Canada’s newest diamond project, the $1.3-billion Diavik mine in the Far North, has cleared the final permitting hurdle for construction and operation. Diavik is owned 60% by mining giant
The last dispensation the project needed, a class “A” water licence, has been approved by the Department of Indian Affairs and Northern Development. Diavik is now in the process of reviewing the terms of the licence to ensure compliance with the project’s design specifications. Once this is accepted, the joint-venture partners will announce a formal production decision.
The project has had a rough ride as the partners tried to move it to production. In mid-1999, the Canadian government completed a comprehensive review of the project and concluded that, “with the implementation of appropriate mitigation measures, the Diavik diamond project is not likely to cause significant adverse effects.” In November 1999, after two years of work, the partners finally received environmental clearance.
The Canadian Arctic Resources Committee (CARC) and the North Slave Mtis Alliance launched a legal challenge in the Federal Court of Canada, seeking a judicial review of the permitting process.
After Diavik reached settlements with both native groups, the national Department of Fisheries issued authorization under the Navigable Waters Act to construct and operate the mine.
The proposed mine centres on the development of four kimberlite pipes — A-154 South, A-154 North, A-418 and A-21. They lie just offshore of 20-sq.-km East Island in Lac de Gras. The pipes boast a minable reserve of 25.7 million tonnes averaging a grade of 4.2 carats per tonne. The A-154 South will be the first deposit to be mined. It represents 57% of the reserves at a grade of 5.2 carats per tonne, with a diamond value of US$79 per carat, for an average rock value of US$412 per tonne.
Estimated capital and operating costs for the project remain unchanged at US$870 million and US$13 per carat, respectively. For the first 10 years of operations, the average annual production is expected to be 7.1 million carats with an average value of US$74 per carat.
According to Diavik, the study shows the project to be extraordinarily robust, with the potential for the junior to recover its share of the preproduction capital within 32 months of production.
The feasibility study examined a production rate of 1.5-1.9 million tonnes of kimberlite per year, which would yield 6-8 million carats of diamonds annually, during the full open-pit mining phase. The project has a mine life of 20 years.
Production is slated to begin in mid-2003. This year’s budget is tabled at $236 million. In anticipation of production, Aber has engaged N.M. Rothschild & Sons to act as advisors on obtaining debt financing.
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