The final feasibility study for the Diavik Diamond project in the Northwest Territories, originally scheduled to be completed in the fourth quarter of 1998, is now not expected until the second quarter of 1999.
Operator Diavik Diamond Mines has informed partner
Revised estimates of capital costs and operating costs are not yet complete, and, as part of the optimization work, the sequence of pipes to be mined by open-pit methods is also being reviewed.
The continuation of the feasibility work into 1999 is not expected to have a substantial impact on the cost of the study, which remains on budget at approximately $30 million. Nor is the delay expected to affect the startup of commercial production, which is still set for the second quarter of 2001.
Canaccord Capital analyst David James writes: “We understand that the basic SNC-Lavalin Group engineering work and the MRDI Canada-H.A. Simons audit is complete, but, as in the prefeasibility study completed earlier this year, the perceived delay here has to do with a refinement or optimization of capital/contractor cost definition.”
The Diavik project lies 300 km northeast of Yellowknife and 35 km southeast of the producing Ekati diamond mine. It is a joint venture, owned 60% by Diavik Diamond Mines and 40% by Aber. The proposed mine centres on the development of four kimberlite pipes — A-418, A-154 South, A-154 North and A-21 — which together contain a diluted minable reserve of 26 million tonnes of kimberlite averaging a grade of 3.9 carats per tonne, with an average estimated value of US$56 per carat.
The four pipes lie just offshore of the 20-sq.-km East island in Lac de Gras. Diavik proposes to dam off the pipes with water retention dykes and mine, by open-pit methods, all four pipes to depths of between 250 and 300 metres. This phase would be followed by underground mining of the A-418 and A-154 South pipes.
The final feasibility study is examining a production rate of 1.5-1.9 million tonnes per year, which would yield 6-8 million carats of diamonds annually during the full open-pit mining phase. The project is forecast to have a mine life of up to 22 years. According to the prefeasibility study, the capital cost is estimated to be $875 million.
The environmental assessment was filed in September. The partners are optimistic permits will be in hand in the fall of 1999. Subject to a production decision, construction could start in early 2000.
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