Green light for Diavik joint venture

Vancouver — Patience and perseverance have paid off for Rio Tinto (RTP-N) and Aber Diamonds (ABZ-T) at the Diavik joint venture in the Northwest Territories. Following months of licensing delays, the $1.3-billion project has been given the go-ahead to proceed to production.

The partners are eager to begin development of Canada’s second diamond mine, now that agreements with federal, territorial and native groups are completed.

Starting in January, about 4,000 truckloads of fuel, equipment and construction materials will be shipped to the project site along a seasonal winter road.

A development plan, including cost estimates and a production schedule for the mine, is to be released in the new year. Production could begin as early as mid-2003. Diavik is slated to produce, annually, 6% of the world’s diamonds.

Diavik Diamond Mines (DDMI), a division of London-based Rio Tinto, is the operator and 60%-owner of the joint-venture project. Aber holds the remaining 40%. The project is 300 km north of Yellowknife and 35 km southeast of the producing Ekati diamond mine.

Earlier in 2000, a bankable feasibility study concluded that the property hosts 25.7 million tonnes of proven and probable reserves grading 4.2 carats per tonne. The study, conducted by SNC-Lavalin, includes reserve calculations prepared by Agra-Simons MRDI.

The proposed mine centres on development of four kimberlite pipes — A-154 South, A-154 North, A-418 and A-21 — that lie just offshore of the 20-sq.-km East Island in Lac de Gras. The pipes boast a minable reserve of 106.7 million carats contained in 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. The pipe 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 remain unchanged at US$870 million and US$13 per carat, respectively. Annual production during the first 10 years of operations is slated at 7.1 million carats with an average value of US$74 per carat.

Diavik says it hopes to recover its share of the preproduction capital within 32 months of production.

The feasibility study examined a production rate of 1.5 million to 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.