BHP set to boost Ekati

Vancouver — BHP Billiton (BHP-N) is gearing up for a 40% increase in diamond production from its Ekati mine in the Northwest Territories.

Over the next two years, the development of additional kimberlite pipes on the property will dramatically ramp up both total production and value.

Following a series of improvements, the kimberlite processing plant is currently averaging more than 11,000 tonnes per day, compared to the original capacity of 9,000 tonnes. Ekati was brought into production in October 1998 at a cost of $900 million. Since that time, mining has expanded from one pit, Panda, to open-pit production from the Misery pipe, underground production from a test mine on the Koala North pipe, and prestripping of the Koala pipe, which will soon be the next major source of feed.

Ekati is Canada’s first diamond mine. Under the mine development plan outlined in the 1997 feasibility study, five kimberlite pipes, Panda, Misery, Koala, Fox and Sable, are to be mined by open-pit methods, followed, in the case of Panda and Koala, by underground mining. The Panda, Koala and Fox pipes lie within a few kms of each other. The Sable pipe is a further 17-km northeast, and the Misery pipe, 25-km southeast, of the main camp.

A sixth, smaller pipe, known as Koala North, has been added to the mine plan. It sits between the Koala and Panda pipes in the existing permitted area. Only 70 metres in diameter, Koala North contains a minable underground reserve of 1.3 million tonnes grading 0.4 carat per tonne. A bulk sample taken from Koala North in February 2001 returned a carat value of US$143. Koala North will serve as an underground test mine in preparation for mining at Panda in 2004 and Koala in 2005. An access ramp has been driven into Koala North under the direction of mining contractor Procon Mining & Tunneling, in joint venture with KeTe Whii. The underground miners cut their first kimberlite in late July.

The Ekati mine is seeking regulatory approval to incorporate two other pipes, Beartooth and Pigeon, into the mine plan, along with the Sable pipe. The addition of Sable, Beartooth and Pigeon would add three years to the mine life for a total of 18 years. BHP initiated the permitting process for these three pipes some three and half years ago.

The land-based Pigeon pipe is 4.5 km northwest of the Panda pit and has a surface area of about 2 hectares. It contains a measured, indicated and inferred open-pit resource of 4.3 million tonnes grading 0.5 carat per tonne. A 114-carat parcel recovered from a 214-tonne mini-bulk drill sample taken in the summer of 1998 from the upper crater zone of Pigeon was valued at US$71 per carat.

The Beartooth pipe, with a surface area of 1 hectare, lies less than 1 km northwest of Panda under a small lake. Open-pit resources are estimated at 1.3 million tonnes grading 1.1 carats per tonne. The value of a 227-carat parcel recovered from a 189-tonne drill sample of the pipe in 1998 was estimated at US$79 per carat.

BHP Billiton stopped reporting the results of its exploration programs at Ekati since acquiring Dia Met Minerals and its 29% minority stake in the mine more than a year ago. At that time, 138 kimberlites had been found on the Ekati mine properties, including 41 pipes on the outlying Buffer zone claims, which are held 58.5% by BHP Billiton, 31.2% byArchon Minerals (ACS-V) and 10% by Charles Fipke.

The mine is operated and 80%-owned by BHP Billiton Diamonds, a wholly owned division of BHP. The remainder is split evenly between geologists Charles Fipke and Stewart Blusson.

Mine production for the quarter ended Sept. 30, 2002, was 954,000 carats of diamonds — 24% higher than in the corresponding period last year but off 7% from the June quarter.

Proven and probable kimberlite reserves in six commercial pipes, at June 30, 2002, totalled 58 million tonnes grading 0.9 carat per tonne, equivalent to 53 million recoverable carats, based on a 1.5-mm bottom-stone cutoff size. The overall resource stands at 114 million tonnes grading 1.3 carats per tonne, or 148 million carats, using a 1-mm cutoff.

Ekati produces about 6% of the world’s diamonds by value and boosted BHP’s revenues by US$390 million in during its last financial year ended June 30.