What is the current status of the Braúna project?

In 2013, a new resource estimate was produced based on additional exploration and sampling carried out on the Braúna 3 deposit, which increased the grade and significantly increased the resource to approximately 2.5 million carats. The mine plan has been reworked to predict an open pit mine with a lifespan of seven years and the potential to go underground after this. The expected average sales value is in excess of $280 per carat, which would rank as the fourth or fifth highest dollar per carat value for rough diamond production in the world. The output will be 230,000 to 250,000 carats per year, but the project will run at excellent margins. Finalizing the engineering work is underway, and the construction is expected to begin in the first quarter of 2016.

How has Lipari experienced Brazil’s regulatory environment?

Lipari maintains a positive relationship with the various agencies and authorities involved in the sector. However, obtaining permits and licenses takes a lot of time and is one of the main factors affecting the project timeline. There are many projects in the pipeline in Bahía, and the state environmental authority, INEMA, is struggling to process all the requests in a short period. Lipari also maintains a good relationship with the local community in the town of Nordestina, which lies next to the Braúna project. The mine will be environmentally friendly, and over 90% of the water used by the plant will be recycled. The total footprint of the open pit mine will only be 300 m wide.

How do the recently passed legislation for the port sector and the new Mining Code affect the sector?

Lipari believes that certain aspects of the new legislation will help the mining industry as a whole. The construction of private ports will make it much easier and less costly to export bulk commodities such as iron ore and bauxite. Concerning the new Mining Code, there is a general feeling among industry players that there was no real need for drastic changes from the current mining code, although royalty rates were lower than the world average. The switch from the priority system to an auction-based approach for granting concessions may result in a reduction of grassroots exploration in Brazil, and problems may arise if public companies want to raise funds to invest in a mining project based on an auction system.

What is the potential for diamond production in Brazil?

Looking at Lipari’s project alone, Braúna’s quality compares favorably with the best diamond mines in South Africa, and it has the potential to operate for 50 years. Taking a wider perspective, the potential for kimberlite mining in Brazil is huge, with over 1,000 kimberlites discovered in the country, but only three or four have been properly sampled.

What is the timeline for the remainder of 2016, and where do you see Lipari five years from now?

By the end of 2015, all the detailed engineering and mine design should be finished, and construction should begin in 2016. The fabrication of Lipari’s plant has already begun, with half of it being built in Brazil and half in South Africa. The processing plant is being designed in Cape Town by the South African firm ADP, which has expertise in diamond mining. Looking into the future, Lipari aims to become the first diamond producer in South America and hopes to acquire its next project beyond 2018, staying focused on Brazil’s geological potential.