New study green-lights Tahera’s Jericho project

Toronto-based Tahera (TAH-T) intends to advance its Jericho diamond project to commercial production now that a feasibility study has indicated that the far-northern project is economic.

The Jericho project is Nunavut, 420 km northeast of Yellowknife, N.W.T., and 170 km north of the Ekati diamond mine.

The study, prepared by SRK Consulting with contributions from Nuna Logistics and Dowding Reynard & Associates, indicates that a proposed open-pit and underground operation on the land-based Jericho JD-1 pipe could produce a total of 3 million carats over a mine life of eight years. Estimated capital costs of $44.5 million include construction of a 50-tonne-per-hour processing plant 1 km from the Jericho kimberlite. Operating costs are estimated at $52.17 per carat.

The feasibility study is based on a minable reserve of 2.5 million tonnes grading 1.19 carats per tonne at a revised value of US$75 per carat, equivalent to US$89.25 per tonne.

The study assumed a US$75-per-carat value, which is 14% higher than that used in the prefeasibility. The increase reflects the findings of London-based WWW International Diamond Consultants, which placed an US$88-per-carat value on the Jericho diamonds in late 1999.

The projected internal rate of return is 34.3%, with the payback period pegged at 2.7 years.

SRK proposes an open-pit operation capable of mining 1.9 million tonnes of kimberlite, equivalent to 2.4 million carats, over the first four years at an overall stripping ratio of 8.4-to-1. This would be followed by the recovery of a diluted 614,000 tonnes of kimberlite grading 0.99 carat per tonne, or 610,000 carats, by a combination of underground sub-level caving and open-bench mining methods in the central lobe. A 30% dilution is assumed. A decline from the open pit would provide access to underground workings.

Development of the underground mine would incur capital expenditures of about $7.9 million, to be funded from cash flow.

Approximately 80% of the minable reserve is derived from the higher-grade central lobe, which contains a probable reserve of 2 million tonnes at a recovered grade of 1.29 carats per tonne, equivalent to 2.6 million carats. Half a million tonnes grading 0.77 carat per tonne, equivalent to 385,000 carats, will be mined by open-pit methods from the northern lobe of the pipe and processed at the end of the mine life.

A further 780,000 tonnes of inferred resource in the southern lobe and 870,000 tonnes of inferred material in the northern lobe will be mined by open-pit methods and stockpiled, pending improved economics.

The total resource of the Jericho pipe stands at 7.1 million tonnes grading 0.84 carat per tonne, or 6 million carats, including an indicated resource of 3.7 million tonnes at an average grade of 1.14 carats per tonne, equal to 4.2 million carats.

A new water permit and land lease applications will be submitted to the Nunavut Water Board, the Department of Indian Affairs and Northern Development, and the Kitikmeot Inuit Association.

Tahera says permitting could be completed as early as the second quarter of 2001, in which case startup could occur in the second quarter of 2003.