Canada poised to be high-value diamond producer?

The Lac de Gras region of the Northwest Territories is poised to become a producer of high-value diamonds, according to an Antwerp-based consulting geologist specializing in the evaluation of diamond deposits.

“The latest news leaves no doubt any longer that Canada will be producing diamonds within three to five years,” said Dr. Luc Rombouts. He was referring to results released more than a week ago by BHP Minerals Canada and Dia Met Minerals (TSE).

The partners obtained six independent valuations of macrodiamonds recovered from three pipes sampled on the joint venture’s Lac de Gras property earlier this year. The best result was from Pipe 4, where a 49.8-tonne sample contained 62.11 carats (31% being of gem quality), for a mean value of US$112 per carat.

Rombouts confirmed that the BHP-Dia Met pipes rank with the best of African pipes and compare well with such Russian pipes such as Udachnaya and Sytkanskaya. Pipe 4 returned 1.25 carats per tonne, about the same grade as the Jwaneng pipe in Botswana, one of the most profitable diamond mines in the world.

“The BHP-Dia Met pipes not only compare well in terms of grade or carats per tonne, but also in terms of the dollar-per-carat value,” Rombouts explained. He pointed out that the best kimberlites in the world (such as Jwaneng) have a value of US$100-120 per carat.

“A good, average, producing kimberlite pipe could have a value of US$50-$100 per carat,” Rombouts added. “But if one looks only at dollar-per-carat value, the best mines in the world are the alluvial operations in Africa, which can have a value as high as US$300 per carat.”

Rombouts told The Northern Miner that results from Lac de Gras are generating plenty of international speculation about how the Canadian mines will market their production. “It has not gone unnoticed that the Canadians have established a relationship with the Russians,” he said. “If these two groups forge an alliance, it could mean De Beers may lose its dominant position in the Central Selling Organization (CSO). Thinking loosely here on what may happen, we could see the emergence of a 3-party CSO where the Russian and Canadian producers have as much influence as De Beers.”

Rombouts also said the Canadians (BHP-Dia Met) and the Russians have acquired or developed sophisticated labs and technology which give them “an exploration edge” over De Beers, which has not been as successful as might be expected in finding mines outside South Africa.

Hugo Dummett, BHP Mineral’s exploration manager for North America, said while the partners are confident of having one or more mines at Lac de Gras, it is still too early to talk about marketing decisions. “All we can say, at this point, is that we intend to be a very responsible marketer.”