Jericho diamond project to stand alone

A facilities-use agreement between Tahera (TAH-T) and Echo Bay Mines (ECO-T) has fallen apart, throwing a wrench into the feasibility study for the proposed Jericho diamond mine in Canada’s Nunavut Territory.

Last year, Tahera proposed that kimberlite from the JD-1 kimberlite, situated less than 200 km from the Ekati diamond mine, be processed at Echo Bay’s nearby Lupin gold mine. The plan limited the environmental impact of the project and paved the way for the environmental assessment and regulatory approval stages to get under way.

Under the proposal, kimberlite would be treated year-round at the plant, using standard processing techniques. A study by SRK Consulting indicated that 2.7 million carats of diamonds could be produced over an 8-year mine life at an annual production rate of 300,000 tonnes.

Capital costs for the proposed open-pit operation, including prestripping and infrastructure, are estimated at $40.3 million. The process plant would be the most costly item at $13.8 million.

The study was based on a minable reserve of 2.3 million tonnes grading 1.13 carats per tonne in a total resource of 6.5 million tonnes grading 0.82 carat per tonne. Diamonds from the Jericho pipe have been valued at US$65 per carat.

The facilities-use agreement was signed, providing the basis for the feasibility study. According to Tahera, the agreement would allow for lower capital costs and would also limit the environmental impact of the operation.

Tahera asked Echo Bay to make a formal application to the Department of Indian Affairs and Northern Development for permission to use the Lupin site to process the Jericho kimberlite. Echo Bay, however, provided an “equivocal and unsatisfactory” response.

Faced with uncertainty over Echo Bay’s position, Tahera has decided to proceed with the project on the basis that the production facility will be at Carat Lake, directly adjacent to the Jericho kimberlite.

According to Tahera, this will increase capital costs by about $4.5 million. Operating costs may, however, decrease, because there would be no need to transport the ore some 28 km to Lupin.

Tahera hopes to have a revised environmental impact statement completed during the third quarter of this year and remains hopeful that all permits will be in place by year-end.

For the three months ended March 31, Tahera recorded a loss of $896,000, compared with a loss of $607,000 in the corresponding period of 1999.