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Legally Speaking


Issue: October, 2006
Author: Wayne M. Sutherland

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Are Diamond Mines in Wyoming's Future?

Diamonds, composed of pure carbon, are the hardest naturally occurring mineral found on the surface of the earth. They form under extreme pressure and high temperature at great depths within the earth’s mantle. Diamonds arrive at the surface through volcanic processes that carry them upward in rare magmas (melted rocks) known as kimberlites or lamproites. A few other rock types may transport diamonds from the mantle, but they have not yet hosted commercial diamond production. Both kimberlites and lamproites are found in Wyoming, as are some less well-known diamondiferous and potentially diamondiferous rocks.

The major value of diamonds is for gemstones. A diamond mine is based on the presence of gem-quality diamonds (larger is always better). The smallest size of recoverable diamonds, when defining ore reserves, is tailored to each individual mine and mill. A mine’s reserves represent the economic material around which a mine is designed. Some of Canada’s large mines currently designate diamonds in the 2 to 3 millimeter size range as the smallest used in their ore reserve calculations. Smaller stones, when recovered, are also used but do not figure in these calculations. Low-quality or extremely small diamonds are used as abrasives, but are not profitable to mine in the absence of gems.

Similar to other valuable minerals such as gold, diamond mining begins with extensive exploration followed by claim-staking where the minerals are federally-owned, or by leasing of state- or privately-owned minerals. However, finding diamond deposits is much more difficult than locating other minerals. Even in a world-class diamond mine, diamonds account for less than one part per million in the host rock!

Diamond exploration may include a sampling program to locate occurrences of tiny mineral grains, such as pyrope garnets and chromian diopside (known as indicator minerals). Concentrations of indicator minerals point to the potential presence of nearby hidden diamond deposits. Further exploration may involve geophysical surveys and drilling to identify and determine the size of kimberlites or other diamond host rocks. Once a host rock has been located, sampling to evaluate the diamond content of the deposit begins. Sampling progresses in steps beginning with a few tons, and if results appear favorable, sampling increases to a few hundred tons, then to a few thousand tons. With favorable diamond showings at each step, large sampling will lead to full-scale mining.

Uncut diamond prices climbed nearly 50% between 2002 and the end of 2005, indicative of a growing world-wide market. Rough diamond values from active mines around the world average from as little as US$20 per carat to US$100 per carat ($2,835 to $14,175 per ounce; one carat = 0.2 gram = 0.007 ounce). This is, of course, a gross generalization in a market with thousands of price categories for diamonds that are based on the four C’s of color, clarity, carat weight and cut. A slight increase in carat weight can dramatically increase the value of a diamond. Exceptional stones command much higher than average prices, and the cutting of rough stones may increase their value by as much as 10 times (or more).

Canada began building a diamond-based economy with its discovery of diamondiferous kimberlite in the early 1990s. Their first diamond mine, the world-class Ekati mine in the Northwest Territories, began production in 1998, and is expected to produce 4 to 5 million carats per year for about 25 years. Since then two more large mines have begun producing, and three more are scheduled to open within the next few years. Canada is now the world’s third largest diamond producer following closely behind Botswana and Australia. Canadian diamonds are a multi-billion dollar part of their economy, with current exploration extending all across Canada. The excitement over diamonds in Canada has created the greatest mineral rush in history!

But what does that have to do with Wyoming?

The ancient core of the North American continent (older than about 2.5 billion years) lies beneath much of Canada and extends southward under Montana and beneath most of Wyoming. This stable part of the continent is believed to have a high potential for the discovery of diamond deposits. The Canadian experience attests to the validity of this belief. Slightly younger (1.6 to 2.5 billion years old) accreted parts of the continent have only a moderate potential for diamonds. However, those accreted terrains include numerous diamond-bearing kimberlites to the south of Wyoming, in Colorado. Most of Wyoming has a high potential to host diamond deposits.

Australia’s place as the world’s second largest diamond producer results from diamonds hosted within rocks known as lamproites. Before Australia’s 1979 discovery of commercial diamondiferous lamproite, the vast majority of the world’s diamond production came from kimberlites, such as those now mined in Canada, or from related placer deposits. Not only does Wyoming have kimberlites and a high potential to find more, it has North America’s largest lamproite field known as the Leucite Hills. The Leucite Hills, northeast of Rock Springs, could host diamonds, but they have yet to see any serious exploration.

During the past 10 to 15 years more than 500 kimberlites have been found in Canada, almost half of which are diamond-bearing. Exploration expenditures per kimberlite found in Wyoming have amounted to less than 0.01%, the cost per discovery in Canada. Even with this disparity, 22 occurrences of diamondiferous kimberlite and related host rocks have been discovered in Wyoming along with several unrelated placer diamonds. Sources for these placer diamonds remain unknown. Most of Wyoming is unexplored for diamonds!

A small Colorado diamond mine operated along the Wyoming-Colorado Stateline from 1996 to 2003. The ore grade varied from 5 to 15 carats per 100 tons and the mine produced many high-quality gems larger than one carat in size. The largest diamond extracted there weighed 23.8 carats. However, the mine closed due to legal problems rather than from a lack of diamonds. Since diamonds were first discovered in the Stateline district in 1975, over 130,000 diamonds have been recovered including several very large gemstones. Lack of access to diamondiferous and potentially diamondiferous kimberlites coupled with individual company policies and personalities has limited development in the area. Some geophysical anomalies (indicative of buried kimberlites) adjacent to diamondiferous kimberlites in the same area have never been investigated.

Diamond-bearing rocks also occur in the Laramie Range in the Iron Mountain District, northwest of Cheyenne, and in the Cedar Mountain area southwest of Green River. These diamond-bearing rocks have not been fully evaluated, and some have not even been completely mapped.

Over the last 20 years, the Wyoming State Geological Survey identified several hundred concentrations of kimberlite indicator minerals, indicative of nearby hidden diamond deposits. Because kimberlites and related diamond host rocks tend to be deeply weathered, they often occupy areas of low relief or are covered by deep soil and debris from adjacent rocks. This makes them quite difficult to find in most areas, although local conditions allow some to stand out in relief. Identification of indicator mineral occurrences is a first step in diamond exploration; however, no serious follow-up studies have been conducted to locate hidden source rocks in Wyoming.

The potential for more diamond discoveries within Wyoming is very great. The accompanying possibility for one or more diamond mines in Wyoming, along with associated economic benefits is also very great. The future of diamonds in Wyoming’s economy is only limited by the vision of exploration geologists, by those capable of financing diamond exploration and development, and by mining company perceptions of Wyoming’s business environment.

Wayne Sutherland has worked more than 35 years as a geologist for government, industry, and as an independent consultant. He holds two Bachelors degrees (Geology and Education) and a Masters degree (Geography) from the University of Wyoming. Wayne has numerous technical publications to his credit, but branched out in 2003 when he and his wife Judy self-published a novel called Yellowstone Farewell. The novel, a fictional account of a possible major eruption of Yellowstone, maintains Wayne’s strong geological orientation. During the last ten years, Wayne’s work has emphasized gemstones and precious metals, primarily in Wyoming. His broad experience has included work with uranium, coal, oil and gas, and various industrial minerals, as well as with mining claim evaluation and federal mineral regulations. Wayne is currently employed in the Metals and Precious Stones section of the Wyoming State Geological Survey (www.wsgs.uwyo.edu/metals/default.aspx).

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