A parcel of diamonds recovered from an exploration bulk drill sample of the Lynx pipe at the Ekati mine property in the Northwest Territories has been valued at US$139 per carat.
A 168.5-tonne sample collected last year by reverse-circulation (RC) drilling returned 140.74 carats of diamonds, indicating a grade of 0.83 carat per tonne. Three Antwerp, Belgium-based diamond dealers evaluated the parcel of stones.
The results warrant additional bulk sampling. A further 150 tonnes will be sampled from the Lynx pipe early this year, again using large-diameter RC drilling.
The Lynx pipe occupies the Buffer zone claims, which surround the Core zone joint venture at the Ekati mine, 300 km northeast of Yellowknife. The outlying Buffer zone covers 2,040 sq. km in the Lac de Gras area and is owned 51% by BHP Diamonds, a subsidiary of Australia’s
The inner Core zone comprises 1,800 sq. km and contains all five diamond-bearing kimberlite pipes that are slated for development. The Core zone is owned 51% by BHP and 29% by Dia Met, with the remaining 20% split evenly between co-discoverers Fipke and Blusson.
The promising Lynx pipe, which has a surface area of 0.6 ha, lies under a small lake and is only 3 km southwest of Misery, the second pipe slated to be mined at Ekati. Prestripping of the permitted Misery pit is almost completed, and open-pit mining is to begin in mid-2001. The Misery pipe contains 5.5 million tonnes of proven and probable kimberlite ore grading 4.26 carats per tonne at an average value of US$26 per carat, or US$111 per tonne, based on the 1997 feasibility study.
The Misery pipe is 29 km south of the main processing plant.
Production to date at Ekati has come solely from the Panda pit, which has an open-pit life of five years, to be followed by six years of underground mining. During the period ended Jan. 31, 2000, its first full year of operation, Ekati produced 2.5 million carats, of which 2.2 million were sold at an average price of US$168.05 per carat. In the 9-month period ended Oct. 31, 2000, Ekati produced 2 million carats (2% more than a year earlier) and sold 1.9 million carats at US$169 per carat.
The stones have commanded a much higher price than the US$130-per-carat valuation predicted for the Panda pipe in the 1997 feasibility study. The high quality of the Ekati stones, combined with buoyant consumer demand, has contributed to strong prices.
Under the original mine plan, five kimberlite pipes — Panda, Misery, Koala, Leslie and Fox — were to be mined by open-pit methods, followed, in the case of Panda and Koala, by underground mining. All five pipes lie under small shallow lakes that vary in depth from 12 to 29 metres. The original mine plan called for the de-watering of 10 small lakes and ponds. There are about 8,000 lakes and ponds on the Ekati property block.
It was on the basis of this plan that BHP applied for permitting in 1994 to build what would become Canada’s first-ever diamond mine. After one of the most intensive environmental assessments ever conducted in Canada, BHP and its partners received final regulatory approval in January 1997. Construction commenced soon afterwards and production from Ekati began on schedule in October 1998. Construction costs totalled $900 million.
However, a final feasibility study, completed by BHP in February 1997, concluded that the Leslie pipe was uneconomic. It was dropped from the mine plan and replaced by the richer Sable pipe.
Seventeen years
The 1997 feasibility study detailed the mine development plan for the Panda, Misery, Koala, Fox and Sable pipes over a span of 17 years. On a daily basis, 9,000 tonnes of kimberlite (or 3.3 million tonnes per year) will be processed during the first nine years of operation, expanding to 18,000 tonnes per day (6.5 million tonnes per year) from year 10 onward.
A total of 78 million tonnes of ore, of which 85% is defined as proven and probable, is scheduled to be mined over the initial 17-year life of the project. Waste rock will amount to 508 million tonnes. Based on the 1997 feasibility study, the five pipes together contain proven and probable reserves of 65.9 million tonnes grading 1.09 carats per tonne, equivalent to 71.8 million carats, at an average value of US$84 per carat.
