Drilling For Diamonds: High Risk, High Reward

(ehudlaniado.com) - After considering the techniques that diamond exploration companies use to identify kimberlite pipes, we know that while technology and know-how have improved steadily, it is still true that only about 1% of kimberlite pipes will eventually yield an economically-viable diamond deposit. Finding a kimberlite field is by no means a guarantee of success, and a lengthy and expensive process of testing and drilling must be undertaken to test the viability of a pipe once it is discovered. In simple terms, exploration companies take a series of samples from a kimberlite target, with each one getting gradually larger and more expensive. Each type of test is designed to assess different variables, depending on the stage of exploration. Since sampling is expensive, companies often have to raise additional financing before continuing on to the next phase of testing, and the previous results must be positive to ensure that they can raise sufficient capital to continue. It is important to remember that very few companies ever reach the stage of a feasibility study, and many go bankrupt in earlier stages of testing. The major producers have been reducing their exploration expenditure for years, so diamond exploration is a high-risk, high-reward venture not for the faint-of-heart.