Within the next few years, as the Diavik and Snap Lake diamond projects come on-stream and join the already producing Ekati diamond mine, Canada will account for 10-15% of the world’s annual diamond production in terms of value, overtaking South Africa to move into third place behind Botswana and Russia. What’s more, Canada’s share could be pushed even higher by the Victor and Kennady Lake projects, both of which are waiting in the wings.
The recent success of
Situated in the Lac de Gras area of the Northwest Territories, some 300 km northeast of Yellowknife, the Ekati mine entered production in October 1998 as a joint venture among BHP Diamonds, Dia Met Minerals, Charles Fipke and Stewart Blusson. Last summer, BHP Diamonds’ parent company,
In the 6-month period ended Dec. 31, 2001, the Ekati mine produced more than 2.1 million carats of diamonds, compared with 1.2 million carats in the corresponding period a year ago and 2.8 million carats in fiscal 2001. Production has steadily improved as a result of increased throughput, higher-grade ore in the Panda pit, and higher recoveries of low-value diamonds.
During December 2001, BHP began processing kimberlite ore from the mine’s second open-pit operation, the Misery pipe. Production from Misery will supplement Ekati’s total output, with the Panda pipe continuing to serve as the main source of production.
Under the current mine development plan, five kimberlite pipes — Panda, Misery, Koala, Fox and Sable — are to be mined by open-pit methods, followed, in the case of Panda and Koala, by underground mining. The Panda, Koala and Fox pipes lie within a few kilometres of each other. The Sable pipe is a further 17 km northeast, and the Misery pipe, 25 km southeast, of the main camp.
A sixth, smaller pipe, known as Koala North, has been added to the mine plan. It sits between the Koala and Panda pipes. Only 70 metres in diameter, Koala North contains a minable underground reserve of 1.3 million tonnes grading 0.4 carat per tonne. A bulk sample from Koala North returned a carat value of US$143.
Proven and probable reserves of the six commercial pipes, at June 30, 2001, totalled 59 million tonnes grading 1 carat per tonne, based on a 1.5-mm stone size cutoff. The diamonds range in estimated value from US$34 per carat for the Misery pipe to US$168 per carat for Panda. Despite the lower diamond value, Misery contains an open-pit reserve of 6 million tonnes grading 3.5 carats per tonne, equivalent to US$119 per tonne of rock. BHP reports that several good-quality “fancy” yellow diamonds have been recovered since the startup of Misery, including a 19-carat stone.
BHP is preparing to go underground on Koala North. Procon Mining & Tunneling, in joint venture with KeTe Whii, has been awarded the mining contract. Construction of the portal is to start in February, and the underground miners should be in kimberlite by late summer. Production is slated to begin in the last quarter of 2002.
Koala North will serve as a test underground mine, and operators will study the potential for going underground at Panda in 2004 and at Koala in 2005.
BHP is considering incorporating two other pipes, Beartooth and Pigeon, into the mine plan, and is seeking regulatory approval to permit these, along with the Sable pipe, for development. The addition of these pipes would extend Ekati’s projected mine life beyond 17 years.
BHP discovered two additional kimberlite pipes at the Ekati mine property in 2001, bringing the total number to 138. The pipes were found during spring drilling. One of them, Impala, returned a significant number of microdiamonds. It was targeted on the basis of a proprietary Falcon airborne gravity gradiometer survey flown over the Ekati claims in the summer of 2000. The pipe is 2-3 hectares in surface plan and lies in the outlying Buffer zone claims. An aggregate 277.9 kg of sample from the Impala discovery hole returned 111 microdiamonds and 72 macros weighing a total of 0.382 carat. (A macrodiamond is here defined as exceeding 0.5 mm in at least one dimension.)
