These high quality gem diamonds recovered from the bulk sampling will be sorted and marketed exclusively by IDH Diamonds NV of Belgium under a marketing agreement executed by it with PT Galuh Cempaka which will operating this project. Ashton Mining is the manager of this project. It might be interesting to note that which is already handling the marketing of bulk of roughs produced by Canada's first diamond mine will thus be emerging the third important channel for direct supply of roughs to the world's diamond processing industries. Already two channels are in existence. One operated by De Beers and the other by Argyle Diamonds. When Argyle severed its marketing tie with De Beers from July 1996 many observers held that it would soon be thrown out of business and wither away. On the contrary it has emerged as a strongindependent supplier of roughs with very creditable performance in 1998.

Construction of the conventional bucketline dredge is well almost complete. The dredge will have an initial annual capacity of 2.5 million cubic metres. This can be upgraded to 5.0 million cubic metres per annum. Trial mining of Danau Seran paleochannel as a bulk testing exercise to establish diamond grade and value is about to start. The Danau Seran and Cempaka palaeochannels have been previously test pitted to contain high quality gem diamonds. These paleochannels are estimated to contain some 260 million cubic metres of dredgeable material within which there are extensive zones of alluviam. According to preliminary estimates rough diamonds to be produced from the Indonesian projects may be values around US $200 per carat.

The Cempaka project was awarded by the Indonesian government to the joint venture company, PT Galuh Galuh Cempaka in February 1998. Its three main partners are Ashton (48 per cent), Malaysia Mining Corporation(32 per cent) and PT Aneka Tambang (20 per cent).

The project area covers approximately 3920 hectares of low lying swamp land within which is contained tow palaechannels known as Denau Saran and Cempaka Chachannels. Drill testing has indicated that the paleochannels are estimated to contain nearly 260 million cubic metres of dredgeable material within which three extensive zones of alluviam containing high quality of diamonds, the dredge for this project has been imported from Malaysia and the diamond recovery plant form South Africa.

Diamond manufacturers who wanted to take to the processing of high quality of roughs were considerably constrained till now as much roughs were not easily available. With the first diamond mine going into production and with the start of trial production of such roughs in Indonesia this problem is expected to ease considerably both these mines are producers of high quality diamonds. The second diamond mine in Canada that is expected to start production in another two yearsis also expected to add to the supply of high quality roughs. This may considerably ease the supply of such stones.