Brazil will have its first underground diamond mine

Lipari Company of Canada plans to use tunnels with a depth of 450 meters for mining.

The largest diamond producer in Brazil plans to enter its second operational phase. In order to extend the service life of the deposit it began mining in mid-2016, Lipari is preparing to build the first underground diamond mine in Brazil. According to preliminary predictions, the depth of the tunnel can reach 450 meters, and the required investment may reach 10 million US dollars.

Lipari has previously broken the Brazilian diamond production model and started commercial production at Bra ú na Mine 3 in Bahia. Prior to this, there had never been an industrial scale diamond mine in Brazil.

Since the beginning of the 18th century, the exploitation of this gem has been carried out in the shallow layer, that is, the Alluvium of the river bed or the ground excavation layer.

Different from the mining of Alluvium, diamonds in Bolaouna mine are mined from kimberlito. Kimberlite is a conical underground geological structure through which some diamonds formed at depths are brought to the surface. Diamond mines around the world mine kimberlite because they may have more gemstones than alluvial deposits.

Over the years, this Lipari open-pit mine located in the rural area of Nordestina, a semi-arid area in Bahia, has been deepening its excavation depth. The current depth of the mine has reached 250 meters. According to Canadian geologist Kenneth Johnson, who is responsible for the company, this is one of the deepest open-pit mines in Brazil. In six years of mining activities, Lipari has produced 1.1 million carats of diamonds in Nordestina. But now the mine has reached its mining limit.

Johnson said, "The open-pit mining activity has ended, and we have reached the limit of mining." The final mining completion work will be carried out in July. Now, the cost of continuing to produce as an open-pit mine will be very high because it is already too deep

Moving from the current mining structure to the underground mining structure allows for entry into more and deeper areas for mining, which can offset operating costs. The geologist introduced, "This is the only way we can continue mining and economically feasible, and this transition to underground mining is a normal operation." He also cited open-pit mines in Canada and South Africa as examples of this transformation process. We are likely to dig down another 200 meters, which ultimately depends on the economic situation

If the transformation is truly successful, it will be the first underground diamond mine with industrial scale in Brazil's three centuries of diamond mining. This will allow the Boraouna 3 Kimberley Mine to operate for another three to four years, and according to the company's report, this deposit is the largest of the 22 deposits owned in the entire Bahia region.

Since its inception, Lipari has become a leader in diamond production in Brazil. In 2017 and 2018, the total output of legally mined diamonds nationwide was about 250000 carats per year, while the output of Lipari reached 230900 carats and 204800 carats respectively. In 2021, the output of Lipari will be 134900 carats, while the national output will be 143000 carats. From 2016 to the first quarter of 2023, the company's total diamond production and export revenue reached $200.4 million.

In terms of quantity, Brazil is a small producer in the world diamond market. But Brazil is a producer of special colored diamonds, and rare diamonds are occasionally discovered. Recently, a pink diamond mined in Minas Gerais in 2007 was auctioned in Geneva, and was purchased by an Asian collector for US $28.8 million.

But in terms of quantity, Brazil is not outstanding. Over the years, the largest diamond producers have been Russia, Botswana, Canada, the Democratic Republic of the Congo and Australia. According to global total data in 2021, Russia produced 39.1 million carats of diamonds, far ahead of major producing countries.

Diamonds mined by Lipari are cut, polished and sold in Antu é rpia, Dubai and India. These three places are the global centers of the diamond industry.

Johnson pointed out that the underground mine transition project is expected to consume up to $10 million in funds, and the company has included this project in its plan with a total investment of $25 million. In addition to the Boraouna mine located in Nordstina, the company also hopes to carry out a diamond project in Angola and another project in Canada through capital operations.

Lipari has hired ERG Securities Co., Ltd., a subsidiary of ERG Capital Partnership of Eden Rock Group in the UK, to raise $25 million. ERG has offices in Toronto, New York, and London, and is an investment bank that specializes in raising funds for the expansion of small and medium-sized companies.

The project began to be promoted to investors in early May, and according to Johnson, some institutions and strategic investors are very interested in the project. We hope to complete the financing around next month

In addition, Lipari is working with another company to become one of the companies listed on the Toronto TSX Venture Exchange. This transaction is expected to be completed at the beginning of the third quarter.

Johnson is unwilling to make predictions about the start time. But he said that once the funds are in place and permission is obtained, the company will immediately begin transformation work.

Although it has not yet been officially determined, the company said that it has submitted its intention to transform an open pit mine into an underground mine to the National Mining Administration and the Institute of Environment and Water Resources (Inema) in Bahia. Eric Bruno, director of the mineral resources department of Lipari Company, disclosed that "we are preparing relevant documents for the official transformation in relevant institutions."