Mineral exploration company Minmet announced yesterday that it had found several rock structures of a type known to host diamond deposits at its gold concession area in Cuiaba, Brazil.

At an e.g.m. in Dublin yesterday, Minmet chairman Mr Jeremy Metcalfe said the site had significant potential, with extensive gold and now diamond deposits, and that the company could no longer be considered the "minnow" of the mining industry.

Following the announcement, Minmet shares traded 1 1/4p higher in London at 9 1/4p. The stock did not trade in Dublin.

Shareholders approved the raising of £9.9 million sterling (€15.03 million) through a share placing and an open offer to fund its projects in Brazil, Portugal and Devon, as well as providing additional working capital. Mr Metcalfe said: "Your company is in good shape. The airborne survey of Cuiba showed a very large number of kimberlite sites, which has been cut down to 30 which will be explored further. "We have presented our case to 43 institutional investors, both in the UK and Ireland, and have got a resounding endorsement of the company's strength."

Mr Metcalfe said the falling price of gold, which recently has seen supply exceeding demand by up to 9 per cent, would not affect the profitability of its Brazilian concessions because it would only cost $30 to $70 (€28 to €66) an ounce to produce - far lower than the world average of $260 an ounce.

Mr Metcalfe said: "Gold is no longer a hedge against inflation. Its future is as a commodity with four major markets, from the jewellery, dentistry, computer and space industries."

Minmet is still encountering problems with its gold exploration project at Castromil, 20km west of Porto. Mr Metcalfe said the situation had been "extremely frustrating", but he expected the licence issue to be resolved after Brazil's general elections in October.

"The area is extremely mineralised and Minmet would expect to start up a number of open-cast mines there once the licensing issue is resolved."

Minmet has also appointed Mr Michael Johnson a non-executive director, which Mr Metcalfe said would be "a tremendous asset to the company" and would assist it in its new mining projects, especially in Brazil. Mr Johnson is an adviser to a number of organisations, including the United Nations and the World Bank, on the environmental assessment of development proposals, environmental auditing, risk analysis and decommissioning.