahedron, and weighed 5 5/8 carats; an octahedral crystal from South Australia weighed 5 5/16 carats. The average weight of diamonds from New South Wales compared with which the yield from the other States is negligible, is only 1/4 carat; the great majority of stones vary in weight between 1/8 and 1 1/2 carats. According to the statements of diamond-cutters, Australian diamonds are harder than the majority of stones from other parts of the world, and can only be cut with their own powder; they have a peculiarly strong surface lustre, and in spite of their extra hardness are usually much water-worn.
In New South Wales there are two principal diamond districts (Fig. 43). One is a stretch of country extending to the northwest of Sydney, as far as the Cudgegong River, and to the west of Sydney, as far as the Lachlan River. The other diamond district is in the northeast corner of the State, in the district of the Gwydir River, a tributary of the Darling; it embraces the neighbourhood of Inverell and Bingera, and extends to the east of these townships into New England. In these districts the diamond occurs in sands together with gold and tin (cassiterite), and with one possible exception it has never been found in the solid rock; it is therefore impossible to make any suggestion as to the nature of the rock in which the diamond was formed.

In the southern diamond districts the diamond-bearing debris is mainly confined to ancient watercourses of Pliocene (a subdivision of Tertiary) age. When the precious stone is found in the beds of recent rivers and streams, it is always associated with material derived from these older deposits, which has been re-deposited by natural agencies or during the process of gold-washing, etc. In this district the diamond is invariably accompanied by gold and it was in the gold-washings that the first discovery of diamonds was made. The diamantiferous gravels and sands of these ancient river deposits, which are always above, and often far above, the present water-courses, are very frequently overlain by a sheet of compact basalt, which must be penetrated before the diamond and gold-bearing stratum can be reached. Re-deposited masses of material, containing both gold and diamonds, often lie on the basalt, having been washed down from the upper part of the valleys.
The first discovery of diamonds in Australia was made in this State in l851; the stones were found in Reedy Creek, a tributary of the Macquarie River, sixteen miles from Bathurst a few were found in the same district in 1852, in Calabash Creek. In 1859 a few stones, having the form of triakis-octahedra, were found in the Macquarie River, near Suttor's Bar, and at Burrandong; in the same year a hexakis-octahedron, weighing 5 1/8 carats, was found in Pyramul Creek. These places are all situated in the same district, and at none of them were more than a few stones found.
In 1867, however, diamonds in greater number were met with near Warburton, or Two Mile Fiat, on the Cudgegong River, nineteen miles northwest of Mudgee; and in 1869 the systematic working of an area of about 500 acres in this district was commenced. The working, which was not very profitable, was carried on at Rocky Ridge, Jordan's Hill, Horse Shoe Bend, and Hassalt Hill, as well as at the places already mentioned. The ancient river-deposits in which the diamonds are found lie under a capping of columnar basalt, and occur at isolated spots along the course of the Cudgegong River, more or less distant from the present river course, and at heights up to 40 feet above the present high-water level. They rest on the eroded edges of perpendicular sedimentary strata, which are interbedded with compact greenstones, and probably belong to the period of Upper Silurian deposits. The diamond-bearing debris consists of coarse sand and mud intermingled with pebbles of quartzite, sandstone, clay-slates, and quartz-slates, accompanied by water-worn grains and crystals of quartz, jasper, agate, silicified wood (this in large amount) and other siliceous minerals, also cassiterite (the "wood-tin", variety), topaz, common corundum (sometimes of a lavender-blue colour), sapphire, ruby, a peculiar variety of corundum called barklyite, zircon, garnet, ruby-spinel, brookite, magnetite, ilmenite, tourmaline, magnesite, nodules of limonite, grains of iridosmine, and, of special importance, gold. The quartz pebbles are frequently encrusted with oxides of iron and manganese. The whole mass of diamantiferous debris is in some places loose and incoherent, and in others bound together to form a solid conglomerate, the cementing material being a green, white, or grey siliceous substance, or a brown or black ferruginous or manganiferous substance. The deposit in places attains a thickness of 70 feet; the diamonds, which are of small size, are scattered through it so sparingly and irregularly that the working of it cannot be profitably prolonged for any length of time.

In spite of the poor character of the deposit, 2,500 stones were found during the first five months of work. All were small, the largest being the octahedron of 5 5/8 carats mentioned above, which, when cut, formed a beautiful colourless brilliant, weighing 3 5/16 carats. The stones average in weight about 1/4 carat, and vary considerably in colour, passing from perfectly water-clear through various shades of yellow, pale green, and brown to almost black; a twinned octahedron of a beautiful dark-green colour was once found. The commonest crystalline forms are the octahedron, which occurs both as simple and twinned crystals, the rhombic dodecahedron, triakis-octahedron, and hexakis-octahedron; one crystal with the form of a deltoid dodecahedron has been found. The crystals are, as a rule, much water-worn; when this is the case their surfaces are sometimes smooth and bright, at other times rough and dull. No spheres of bort, such as are found in Brazil and South Africa, appear to occur in Australia.

