Aber boosts resource at Diavik diamond project

Aber Resources (ABZ-T) and Diavik Diamond Mines, a division of Rio Tinto (RTP-N), have tabled an updated resource estimate for the Diavik project, 300 km northeast of Yellowknife, N.W.T.

The resource, calculated to a depth of 400 metres, is now pegged at 37.4 million tonnes grading 3.5 carats per tonne. This works out to a contained resource of 133 million carats — an increase of 10 million carats over the previous estimate.

Diluted, proven and probable reserves have yet to be re-calculated. Earlier calculations had set the proven and probable diluted reserves at 27.7 million tonnes grading 3.7 carats, equivalent to a contained resource of 102.5 million carats.

The most significant change to the resource was the re-defined grade in the upper 100 metres of the A-154S pipe. Large-diameter core drilling increased the A-154S resource to 3.2 million tonnes grading 5.2 carats per tonne from 3.2 million tonnes grading 4.4 carats — an 18% increase in grade for this part of the pipe.

A breakdown of the updated reserves per pipe is as follows:

* Pipe A-418 contains 9 million tonnes averaging 3.7 carats per tonne, for a total contained resource of 33 million carats. Diamonds from A-418 are valued at US$56 per carat.

* Pipe A-154S contains 12 million tonnes averaging 4.8 carats per tonne. This works out to a contained resource of 57 million carats. The increase is attributed to a 5% increase in tonnage and a 4% increase in grade. Diamonds from this pipe have been valued at US$63 per carat.

* Pipe A-154N contains 11.5 million tonnes grading 2.4 carats per tonne, which works out to a contained resource of 28 million carats. The grade was increased by 26% and the tonnage dropped by 11%. Diamonds from A-154N are valued at US$35 per carat.

* Pipe A-21 contains 4.9 million tonnes grading 3 carats per tonne, equivalent to a contained resource of 15 million carats. Pipe A-21’s grade was increased by 8%.

The Diavik project feasibility study is scheduled to be completed in the fourth quarter of 1998. The study, together with associated engineering and environmental assessment work, is budgeted at $30 million.

The average diamond price estimate for all the pipes has been set at US$56 per carat. Further valuations on the A-418 pipe and the A-154S pipe confirmed earlier price estimates of US$56 and US$63 per carat, respectively.

The study is examining possible mining and processing rates of between 1.5 million and 1.9 million tonnes per year. At full, open-pit production, the operation is estimated to produce 6-8 million carats per year, dropping to 3-4 million carats after year 15. The mine life is estimated at 16-22 years.

Aber has modified the original timetable for the project. First production has been pushed back by six months to the second quarter of 2002. Original estimates were for a startup late in the fourth quarter of 2001 or early 2002.

Several hurdles have yet to be passed before production can commence. These include:

* filing of an environmental assessment report, which was to have been completed by presstime;

* completion of the final feasibility study, set for September or October of 1998;

* federal cabinet approval, which is anticipated for the second quarter of 1999; * receipt of all project permits, set for the fall of 1999;

* mobilization of equipment and supplies, scheduled for the first quarter of 2000; and

* project construction, to begin in the first quarter of 2000 and last until the second quarter of 2002.

First production is anticipated for the second quarter of 2002.

Aber holds a 40% interest in the Diavik joint venture and retains the right to market its 40% share of diamond production. Diavik Diamond Mines holds the remaining interest.

Aber has 48 million shares outstanding and working capital of $120 million.