BHP approves Misery project at Ekati

BHP Billiton (BHP-N, BLT-L) gave a thumbs-up to its Misery open-pit project at the Ekati diamond mine near Yellowknife, N.W.T., on May 9.

“With the approval of the Misery project, we are able to continue to make the most of the resources at Ekati and also continue our proud legacy,” said Graham Kerr, president of BHP Billiton Diamonds and Specialty Products, in a press release. He added that since Ekati started production in 1998, it has been a “cornerstone” of the local economy and has significantly benefited the local communities.

The Misery project includes a pushback of the existing Misery open pit, which saw mining between 2001 and 2005.

The company expects to start stripping the pit in October, with ore production slated for late 2015. Misery would have a two-year mine life, with final production expected in mid-2017.

It would cost about US$323 million to expand the Misery pit. Of that amount, US$29 million was approved last year to allow long lead equipment to be brought in on the 2011 winter road.

Situated 310 km northeast of Yellowknife, 200 km south of Canada’s Arctic Circle, the mine is in an area of continuous permafrost. Ekati is accessible primarily by air, with the exception of a roughly 10-week access to the winter road each year to allow trucking of bulk supplies to the site.

The existing Misery pit is one of the five open pits at Ekati, along with Panda, Koala, Beartooth and Fox.

The company said in a fall 2010 press release that it completed mining at the Panda underground mine and began first reclamation of Ekati mines. Active mining at the project is planned to end in 2018.

BHP notes that the Misery pit has played a significant role in developing Canada’s first surface and underground diamond mine, which has been active for more than two decades, and could, continue to play a notable role with the pushback.

The company discovered the Misery pipe in the early ’90s and noticed that the original drill core had “unusually high microdiamond recoveries.” It followed that up with bulk-sample drilling, confirming a high diamond grade potential. Misery was then included in a 1996 feasibility study for Ekati, and was mined for five years in the early 2000s.

The pipe was named after Misery Point, which sits 30 km from the main Ekati camp. The point, the company says, was named after an unsuccessful explorer at the end of the last century, quickly adding that the “quality of the stones bear no relation to the name.”

In 2009,  BHP completed a selection study on the pit, and got the green light to move into the definition stage as a pushback open pit last January.

To date, 156 kimberlites pipes have been discovered on Ekati. The project has generated an average of about 3 million carats of rough diamonds per year over the last three years.

The company says annual sales from Ekati make up about 3% of the world’s current rough diamond supply by weight and 5% by value.

The first diamond recovered at Ekati was in September 1998, a month before its official opening on Oct. 14.

The Misery news helped push BHP’s stock up US$1.33 to US$96.83 on 3 million shares traded on the day.