Suppliers News (October 16, 2006)

Kimberley awards A$120M contract for Ellendale

Australia’s Kimberley Diamond (KMBYF-O, KIM-A) has awarded a new 4-year mining contract worth A$120 million to Macmahon Holdings (MCHHF-O, MAH-A) to contract mine the diamond miner’s Ellendale diamond project in Western Australia.

The mining contract is the largest awarded by Kimberley since production started at Ellendale in 2002. It covers both open-pit mining at the new A$48-million Ellendale 4 diamond mine and ongoing work at the existing Ellendale 9 operation.

The new Ellendale 4 mine features a 4.4-million-tonne-per-year processing plant, situated some 15 km from the existing Ellendale 9 mine, about 150 km from Derby, Western Australia. The new plant was recently commissioned.

Macmahon will supply a combined workforce of roughly 110 people for Kimberley’s operations.

The initial focus of operations will be on delivering enough ore feedstock to ensure that crushing and processing activities can be maintained through the Kimberley wet season.

Macmahon already holds the contract for mining operations at Ellendale 9, where it has been operating since November 2003. The new contract encompasses expanded mining operations at Ellendale 9 to match the progressive upgrade of the E9 West plant from 300 tonnes per hour to 600 tonnes per hour and realizes a 10% saving on the previous unit rate.

With the development of a second mine at Ellendale 4 and the parallel expansion of the Ellendale 9 operations, the total processing capacity at Ellendale will increase to 7.7 million tonnes annually, or 600,000 carats per year of predominantly gem-quality stones — including its signature Kimberley Yellow stones.

“The major expansion at both Ellendale 9 and Ellendale 4 will enable Kimberley to significantly reduce its unit operating costs and underpin the company’s status as a profitable, top-five Western World diamond producer,” says Miles Kennedy, Kimberley Diamond’s executive chairman.

Cabo to drill Garson

Cabo Drilling’s (CBE-V, CBEEF-O Kirkland Lake, Ont.-based subsidiary Heath & Sherwood Drilling has worked out a deal with Inco (N-T, N-N) to drill the nickel giant’s Garson mine in Sudbury, Ont.

The work will consist of about 21,000 ft. of 36.5 mm diameter core drilling from three different underground locations on the Garson surface ramp, part of the Garson nickel mine.

The diamond drill set-up locations will be primarily on the 600 orebody vent drift and ramp drift. Heath & Sherwood will use a JKS Boyles/Atlas Copco B-10 underground electric hydraulic drill.

Cabo Drilling is based in North Vancouver, B.C. and has subsidiaries elsewhere in the province, as well as Ontario, Quebec and Newfoundland.

Pine Valley extends deal with Tercon

Pine Valley Mining (PVM-T, PVMCF) has a new contract with Tercon Mining, the company’s mining contractor at the Willow Creek coal mine in B.C.

The new contract continues at current rates and runs out at the end of June 2007. It also contains a provision to discuss a possible long-term arrangement between both parties.

“This agreement provides a stable mining situation for an extended period,” says Bob Bell, president and CEO of Pine Valley. This is an important development for the company as we build a platform for added shareholder value.”

Pine Valley has been making commercial coal shipments from Willow Creek since September 2004.