The Mackenzie Valley Environmental Impact Review Board has recommended development of the Snap Lake underground diamond project, following a 14-month assessment.
Upon approval by the federal minister of Indian and Northern Affairs, the project will enter a second review process under the authorization of the Mackenzie Valley Land and Water Board for a Class A land use permit and Class A water licence. The review process for these licences, which are necessary before construction can begin, may include a water licence hearing. In addition,
“We hope to receive the land and water use permits during the first quarter of next year, allowing us to use the 2004 winter road to start activities,” says Richard Molyneux, president and CEO of De Beers Canada, which owns the Snap Lake project.
De Beers has proposed development of a 3,000-tonne-per-day (1.1-million-tonne-per-year) underground diamond mine on the Snap Lake kimberlite dyke, with an operating life of 22 years. The project is expected to deliver 1.5 million carats annually, based on a minable resource of 22.8 million tonnes of kimberlite grading 1.46 carats per tonne, equivalent to 32.3 million carats. The diamonds are valued at $100 per carat (or US$76 per carat), representing $182 per tonne of kimberlite in revenue. De Beers is confident Snap Lake will be in full production by 2007. The project, which represents De Beers’ first mine outside of southern Africa, has a projected capital cost of US$320 million.
De Beers initiated the permitting process in February 2001, with the filing of applications for land and water use licences from the Mackenzie Valley Land and Water Board. The project was referred on to the Mackenzie Valley Environment Impact Review Board in May 2001 and subjected to an environmental assessment (EA), carried out by De Beers with the assistance of Golder Associates and AMEC. De Beers submitted the EA report in February 2002.
The findings of the Review Board are contained in a report of more than 300 pages, released on July 25, 2003, which includes numerous recommendations and suggestions.
The Review Board concludes: “With the implementation of the measures recommended in this report of EA, and implementation of commitments and mitigation measures proposed by De Beers, the proposed development will not likely have a significant adverse environmental impact and should proceed to the regulatory phase of approval.”
The Snap Lake project lies at the headwaters of the Lockhart River drainage system in the high Sub-Arctic ecoclimatic region, 220 km northeast of Yellowknife. The area consists mostly of boulder fields and heath tundra, providing habitat for caribou, grizzly bears, Arctic and red foxes, wolves and wolverines, and various birds.
Trapping
De Beers recorded 53 archaeological sites in the Snap Lake area but noted that the area is not regularly used for traditional land-use purposes, and that little fishing occurs in the area. In the past, the region has been used for trapping and as a travel route to hunt wolves.
By opting for an underground-only operation using room-and-pillar mining, De Beers has limited the surface footprint of the mine to 2.5 sq. km on the northwestern peninsula of Snap Lake. The above-ground facilities will include a kimberlite process plant, materials and ore storage areas, water and sewage treatment plants, water management pond, fuel storage, power-generating plant, airstrip, and camp complex for housing up to 350 people.
One of the mine’s most noticeable features will be the North Pile, a surface containment area for processed kimberlite and potentially acid-generating waste rock. A landfill, land farms to treat any hydrocarbon contaminated soils, and three granite quarries will be situated in the North Pile footprint. An engineered ditch will surround the North Pile and two other laydown areas for the collection of water that drains from these features. This water will be directed to settling ponds and then to the water treatment plant before being released to Snap Lake. The water management pond will provide storage capacity.
About half the processed kimberlite produced each year will be mixed with cement and then pumped back into the mine for permanent storage as backfill material. The remainder of the processed kimberlite will be pumped to the North Pile for permanent storage.
Water treatment
Almost all the water that comes into contact with the Snap Lake project during construction and operation will be treated before being released into Snap Lake. The mine will draw water from Snap Lake for kimberlite processing and for domestic use at the camp complex.
Among the conclusions of the recent public hearings into the Snap Lake environmental assessment is that there is unlikely to be any long-term effects on the lake as a result of the release of treated mine water. However, the effects of mine development on the migration and health of caribou remain a concern.
The Mackenzie Valley Environmental Impact Review Board says one of the larger issues raised during the public hearings was the lack of sufficient environmental and socio-economic baseline information regarding surface water quality, aquatic resources, wildlife, economics, and socio-cultural topic areas. In these instances, the Review Board has developed specific recommendations to address these “deficiencies.”
The Snap Lake project will employ up to 450 people during construction and will create upwards of 525 permanent positions during operations. De Beers is committed to hiring 40% territorial residents during construction and 60% during operations. Half of the northern residents hired will be aboriginal people. De Beers is in negotiation with local aboriginal groups, including the Dogrib Treaty 11 Council, Yellowknives Dene First Nation, Lutsel K’e Dene First Nation, and the North Slave Metis Alliance, to establish impact benefit agreements, and with the territorial government over the terms of a socio-economic agreement. Despite De Beers’ stated preference for including all Canadian diamonds in its “supplier of choice” marketing strategy, Molyneux acknowledged, in a recent De Beers newsletter, that the company has not developed a specific policy on the issue of local rough diamond supply to the territorial cutting centres. “De Beers looks forward to presenting the government with some innovative proposals during our forthcoming discussions,” says Molyneux.
