Bhopal: Global major, Rio Tinto, has submitted mining lease applications for its Bunder diamond project in the Bundelkhand region of Madhya Pradesh, India, taking a major step in the development of what it describes could be the ''first significant world class diamond mine in India.''

Rio Tinto has announced the exploration target for diamond mineralisation at the Bunder project at 40-70 million tonnes, with a mineral grade of between 0.3 and 0.7 carats per tonne. It says that the targeted diamond grades are at least three times greater than the grade of the Panna mine, India's only other hard rock diamond mine.

The Bunder project is an original discovery made as part of a regional exploration reconnaissance in 2004, Tinto said. A prospecting license was executed in September 2006, which allowed exploration activities to continue, and an order of magnitude study was commenced to evaluate the economic viability of the eight diamondiferous lamproites.

The results of this study are expected by the end of the third quarter of 2008.

To date, work on the Bunder diamond project includes mapping, 48 drill-holes and five surface bulk samples. Drilling is continuing and further surface bulk sampling to support diamond valuation is underway.

Environmental approval for a 10 tonne per hour Dense Media Separation Plant is expected soon from the Madhya Pradesh government, which allows processing of bulk samples at the project site.

Following the completion of the order of magnitude study in the second half of 2008, a pre-feasibility study would involve further social and environmental studies including further drilling and below the surface bulk sampling.

In total, Rio Tinto said, it has spent over Rs75 crore ($19 million) on evaluation of the deposit so far. Plans are in place to spend around a further Rs35 crore ($30 million) to support continued evaluation of the deposit.

Nik Senapati, managing director, Rio Tinto, India, said, "Diamonds are a significant part of the history of India and an important product for Rio Tinto. We have spent more than Rs100 crore ($25 million) over the last six years on diamond exploration and evaluation in India, and remain excited about the prospects for the Bunder project. The application for mining leases is confirmation of our commitment to both mining in India and the global diamond industry."

Bill Champion, managing director, Rio Tinto's diamond business commented, "We are delighted with the progress of the Bunder project, which has the potential to be a world class operation. Rio Tinto has a strong track record of introducing new productions into the market and significantly enhancing their value. We are committed to ensuring a stronger, healthier and environmentally secure community at Bunder, as we have done across all of our diamond operations."

Currently, Rio Tinto processes the majority of its diamonds in India and independently markets the diamond productions from its Australian, Canadian and African mines, with a well established presence in all the major diamond centres of the world.

Rio Tinto's strategic alliance with the Indian diamond industry, built over the past 25 years, has enabled it to gain a deep understanding of India as the world's largest diamond cutting centre and as one of the key emerging markets for diamond demand.

Rio Tinto has a global diamond exploration portfolio encompassing six continents and including projects in Canada, India, southern and western Africa, Brazil, Russia and Australia.

Currently, Rio Tinto produces about 16% of the world's rough diamonds by volume and 8% by value through its 100% control of the Argyle mine in Australia, 60% of the Diavik mine in Canada and a 78% interest in the Murowa mine in Africa.