Aber and Diavik table plans for Lac de Gras diamond mine

Aber Resources (ABZ-T) and Diavik Diamond Mines, a division of Rio Tinto (RTP-N), unveiled a $875-million plan to build Canada’s second diamond mine.

The mine site is situated 300 km northwest of Yellowknife, N.W.T., and 35 km southeast of the Ekati project of BHP and Dia Met Minerals.

The mining plan calls for a 2-million-tonne-per-year processing plant that will handle production from four kimberlite pipes: A-418, A-154S, A-154N and A-21. The plant will utilize heavy medium separation with x-ray diamond recovery.

The operation is expected to yield 6 to 8 million carats of diamonds per year, with a total projected mine life of 16 to 22 years. After year 15, the rate of production would drop to between 3 and 4 million carats per year.

A preliminary reserve estimate, calculated by Diavik, weighs in at 37 million tonnes grading 3.3 carats per tonne (or 123 million carats). To date, 83% of the resource, (104 million carats), falls into the total minable reserves category. The average diamond price is estimated to be US$56 per carat. The companies expect that more than 90%, by value, of the diamonds produced will be gem quality.

A prefeasibility estimate pegs the project’s capital cost at $875 million, plus or minus 25%. The final feasibility study is expected to be completed in the fourth quarter of 1998. Current estimates suggest that production could commence as early as 2001.

Life-of-mine operating costs have been estimated at $66 per tonne of kimberlite. These costs include the underground mining phase as well as the open pit, however, they do not include sorting, valuation, marketing, royalties, reclamation and corporate costs.

The Diavik joint venture (60% Diavik and 40% Aber) has spent $80 million to date on environmental and socio-economic studies, as well as resource definition, bulk sampling and prefeasibility engineering work.

A breakdown of undiluted reserves per pipe is as follows:

* Pipe A-418 — This pipe contains a reserve of 4.4 million tonnes grading 3.73 carats per tonne that is amenable to open-pit mining. Its underground reserve weighs in at 4.3 million tonnes grading 3.9 carats per tonne.

Diamonds at A-418 are valued at US$56 per carat.

* Pipe A-154S — This pipe contains a reserve of 9.7 million tonnes grading 4.61 carats per tonne that is amenable to open-pit mining. Underground reserves contribute 1.6 million tonnes grading 4.47 carats per tonne. A-154S diamonds are valued at US$63 per carat.

* Pipe A-154N — This pipe holds a reserve of 2.8 million tonnes grading 2.84 carats per tonne that is amenable to open-pit mining; the underground portion of the reserve has yet to be determined. The pipe’s diamonds are valued at US$35 per carat.

* Pipe A-21 — This pipe contains a reserve of 3.9 million tonnes grading 2.84 carats per tonne that is amenable to open-pit mining; underground reserves have not been defined. Diamonds in this pipe are valued at US$38 per carat.

All four pipes are under shallow water adjacent to a 20-sq.-km island in Lac de Gras. Based on safety and environmental concerns, as well as economics, water-retaining dikes will be constructed in order to isolate the kimberlite pipes from the lake. The prefeasibility study suggests that pipe A-418 will be the first to be exposed and exploited. Granitic rocks from that operation would be used to construct a dike around pipes 154N and 154S.