THE DIAMOND PAGE — Ore reserve estimates released — Quarter century of mining estimated for NWT Diamonds operation

The feasibility study for the NWT Diamonds project, near Lac de Gras in the Northwest Territories, proposes the development of five kimberlite pipes over 17 years. However, given the discovery of additional pipes, the owners are projecting a minimum life of 25 years.

The project is held 51% by BHP Diamonds, a subsidiary of Australian-based Broken Hill Proprietary (BHP), and 29% by Dia Met Minerals (DMM-T). The remaining 20% is split between Charles Fipke, the Canadian geologist who originally discovered diamonds in the region, and his prospecting partner, Stewart Blusson.

Construction of what will be Canada’s first diamond mine began in the fall of 1996. Its first building, the permanent camp accommodation complex, is scheduled for completion in April. Engineering and construction will be managed by H.A. Simons Mining Group, and startup is scheduled for late 1998.

Capital costs are estimated at US$700 million.

The feasibility study proposes production of the Panda, Misery, Koala, Sable and Fox pipes. The substitution of the higher-grade Sable pipe for the Leslie pipe was previously reported. On a daily basis, 9,000 tonnes of kimberlite would be processed (or 3.3 million tonnes per year), expanding to 18,000 tonnes per day (6.5 million tonnes per year) in the 10th year.

For the first time, the partners have released ore reserve estimates of the five pipes.

The Panda pipe will be mined for the first five years by open-pit methods, to be followed by six years of underground mining. Proven and probable reserves in the pit are estimated, on a diluted basis, at 12.6 million tonnes grading 1.09 carats per tonne, while underground minable reserves are calculated at 800,000 tonnes at 0.97 carat. The diamonds are valued at US$130 per carat.

* Open-pit mining on the Misery pipe will begin in the second year and continue un-

til year 15. Minable reserves stand at 5.5 million tonnes grading 4.26 carats per tonne, with a diamond value of US$26 per carat.

* The Koala pipe will be mined by open-pit methods from years 5 to 11, and by underground methods from years 11 to 15. Minable pit reserves are estimated at 14.6 million tonnes grading 0.76 carat, underground reserves at 2.8 million tonnes grading 1.63 carat. The diamonds are valued at US$122 per carat.

* Beginning in year 10 and continuing through to year 15, the Sable pipe will be mined by open-pit methods. Reserves stand at 12.9 million tonnes grading 0.93 carat, with a diamond value of US$64 per carat.

* The Fox pipe will be subjected to open-pit mining from years 11 to 17.

Minable reserves are estimated at 16.7 million tonnes grading 0.4 carat at a value of US$125 per carat.

Mining rates for each pipe are determined by grade, diamond quality and specific ore-processing characteristics. A total of 78 million tonnes of ore, 85% of which is defined as proven and probable, will be mined over the initial 17-year mine life. Waste rock will amount to 508 million tonnes.

Three additional pipes have been bulk-sampled, and Dia Met says these may have economic potential. Among them is the Leslie pipe, which has an estimated grade of 0.33 carat and a diamond value averaging US$89 per carat.

A further five pipes have returned sufficiently encouraging results to warrant additional sampling for macrodiamond content. Extensive exploration drilling is planned for 1997.

In related news, Dia Met has proposed a $30-million public offering of Class A subordinate voting shares. Proceeds will be used to fund exploration.

Dia Met is currently exploring in Finland and Eastern Europe, and recently formed a joint venture in Venezuela.