Nov 28 2014
Dominion Diamond Corporation reports that Rio Tinto plc, the parent company of the operator of the Diavik Diamond Mine (Diavik Diamond Mines (2012) Ltd., has approved the development of the A-21 pipe at the Diavik Diamond Mine, in which the Company holds a 40% stake.
DDMI has estimated the total capital cost for the development of the A-21 pipe to be approximately US$350 million at the Company's estimated Canadian/US dollar exchange rate of $1.11 (on a 100% basis), with the Company's share being US$140 million. The A-21 resource is well understood, and A-21 diamond production is planned for late calendar 2018. The A-21 production will provide an important source of incremental supply for Diavik, ensuring the continuation of existing production levels.
The A-21 ore body is located under a lake requiring construction of a dike to isolate the open pit operations. The bulk of the requisite infrastructure for the A-21 pipe is already in place from the previous dike construction and pit operations at the Diavik Diamond Mine, and the necessary operating licenses and agreements are in place for project implementation. The A-21 ramp up is anticipated to commence immediately, with the first equipment and supplies scheduled to be transported in early 2015 to the Diavik mine site on the seasonal winter ice road. Four years of dike construction and pre-stripping (2015-2018) are expected to be followed by approximately five years of open-pit mining. The Diavik Joint Venture has approved the 2015 programme of works. Expenditure on the development of the A-21 pipe in 2015 will relate to crushing costs, pipeline construction and initial dike foundation and abutment work in preparation for expected dike construction during the 2016 and 2017 summer seasons. Pre-stripping of the open pit is expected to commence in 2018 following dewatering of the pool within the dike.
DDMI has estimated that the A-21 pipe contains (on a 100% basis) 3.6 million tonnes of measured resources, at a grade of 2.8 carats per tonne, and 0.4 million tonnes of indicated resources at a grade of 2.6 carats per tonne. These estimates are as of December 31, 2013. Mineral resources that are not mineral reserves do not have demonstrated economic viability. The Company intends to publish a detailed summary of the updated reserves only mine plan for the Diavik Diamond Mine, plus A-21, once these have been approved by DDMI. The Company expects to receive an updated estimate of the mineral reserves and mineral resources at the Diavik Diamond Mine from DDMI in the first calendar quarter of 2015.
Using the prices from the Company's September 2014 rough diamond sale and the current diamond recovery profile of the Diavik processing plant, the Company has modeled the approximate rough diamond price per carat for the A-21 pipe to be approximately US$145 per carat.