The Buffer zone claims surround the Core group of claims, which centre on the Ekati mine. In total, 97 kimberlite pipes have been found on the Core claims, including all of the pipes in the current mine plan. On the outlying Buffer zone, 41 pipes are known to exist. The Buffer zone claims are owned 58.5% by BHP, 31.2% by
In September, BHP Billiton Diamonds flew its Falcon gravity survey over the northern portion of the WO claim block, 60 km southeast of Ekati. The WO block covers ground south and southeast of the Diavik diamond mine project and includes the infamous Tli Kwi Cho (DO27 and DO18) kimberlites.
The WO block is held 55% by DHK Diamond, 20% by Archon, 15% by
BHP can earn a 54.47% interest in the WO claims by taking a 200-tonne bulk-sample of any new kimberlite discovery.
BHP’s proprietary airborne gravity survey is designed to detect density contrasts in the underlying rock. Kimberlites of sufficient size, with their relatively low density, especially pyroclastic or crater facies, can be detected with this technology. Likewise, density contrasts can be explained by other geological formations of low density, such as meta-sediments, lake-bottom sediments and deep depressions in bedrock covered with overburden. Archon came up empty last summer after drilling 14 such targets generated from a Falcon survey flown over the DHK and WI claim blocks in the Lac de Gras area. Two anomalies remain untested under lakes on the DHK block.
The BHP data from the WO block incorporate electromagnetic and magnetic results recorded concurrently with the gravity survey, along with previous geophysical and kimberlite indicator mineral data generated by Kennecott and Archon. Twenty-two new targets have been interpreted by BHP based on its compilation of results, and three of these have been designated high-priority. Archon is responsible for funding the cost of drilling the first two Falcon targets.
Diavik
With construction at what will be Canada’s second diamond mine now about 65% complete, Aber Diamond has closed a previously announced US$230-million loan facility, which will allow the company to fund its remaining share of costs through to commencement of project operations in April 2003. To date, Aber has financed its 40% share of the capital cost of the $1.3-billion Diavik diamond mine project out of its own equity funds. Diavik Diamond Mines, a wholly owned subsidiary of
The US$230-million loan represents a record bank project loan to a domestic mining project and is the largest debt financing ever for a diamond project. The first drawdown will occur in the first quarter of 2002. Using economic projections contained in the the feasibility study, the loan facility is expected to be repaid in 2005.
The Diavik project is focused on four high-grade kimberlite pipes — A-154 South, A-154 North, A-418 and A-21 — that lie immediately offshore of a small island in Lac de Gras, 30 km southeast of the Ekati mine. Together, the four pipes contain minable reserves of 25.6 million tonnes grading 4
carats per tonne, equivalent to 101.5 million carats at an estimated value of US$63 per carat.
The mine plan calls for a 2-year ramp-up period before reaching its annual design-processing rate of 1.5 million tonnes of kimberlite. Production will peak at more than 6 million carats per year during a 20-year life.
A series of water retention dykes will be built from the shore of East Island to surround the four kimberlite pipes and permit open-pit mining in three separate pits. Mining will shift underground on the two richest pipes, A-154 South and A-418, in the latter part of the project’s life.
Construction of the first dyke around the two A-154 pipes began in 2001. A 3.9-km-long rock embankment was closed around the A-154 pipes in October 2001. Completion of the containment’s internal plastic-concrete waterproof barrier is scheduled this summer, so that dewatering and overburden removal can start in the second half of 2002. Construction of the physical plant, including the maintenance shop, accommodation complex, power facility, and kimberlite processing plant, all began in 2001, with completion planned for later this year.
Aber retains the right to market independently its 40% share of the diamonds produced from the Diavik mine. In July 1999, Aber entered into an arrangement with upscale jeweler
Aber is also developing a marketing strategy with Overseas Diamonds of Antwerp, Belgium, under the name CanaDiam. Overseas is a leading diamantaire and a
To service these marketing arrangements, Aber is establishing a diamond-sorting office in Toronto. The office will perform functions normally carried out in Antwerp and will permit the sale of sorted diamonds directly to its main markets.
