BHP greenlights Misery at Ekati

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

“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, and final production for 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 and 200 km south of Canada’s Arctic Circle, the mine is in an area of continuous permafrost. Ekati is reachable by air, and can be accessed for about 10 weeks each year via a winter road that allows the trucking of bulk supplies to the site. 

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

The company said in a press release late last year that it completed mining at the Panda underground mine and began its first reclamation tasks at Ekati. 

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.

“Misery will add one year to the Ekati base mine plan which includes active operations and projects which have been approved for execution,” writes media relations representative Ruban Yogarajah in an email to The Northern Miner. “The base mine plan extends to 2018 with the inclusion of Misery.” 

The company discovered the Misery pipe in the early ’90s and noticed that the original drill core had “unusually high” microdiamond recoveries. It followed 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 a fruitless exploration effort at the end of the 19th century, adding that the “quality of the stones bear no relation to the name.” 

In 2009, the company 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 kimberlite pipes have been discovered on Ekati, which operates at an average throughput rate of 13,000 tonnes per day to produce 11,000 carats of diamonds daily.

However, output in the first three months of 2011 totalled 551,000 carats of rough diamonds – a 28% decline from the same period of 2010. The company says this was due to lower average ore grades, and expects lower grades to impact production in the 2012 fiscal year.

The mine has generated an average of 3 million carats of rough diamonds per year over the last three years. 

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

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

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