Solitary specimens of diamond have been found at many other places in this district. At Bald Hill, near Hill End, on the Turon River, a stone of 5 1/8 carats was found, and a number of diamonds, which though of small size were of excellent quality, were met with in the old gold mines of Mittagong. Again, near Bathurst, a black diamond, the size of a pea, and having the form of an almost spherical hexakis-octahedron, was found. Diamonds have also been collected from the gravels underlying the basalt at Monkey Hill and Sally's Flat, in Co. Wellington, just as they occur at Mudgee. Uralla, Oberon, and Turnkey are other localities at which more than solitary specimens of diamonds have been found.

The occurrences mentioned above were all in ancient river gravels among existing watercourses in which diamonds have been found might be mentioned the Abererombie, Cudgegong, Macquarie, Brook's Creek, Shoalhaven, and Lachlan Rivers. The stones found in existing streams are much worn, and many are broken; from this, and also from the fact that the minerals forming the gravels of these watercourses are identical with those of the ancient river deposits found underlying the basalt, we may conclude that the gravel of the present rivers is re-deposited material derived from the ancient river-beds. The mode of occurrence of the diamond in the north of New South Wales, especially in the district of the Gwydir River, in the neighbourhood of Bingera and Inverellsome importance. Diamond is composed of carbon and is the hardest known natural substance, but a sharp blow can shatter it. It also has the highest thermal conductivity of any known material at room temperature.

Diamond Report Extract from Geosciences Australia

Diamonds are thought to form 150–200 km below the Earth’s surface at high temperatures (1050– 1200°C) and pressures (45–55 kilobars). They are carried to the surface within kimberlites and lamproites that intrude through the crust. These intrusions form narrow cylindrical bodies, called ‘pipes’ and only a very small proportion have significant diamond content. When pipes are eroded, liberated diamonds may accumulate in alluvial deposits. Diamonds may be found far from their source as their hardness allows them to survive multiple episodes of erosion and deposition.
The quality of diamonds is subdivided into gem, near gem and industrial categories. In rare cases, up to 90% of diamonds in a deposit are of gem quality but most economic deposits contain 20 to 40% gem quality diamonds.

Current uses for diamond include jewellery, stone cutting and polishing, computer chip manufacture, machinery manufacture, mining and exploration, construction and transportation services. A large proportion of industrial diamond is manufactured and it is also possible to produce synthetic diamonds of gem quality.

Resources
EDR for gem/near gem was 124.2 Mc and industrial 129.2 Mc, both up 132% compared with 2004 resulting from the decision to proceed with underground mining at Argyle and a related upgrade of around half of the mineral resource to ore reserve based on the results of a $70 million comprehensive feasibility study.

Accessible EDR
All diamond EDR is accessible for mining. At Australia’s 2005 rate of production, EDR is sufficient for eight years production.

JORC Reserves
JORC Code reserves account for almost all AEDR. The remaining AEDR comprise those measured and indicated resources (reported by mining companies), which Geoscience Australia has assessed as being economic in the long term.

Exploration
ABS data indicate that expenditure on exploration for diamond in Australia in 2005 was $22.8 million, down 10% on 2004. Exploration continues to be concentrated in Western Australia, notably the Kimberley region, Northern Territory and South Australia.

Ellendale (WA): Limited trial mining of alluvial gravels in paleo-channels at the Ellendale 9 North project in the Kimberly region yielded 7336 c at an average mined grade of 20.65 cpht with at an estimated sales price of US$195 per carat. The average size of the 20 000 diamonds was 0.37 c but eight stones in excess of 5 c were recovered, including a 9.92 c yellow gem, the largest found so far from alluvial material in the Ellendale area. This operation was undertaken by Blina Diamonds NL, in conjunction with 54% owner Kimberley Diamond Company (KDC), from within the footprint of a proposed waste dump for the Ellendale 9 mine. Trial mining of a similar paleo-gravel system at Terrace 5 is underway in conjunction with exploration within the Terrace 5 catchment to delineate associated paleo-channels and pipes and assess three large known pipes (Ellendale Pipes 10, 12 and 13).

Abner Range (NT): South of the McArthur River mine, a diamondiferous kimberlite (ABN21) with an estimated area of 1.3 hectares was discovered by Gravity Diamonds Ltd after drilling a Falcon® airborne gravity anomaly. A total of 33 diamonds ranging in size from 0.3 mm to 6 mm were
recovered from seven holes. The company reported that, despite drilling difficulties, diamonds in excess of 0.3 mm were recovered from each hole processed. The largest stone was 0.147 c and colourless with a slight green tinge, transparent and mostly free of inclusions. In excess of 60% of the stones recovered are similarly colourless, transparent and free of inclusions. A bulk sampling program is scheduled for the 2006 field season. Strong kimberlitic indicator mineral results were returned from tenements adjacent to the ABN 021 discovery and the fresh morphology suggests additional targets exist. The Merlin cluster of kimberlites lies some 50 km east of the Abner Range.

