DIAMOND PAGE — Diavik feasibility study delayed until mid-year

The final feasibility study for the proposed Diavik diamond mine project in the Lac de Gras area of the Northwest Territories will be not be completed until the federal minister of the environment has issued a decision on the project.

Diavik Diamond Mines (DDMI), a subsidiary of London-based Rio Tinto (RTP-N), and partner Aber Resources (ABZ-T) are delaying completion of the study until they have a better understanding of the project’s permitting, regulatory and fiscal requirements. The minister’s decision, which is due in mid-1999, is expected to shed light on these matters. DDMI is the project operator.

Details of the final feasibility work were first expected in late 1998 and then early in the second quarter of this year. Mining analyst David James of Canaccord Capital says a management change at DDMI, which includes a new president, Stephen Prest, might partly account for the delay.

However, the delay has not affected the anticipated production schedule. Construction is still slated to begin in the first quarter of 2000, with commercial production planned for the second quarter of 2002.

Situated 300 km north of Yellowknife and 35 km southeast of the producing Ekati mine, the Diavik project is a 60-40 joint venture between DDMI and Aber. The project is based on developing four kimberlite pipes — A-154 South, A-154 North, A-418 and A-21 — that lie just offshore of the 20-sq.-km East Island in Lac de Gras.

The pipes boast a resource of 133 million carats contained in 37 million tonnes averaging 3.6 carats per tonne. A diluted minable reserve stands at 26 million tonnes grading 3.9 carats per tonne, representing 102 million carats at an average value of US$56 per carat.

DDMI intends to dam off the pipes with water retention dykes — one around the A-154 South and North kimberlite pipes; another, around A-418; and a third, around A-21 — and then mine, by open-pit methods, all four pipes to depths of between 250 and 300 metres. The pit phase would be followed by underground mining on the A-154 South and 418 pipes to a depth of 400 metres.

The project has a mine life of up to 22 years, with capital costs estimated at $875 million.

The environmental assessment of the project was filed in September 1998, and the environmental and socio-economic review process is still in progress. A comprehensive study report is being prepared by the Department of Indian Affairs and Northern Development; after this report is submitted to the minister of environment, it will be released for a 30-day period of public comment.

If the potential environmental impact of the project can be mitigated and public concerns are adequately addressed, the government will proceed with permitting. DDMI and Aber are optimistic that permits will be in hand by the fall.

In the meantime, the partners have approved a 1999 budget of $43.6 million for detailed engineering and planning.