Aber holds varying interests of 10-44.4% in 10 separate property blocks covering 3,000 sq. km in the Diavik area. In the past 10 years, 56 kimberlite bodies were discovered on the Diavik area properties. Of this total, 28 are diamondiferous. Last year, the Aber-Rio Tinto joint venture continued to explore for additional resources, working with a $2.8-million exploration budget.
The joint-venture partners have approved a $3.2-million budget for the 2002 calendar year. The program will include mini-bulk sampling of two kimberlites, ground geophysical surveying of more than 50 targets, and the drill-testing of 30 targets.
Snap Lake
Startup of the Snap Lake kimberlite dyke underground project, 110 km south of the Ekati mine, was pushed back a year by De Beers until 2006 to allow more time for the permitting process and to delineate the kimberlite resource. Melissa Kirkley of De Beers Canada Mining told delegates attending the Cordilleran exploration roundup in Vancouver that an environmental assessment of the project will be filed with regulatory authorities in the next month. If a mining permit can be issued within a year of the environmental submission, Kirkley says, production could start in late 2005.
The project centres on the highly diamondiferous NW dyke, which subcrops on a narrow peninsula of the western shore of Snap Lake. The NW dyke is unique in that it is sub-horizontal rather than vertical. The gently dipping, hypabyssal kimberlite horizon extends beneath the lake at a northeastern orientation of 15-20 over a confirmed distance greater than 3.2 km north-south and 3.1 km east-west. It is generally 2-3 metres thick but narrows to 1.3 metres at the eastern margin.
Irregular and sinuous zones of hypabyssal kimberlite breccia occur locally, adjacent to the hangingwall and/or footwall of the dyke and in relatively sharp contact with the dyke.
Kirkley says the relatively flat-lying nature of the Snap Lake dyke is due to regional compressional stresses present in the upper crust of this area of the Slave province at the time of its emplacement, rougly 523 million years ago. As a result of the compression, fractures opened in near-horizontal directions and were exploited by the kimberlite magma.
The Snap Lake dyke contains indicated reserves of 22.8 million tonnes at a minable grade of 1.65 carats per tonne, equivalent to 37.6 million carats at a revised present value of US$90 per carat. A further 20 million tonnes are categorized as inferred.
Annual production of the proposed 3,000-tonne-per-day underground operation is pegged at 1.9 million carats over a projected life of 20 years. The scale of the underground operation, together with the flat-lying nature of the kimberlite body, renders Snap Lake a technical challenge. It will be the first mine owned by De Beers outside southern Africa.
Last summer, Randy Turner’s
Caustic fusion analysis was carried out on samples collected from four of the holes. The first hole was not tested, owing to the “feathered” nature of the 17 kimberlite intervals, which individually ranged from 2 to 33 cm in thickness over a 60-metre interval. A 56.5-kg aggregate sample of kimberlite yielded 327 micros between a square screen sieve size of 0.1 and 0.6 mm, plus 19 larger stones exceeding a 0.6-mm screen size. The two largest stones recovered measured 2.08 by 1.45 by 0.49 mm and 2.05 by 1.37 by 0.72 mm.
Victor
De Beers, now a partially owned unit of
The Victor project is 90 km west of the coastal community of Attawapiskat. Victor occurs in a cluster of 19 kimberlite bodies. It is the largest body in the cluster, comprising one larger Main pipe and a smaller SW pipe that coalesce near surface and together cover 17 hectares. De Beers estimates the Victor bodies contain an inferred resource of 36.2 million tonnes.
In total, some 8,392 tonnes of kimberlite collected from surface pits and large-diameter drilling on the multi-phase Victor have yielded 3,622 carats for an implied grade of 0.43 carat per tonne. While no diamond values have been made public, a 107.9-carat parcel recovered from a 1999 bulk-sample was reported to be worth US$154 per carat.
De Beers says several concerns need to be addressed in the prefeasibility study, including whether the costs of building a permanent all-weather road for this remote site are justified. As well, water management and ground water disposal require engineering and environmental studies as the Victor project sits in an area with a lot of muskeg.