Flinders Ranges (SA): Flinders Diamonds Ltd reported that exploration in the Peterborough-Nackara area some 120 km northeast of Port Pirie returned diamonds. Microdiamonds were recovered from five of eight samples tested. The company reported that of the 50 new kimberlites sampled in the past year, 20 have been shown to be diamondiferous. Further targets have been identified for testing. Flinders has entered into an alliance with De Beers.

Timber Creek (NT): Total diamond recovery from Tawana Resources NL’s TC-01 kimberlite, 360 km south-southwest of Darwin, is reported as 17 387 diamonds weighing 839 ct at an overall grade of 22 cpht and includes a 4.66 c clear, good quality diamond. Tawana has entered into an alliance with De Beers.

Ullawarra (WA): In the Pilbara region, some 290 km north of Carnarvon, Paramount Mining Corporation Ltd reported the presence of a diamond indicator mineral, pyrope garnet, considered to have come from a possible kimberlite pipe (ULW 1) reported in 2004.35 Production

Australia produced 30.7 Mc of diamond in 2005, making it the world’s second largest producer of diamond by weight after Russia, with Botswana and Congo (Kinshasa) ranking third and fourth respectively. As a producer of gem/near gem diamond, Australia is the third largest after Botswana
and Russia, and as producer of industrial grade diamond Australia is the second largest.

Production was almost entirely from the Argyle mine, which produced 30.5 Mc—mostly industrial and cheap diamonds with an average price of US$15–16, but making it the leading global producer.

Production was 48% higher than in 2004 despite mining constraints within the deepening open pit.
Production from Kimberley Diamond’s (KDC) Ellendale mine in the West Kimberley region increased to 123 334 c in 2004/2005, up from 60 850 c in the previous period. Production was nearly all from the Ellendale 9 pipe where high-value fancy yellow gem diamonds were mined. The average grade for the period was 6.81 cpht and the average sale price was US$226 per carat. KDC is targeting production of 240 000 carats in fiscal 2006.

World Ranking
Australia’s EDR of industrial diamond ranks third (22% of current world total EDR), after the Congo (Kinshasa) and Botswana (26% and 23% respectively). Detailed data are not available on world resources of gem/near gem diamond but Australia has stocks amongst the largest for this category.

Industry Developments
Argyle (WA): In December 2005, after a comprehensive feasibility study, Rio Tinto Ltd announced it would extend Argyle’s mine life by investing US$760 million on converting to an underground block cave operation. It will take three years to bring the underground mine fully on stream. An additional US$150 million will be spent on a related open pit cutback to enable production to continue in the transition period, and beyond, as the open pit operation is wound down and the new underground mine is ramped up. Average annual production over the life of the underground mine from 2007 to 2018 is expected to be about 60% of Argyle’s historical annual average of 34 Mc and of similar quality. Rio Tinto Ltd negotiated a reduced royalty rate of 5% on all production from the start of 2006, down from 7.5% previously.

Ellendale (WA): Work began at Ellendale Pipe 4 on construction of a new 4.4 Mtpa processing plant and open cut mine some 15 km south of the existing Ellendale Pipe 9 operations. Forecast production from Ellendale 4 is more than 2.7 Mc over a seven year life. A two-stage expansion of the existing 2.2 Mtpa Ellendale 9 East processing plant is also in progress, initially increasing the throughput capacity by 50% to 3.3 Mtpa at a cost of $26 million. The second stage involves installing a high pressure rolls crusher to lift production to 4.4 Mtpa. The crusher will make it possible to treat the 30% of ore which is currently being reported as encapsulated lights. Test work indicates that 20% of diamonds are not being recovered from this ore. The upgrades are expected to reduce cash costs by up to 20% and contribute to an increase in total Ellendale output from 120 000 cpa to 700 000 cpa by the third quarter of 2006.

Merlin (NT): Since re-processing of the x-ray sorthouse tailings began in July 2005, as the first stage of North Australian Diamonds Limited’s redevelopment of Merlin mine, in excess of 12 000 c has been recovered from 2600 t as 146 000 individual diamonds. These include three diamonds of greater than 10 carats (c): a 14.21 c gem quality clear white diamond, a 10.97 c brown near gem diamond and 10.27 c light brown gem quality fragment for a larger stone. Yellow diamonds represent 5% of the diamonds recovered from the x-ray sort house tailings and these achieved an average valuation of US$1454/c with two ‘fancy yellow’ stones valued at US$4500/c. The yellow diamonds are non-fluorescent and are unlikely to have been recovered in previous mining. The Merlin operation was previously owned by Ashton/Rio Tinto, which recovered 500 000 c from nine pits from 1998 to 2003.

Stage 2 of the development will involve processing of remaining ore from tailings, remnant ore from previously mined pits and ore minable because of re-optimised pit designs. Crushing and liberation tests on primary kimberlite ores from the Ywain and Kaye pipes resulted in improved liberation and recovery of diamonds with grades of 84.6 cpht and 13.4 cpht representing increases of over 40% and 30% on previously mined ore.