The mine plan has since been amended to include the Koala North, Pigeon and Beartooth pipes, increasing the projected lifespan of the operation to 18 years.
BHP is awaiting final regulatory licences approving the development of the Sable, Pigeon and Beartooth pipes. Koala North falls within the existing permitted area.
By not mining the Sable, Pigeon and Beartooth pipes, Dia Met says, the life of Ekati would be reduced by three years.
The Koala North pipe occurs within Koala Lake and has a surface area of 0.6 ha. A bulk drill sample weighing 201.7 tonnes yielded 126.58 carats, giving an implied grade of 0.63 carat per tonne. A commercial valuation of the stones was made in Antwerp in May 1998. Diamonds from the Koala North were determined to be worth US$200 per carat. About 77% of the value was attributable to three gem-quality stones ranging in size from 3.26 to 5.41 carats. A test pit on Koala North was scheduled for last year, to be followed by underground development in 2001.
Pigeon
The land-based Pigeon pipe is 4.5 km northwest of the Panda pit and has a surface area of about 2 ha. It contains a kimberlite ore reserve of 5.3 million tonnes to a depth of 200 metres at a waste-to-ore stripping ratio of 9.7-to-1. The Pigeon pipe is divided into an upper crater zone and a lower hypabyssal zone. The average depth of the contact between the two zones is 120 metres.
A bulk sample of Pigeon was obtained in late summer 1998 using a large-diameter RC rig. A 213.6-tonne sample of the crater zone returned 113.89 carats, for an implied grade of 0.53 carat per tonne at a value of US$71 per carat. The lower hypabyssal zone yielded 137.42 carats of diamonds valued at US$39 per carat from a 351.2-tonne sample, giving an implied grade of 0.39 carat per tonne.
Beartooth
The Beartooth pipe, with a surface area of 1 ha, lies less than 1 km northwest of Panda under a small lake. The proposed pit will be developed to a depth of 155 metres at a 12-to-1 stripping ratio. Reserves are estimated at 1.4 million tonnes. A 189.3-tonne RC drill sample collected from the pipe in 1998 yielded 227.09 carats for an implied grade of 1.2 carats per tonne. The average value of the diamonds was determined to be US$79 per carat.
A 2000 summer program of exploration drilling at Ekati resulted in the discovery of 11 additional kimberlites, bringing the total number of confirmed pipes to 136.
Nine of the discoveries were made in the Core zone claim block, where 97 pipes have been discovered. Two new pipes were found in the outlying Buffer zone, where the total stands at 39.
Three of the recent kimberlite finds — Kodiak, Pegasus and Wildebeest — returned significant microdiamond results. The Kodiak pipe occurs in the Core zone, whereas Pegasus and Wildebeest are in the Buffer zone, 22 km east of the Ekati plant site.
A 300.8-kg core sample of the Kodiak pipe returned 74 microdiamonds and 17 macrodiamonds, weighing a total of 0.087 carat. (A macro is defined as measuring greater than 0.5 mm in at least one dimension.) The Pegasus pipe yielded 291 micros and 62 macros weighing 0.33 carat from a 295.3-kg core sample of kimberlite, and Wildebeest returned 41 micros and 11 macros weighing 0.032 carat from a 35-kg sample.
By comparison, initial microdiamond testing on the Lynx pipe yielded 275 micros and 69 macros weighing a total of 1.656 carats from 424.7 kg of sample. The largest recovered stone was a transparent brown octahedral weighing 1.43 carats.
In October, Dia Met announced it was seeking bids for the purchase of all the outstanding shares of the company. The move came after the board of directors was advised by two major private shareholders (who together own a 38% stake) that they were willing to entertain offers to sell their shares.
Dia Met retained Credit Suisse First Boston as an investor advisor to aid in a full auction process.
Gerald Prosalendis, vice-president of corporate development, was unwilling to comment on this matter. “It’s a confidential process, and the integrity of the process is based on a foundation of confidentiality,” he said. This process is expected to continue over the next few months.
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