Yellowknife (Dec 24/03) - Diavik has decided to increase its 2004 exploration budget from $4 million to $9 million.

The plan is to focus on the present mine area, as well as the rest of the claim block involving 240,000 hectares, said Tom Hoeffer, Diavik's manager of internal and external affairs.

Looking back over the year, Hoeffer said the results have been better than what was projected on almost every level.

"The evaluation of the A-154 north pipe tells us there's a good potential to increase the ore reserves," said Hoeffer.

As a result, Diavik has put together a strategic planning team that will study opportunities at A-154 north and the implications to the mine plan, said Hoeffer.

The planning team's report is expected to be out sometime next year, said Hoeffer.

Looking back over the year, Diavik's production has revved up to full production, which is a good year ahead of schedule, said Hoeffer.

Estimates on construction costs have been high, estimates on profitability have been low, the mine is richer than originally anticipated and production is exceeding at rates which mine planners could only dream of, he said.

"When you're building in a place in the NWT on an island on lake water surrounded by a dyke, when you estimate what the future holds you have to estimate conservatively. It's difficult to project what you might run up against," said Hoeffer.

"Situations turned out better than expected. It's a combination of people and equipment and conditions that made everything turn out faster than expected," he said.

The current mine plan calls for open pit mining on four pipes and underground mining at two of those pits.

"With the results we achieved this year with 154 north, it demands we go and look at underground mines that pipe as well.

"As a result of all of this we have upped our estimation of the quality of Diavik. We believe we have the three most valuable kimberlites in the western world in terms of value per tonne," he said.

As a result of the excellent start up, Diavik has now made the decision to increase production by close to 30 per cent, said Hoeffer.