Gahcho Kue
De Beers has several other advanced exploration projects in Canada, including the Gahcho Kue (Kennady Lake) joint venture in the Northwest Territories and the Fort la Corne joint venture in Saskatchewan.
De Beers has earmarked another $10 million for further bulk-sampling work at Gahcho Kue, 120 km southeast of Lac de Gras, in a continuing attempt to enhance the project’s economics. Gahcho Kue comprises a portion of the AK-CJ claims, held 51% by De Beers Canada Explora
tion, 44.1% by
The project centres on a cluster of five kimberlite pipes, including 5034, Hearne, Tuzo, Tesla and the smaller Wallace body. De Beers tabled a desktop study of Gahcho Kue in 2000 that fell short of the critical mass to achieve a 15% rate of return required to proceed to feasibility.
The study proposed open-pit mining for the 5034 and Hearne pipes, along with a high-grade zone within the top 140 metres of the Tuzo pipe. The 5034 kimberlite contains a modelled resource of 12.5 million tonnes to a depth of 300 metres grading 1.64 carats per tonne. The 5034 pipe is subdivided into four lobes based on internal geology, with the north lobe extending partly under land.
The Hearne pipe hosts 7.2 million tonnes grading 1.71 carats per tonne. Hearne consists of a northern and southern lobe, which have been further divided into multiple phases. The Tuzo pipe contains 14.9 million tonnes of kimberlite grading 1.22 carats per tonne at US$43 per carat, based on the 1999 bulk sample. An upper higher-grade zone hosts a modelled 1 million tonnes grading 2.7 carats per tonne at US$47 per carat.
Last winter, De Beers targeted further bulk-sample drilling on the 5034 and Hearne pipes. The major wanted to recover a larger number of diamonds to increase the confidence level of its scoping study model. The 2001 bulk sample drilling yielded an additional 1,665 carats using a 1.5-mm bottom cutoff, bringing to 3,491 carats the total parcel recovered from the two pipes.
The newly modelled carat values, based on a diamond parcel nearly twice the size of the 1999 parcel, were down 5% for 5034 at US$65.50 and down 11% for Hearne at US$63.30.
Despite the lower values, which are consistent with the large drop in the rough diamond market value, De Beers decided to proceed with another bulk sample to recover a further 2,000 carats. The decision was based on the recovery of a 9.9-carat, gem-quality stone from the 5034 pipe that was valued at US$60,000, or US$6,000 per carat. De Beers believes there may be a statistically significant population of high-quality diamonds present in the 5034 and Hearne pipes.
North Slave Craton
An area of the northwestern portion of the Slave Craton, newly dubbed the Coronation Gulf district, has seen more than 1.5 million hectares of land gobbled up by staking in recent months. The land is peripheral to recent diamond-bearing kimberlite discoveries by Ashton and Kennecott in an area that extends some 50-120 km south of Coronation Gulf. Prior to the fall discoveries, there were only three or four operators on diamond projects in that area. There are now 27 junior companies holding interests in 25 different properties.
Ashton is one of the lead players, being the operator on five properties totalling 1,900 sq. km. The company recently reported additional microdiamond results from the Artemisia kimberlite, which was discovered by drilling on the Kim property in September 2001. In total, 812 micros and 86 macros have now been recovered from 246 kg of drill core. Sixteen of the macros are greater than 0.5 mm in two dimensions. The largest recovered stone measured 1.23 by 1.15 by 1.1 mm.
In addition, surface samples collected from talus and kimberlite outcrop in three separate sites within the confines of the interpreted body (150 by 140 metres) returned 309 micros and 34 macros from 85.5 kg. Twelve of the macros exceed 0.5 mm in two dimensions.
Macrodiamond results are pending for a 1.2-tonne sample collected from outcropping kimberlite at Artemisia.
The Kim property is held under the Slave regional joint venture. Ashton’s interest in the joint venture is 90%, with
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