Victor project
In the meantime, De Beers may soon have a second source of premium Canadian diamonds as it moves its wholly owned Victor project in the James Bay Lowlands of northern Ontario through final feasibility studies by year-end. “Our project team remains cautiously optimistic that Ontario’s first diamond mine is on track, albeit relatively modest in comparison to its illustrious N.W.T. predecessors,” Molyneux wrote in the company’s winter newsletter.
The Victor kimberlite occurs in a cluster of 19 pipes, 90 km west of the coastal community of Attawapiskat on the western side of James Bay. The Victor body consists of two adjacent pipes, Victor South and Victor North, which coalesce at surface and cover an area measuring 16 hectares.
The geology of the multi-phase Victor kimberlite is complex and highly variable in diamond grade. A comprehensive bulk-sampling program in the winters of 2000 and 2001 involved the collection of 10,042 tonnes of kimberlite from surface trenching and some 37 large-diameter reverse-circulation holes drilled to a maximum depth of 250 metres. In total, 3,788 carats of diamonds were recovered for an overall grade of 0.38 carat per tonne (or 37.7 carats per 100 tonnes). This parcel was valued at more than $1.5 million for an average value of $405 per carat.
De Beers has established a revenue value of $94 per tonne for Victor, with a minable open-pit resource of 25 million tonnes of kimberlite to a depth of 200 metres and the p
otential for an additional 3 million tonnes.
A desktop study in late 2001 recognized that the remote location of the project site, coupled with difficult muskeg terrain and bogs, presented various logistical and construction challenges. A prefeasibility study completed in November 2002 assessed the project in more detail, addressing water management, ground water disposal and treatment, site access, and project costs. Studies indicate there is a significant groundwater component in the surrounding country rock and overburden, and that this groundwater would have to be prevented from entering an open pit.
Although the results of the prefeasibility study were not disclosed, De Beers was sufficiently encouraged to advance the project to the final feasibility stage. An environmental prospectus prepared by AMEC in May 2002 revealed that De Beers has been examining the economics of an open-pit operation and 2.5-million-tonne-per-year (7,000-tonne-per-day) processing plant. The mine life is projected to be 10 years, though the occurrence of other diamond-bearing pipes in the area has the potential to extend that. This past winter, core drilling and bulk sampling were conducted on three kimberlites close to Victor, namely the Tango Extension, Delta and India.
The aim of the final feasibility study is to determine the economic viability of mining at Victor. Civil engineering drilling was conducted this winter to determine the best placement and design for the mine buildings and plant. Further subsidence and compaction tests were done on two gravel pads, which were constructed last year.
Pump tests are under way to test the three-dimensional hydrological model, which predicts the flow, quantity and quality of the ground water that will be pumped during mining. Additional geological drilling and seismic studies were done to confirm the shape of the kimberlite below the surface, and to identify the boundary between the kimberlite and surrounding country rock. Geotechnical drilling has provided further information for the design of the open pit.
A draft EA report was filed at the end of May and a final EA will be submitted by the end of September. The permitting process is on a path, pending a positive feasibility study, that could lead to Ontario’s first-ever diamond mine by 2007.
De Beers is in negotiations with the Attawapiskat First Nation over an impact benefit agreement. A new training centre is being established in the Attawapiskat community.
Gahcho Kue
Despite a decision earlier this year to put the Gahcho Kue project in the Northwest Territories on the backburner after an updated desktop study failed to meet a critical 15% internal rate of return, De Beers is looking to the project with increasing interest.
De Beers Canada Exploration has begun estimating the cost of carrying out a prefeasibility study in 2004 and in the first half of 2005. The estimate will be presented to De Beers’ board in November for approval. The decision to move the project along was based on the improving geo-political and economic conditions, which support confidence in longer-term diamond-price projections.
Gahcho Kue is 275 km northeast of Yellowknife and centres on the Kennady Lake cluster of five diamond-bearing pipes. De Beers is the operator and 51%-owner of the joint-venture project.
The updated desktop study analyzed the costs of open-pit mining of the 5034 and Hearne pipes, as well as a high-grade zone in the top 140 metres of the Tuzo pipe. The recent desktop study projected capital costs of $608 million, slightly higher than those proposed in the 2000 study, but called for increasing production to 2 million tonnes per year to reduce operating costs to $56 per tonne from $84 per tonne.
“At our recent executive meeting, we started to have real hope that we might be able to develop critical mass in Canada, subject to the long permitting process,” says Gary Ralfe, managing director of the De Beers group. “We hope to be in production, within some years, at more than one of these projects.”
The South African major expects to spend $34 million on exploration across a wide front of projects in Canada in 2003. The Canadian exploration division of De Beers recently completed an updated conceptual study of the Fort la Corne project in Saskatchewan, and a draft report has been forwarded to its joint-venture partners — namely,
“This is a preliminary step aimed at determining, for various orebody and mining-rate scenarios, the ore values that would be required to mine kimberlite economically in this area,” says Joe Joyce, president of De Beers Canada Exploration. “We felt the study was necessary at this stage because current data suggest that these large bodies, lying under varying thicknesses of barren cover, are of moderate grade at best. It is thus important that the joint venture get a firm handle on project economics in this part of Saskatchewan in order that we might direct bulk-sample programs on various kimberlites that make up the Fort la Corne kimberlite province.”
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