Doug Ashbury
Northern News Services

Yellowknife ( Jun 05/00) - The price tag of Tahera Corp.'s proposed mine in Nunavut will increase by at least $4.5 million.

Failure to reach a land-use deal with Echo Bay Mines is the reason for the increase, says Grant Ewing, Tahera's vice-president of investor relations and corporate development.

Tahera had hoped to process diamond-bearing kimberlite ore from its Jericho project at a facility built at the nearby Lupin mine site -- using the existing infrastructure.

Without an agreement with Echo Bay, Tahera is focusing on building its processing plant at Carat Lake, adjacent to the Jericho pipe.

The Tahera project centres on a single, land-based kimberlite pipe about 30 kilometres north of Lupin.

Ewing estimates the Jericho mine will now cost about $48 million.

"We've always been interested in using the Lupin site. We've had two studies going along (utilizing Lupin and a stand-alone option at Jericho)," Ewing said.

"We found with the Lupin option we could not go that last step. We could not get what we felt was adequate co-operation," he said.

A call to Echo Bay was not returned by deadline.

Ewing says Tahera informed Lupin mine owner Echo Bay Mines about the cost associated with processing ore at a facility built at the Lupin mine site and costs associated with the stand-alone option.

Under the now- defunct plan to build a facility at Lupin, Echo Bay was to get half of the capital cost of the stand-alone option.

With this new development, Tahera will realize some operating cost savings, Ewing said. The company will not have to truck ore from Jericho to Lupin.

During operations, Tahera estimates Jericho will employ between 80 and 100 people. But that number is apt to drop slightly because fewer truckers will now be needed.

Ewing said Tahera is committed to seeing the project completed and the company's final feasibility study on Jericho should be out this month.

Ewing added Tahera is still hopeful it will get the necessary permits by the end of this year.

That would mean the planned one-year construction would occur over winter 2001-2002. Tahera is now aiming for full production in 2003 instead of 2002.

Tahera will resubmit its Environmental Impact Statement to regulatory agencies.

"The goal is to get this project generating cash flow to fund future exploration," said Ewing.

Tahera has also announced that two new kimberlite bodies have been found on the company's Kennecott Canada Exploration Inc. three joint-venture properties in the North.

The kimberlite found on the Hood property, named Tenacity, is located about 110 kilometres north of Jericho and is close to Echo Bay's Ulu gold deposit.

A kimberlite body has been discovered on the Rockinghorse property, which is located about 70 kilometres west of Jericho. Tahera has named the kimberlite Nanurjuk -- Inuit for the star Aldebaran.

Micro-diamond results from the two kimberlites are expected later this month.

Kennecott Canada can earn a 50 per cent stake in the Hood, Rockinghorse and Ice properties with $50 million in exploration spending by 2008. About $16 million has been spent so far.

Tahera traded around 15 cents last Thursday. Stock has dipped from 22 cents two months ago.