BHP in high gear at Lac de Gras camp

Early this year, BHP Minerals Canada will complete the first-ever pre-feasibility study for a diamond project in North America.

And if positive results are evident mid-year from the multi-million-dollar bulk-sampling program now in progress, BHP’s joint venture with Dia Met Minerals (TSE) will undertake a full feasibility study. This would lead to a possible internal production decision by the end of 1994.

When The Northern Miner recently visited the property, north of Yellowknife, N.W.T., BHP was commissioning its newly constructed dense-media-separation (dms) plant. The facility will process bulk samples to be extracted from two diamondiferous kimberlites.

“They may not be our best pipes,” Bruce Turner, BHP’s manager responsible for N.W.T. diamonds, said of the Fox Lake and Koala Lake kimberlites. “But so far, they appear to offer the greatest opportunity for commercial development.”

Results from smaller tests (up to 200 tonnes) of these targets have been highly encouraging with respect to grade, size distribution and percentage of gems, as well as the exceptional color and clarity of the diamonds (T.N.M. Jan. 17/94).

The Fox Lake pipe will be tested by an underground decline to total 1,471 metres in length, at a 17% grade, for a vertical depth of 250 metres. Work began in mid-October and, at the time of our visit in January, contractor Canadian Mine Development (a division of Hillsborough Resources) had driven 530 metres and was achieving about 10 metres a day. Kimberlite extraction will begin this spring.

Despite the minus 45C temperatures at the portal, heated air made underground conditions comfortable. Ground conditions in the country rock (biotite granite) appeared to be excellent, with only minimal screening over a few faults which are tight and cause no water problems.

The angled decline measures about 4.3×4.3 metres, and will size down when in kimberlite to roughly 2.1×2.7 metres. The size of the decline has fueled some speculation that it may later be used for production purposes, a notion Turner dismissed. He said, however, that it may eventually be used as a service ramp.

“The size is just a function of the contractor wanting to use large equipment to achieve a faster rate of advance,” Turner said. “The bidding for this job was very competitive.”

BHP plans to extract 5,000 tonnes from the diatreme zone of the Fox Lake pipe. The upper part (the crater zone) was tested by last year’s smaller sampling program which used 10.5-inch-diameter drills.

Some 3,500 tonnes will be taken from the Koala Lake pipe, where a barge-mounted drill was working last summer. Contractor Christensen Boyles will use a 36-inch-diameter drill, brought in from the U.S., and adapted to cold-weather conditions.

Both targets are within several kilometres of the camp and processing plant and are accessible by winter roads. BHP will not say if Koala Lake is Pipe 4 — the pipe that returned a grade of 125 carats per 100 tonnes plus the highest-valued diamonds (averaging US$112 per carat) from last year’s program — but the fact that its sample will be smaller and extracted first makes it seem likely.

Jaap Zwaan, chief mine engineer, said results from both tests will be compared to determine which technique is more economical and which provides the better representative sample. Various mathematical techniques are used to determine whether a sample is statistically valid, based on the volume of kimberlite and the nature of the size distribution of the diamonds. At the time of our visit, a J.T. Thomas drill rig was delineating the walls of the Koala Lake pipe, the first time this type of work has been done. BHP relies on a combination of ground geophysical techniques to estimate the size of its pipes and is now “getting a handle” on estimating the size of the diatreme relative to the upper crater zone, which has a larger surface expression.

BHP has been thickening the ice since October (70 inches is needed for the big rig) by pumping up water and repeatedly flooding the lake’s ice surface. This drilling will begin in early February and be completed by late March. Turner said results from both targets, including valuations, will not be in hand until this summer. And he said the partners would want to have “clear indications of a commercial deposit” plus sufficient sample representative of the pipe before upgrading the engineering into a full feasibility study and moving into serious marketing discussions. The permitting schedule is such that late 1995 is the earliest possible date for start of construction. “We would be remiss not to study all the marketing options,” Turner said. “Most countries retain some production outside CSO (De Beers’ Central Selling Organization) and there is merit to marketing some outside the CSO. We have no idea, at this point, as to which direction we will take.” A Canadian diamond cutting industry is also a possibility, according to Turner, who said producers in this country “may want to look at downstream processing” once economic pipes are a certainty.

International diamond experts have already speculated that Canadian producers may forge an alliance with Russian producers to bring about a 3-party CSO, thus retaining the marketing mechanism but weakening De Beers’ sole dominance over the cartel.

Turner conceded that the first company to prove up a commercial deposit in Canada’s North will be better able to position itself in the diamond market, particularly for good-quality gems. But as for the much-ballyhooed “race” with Kennecott (now testing a target nearby), Turner said BHP’s race is strictly internal because of the huge sums being spent on the project. “We want to get a return on our investment,” he said. “But we are following standard procedure and want to make sure we would be at the lowest end of the cost curve, because the diamond market could turn more competitive (than it is now).”

BHP spent 13% of its A$100-million worldwide exploration budget on the diamond project in 1993, and millions more will be spent this year. The freight costs to airlift supplies and equipment for the current program are estimated at more than $2.4 million. The airlift started last September, and, up to Christmas, 3.6 million lb. of goods in more than 600 plane trips had been brought in — including the new camp, dms plant and underground equipment. The larger pieces (about 1 million lb.) were brought in by Hercules aircraft to the Salmita strip and then choppered in pieces by a Chinook to the camp. About 2,000 gallons of fuel are also brought in daily. The new $1-million camp, a series of cosy Weatherhaven units, can accommodate 112 people. Another camp is being constructed for exploration crews, which recently started overseeing smaller bulk samples (200 tonnes) on other promising targets. The program will likely include more testing of 93-J, which produced a spectacular amount of diamonds from core drilling last year. “This will be the biggest program we have attacked to date,” said exploration manager Rory Moore.

All samples will be processed in the dms plant, housed within a large, well-insulated Sprung structure that adjoins a sample storage facility. The plant is managed by Senior Project Engineer Michael Rylatt, who has almost a decade of experience in this field in Africa.

The plant has two crushers, which takes minus-6-inch (minus-15-cm) material and crushes it down to minus-40-mm, and then down to minus-16-mm. After going through the dense media (ferro-silicon) which float out the waste rock, the diamonds and garnets go into a locked sink-screen, one of many security measures that will eventually be incorporated into the project. The plant’s nominal rate is about 16 tonnes per hour.

The process is environmentally benign, as are the tailings which will be stored in an impermeable dam which uses Russian technology and features a continually frozen core “liner.” A membrane is also used as an extra precaution.

Environmental studies are being carried out by Rescan, including studies on the impacts of draining lakes to allow for low-cost open-pit minin
g. Special effort has been made to keep local First Nations groups informed of project developments. Even the local bear population is getting attention; plans call for an electric fence to surround the complex by this spring. Winter roads used to gain access to the pipes are built, for the most part, on eskers, which are easier to reclaim, thus reducing the overall long-term impact on the environment. The property is connected to Echo Bay’s Lupin winter road by a 40-km access road.

The diamond project, if developed into a mine, will eventually end up within BHP’s World Minerals division. The major will have a 51% interest, with Dia Met holding a 29% stake. The remainder is held equally by Dia Met Chairman Charles Fipke and Stewart Blusson.