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KITIKMEOT
The diamond resources of the long-dormant Jericho Diamond Mine are being tapped once again, as its new owner, Shear Diamonds Ltd. The company is now in full swing with 24-hour processing operations running at the Kitikmeot region mine.

This aerial view of the past-producing Jericho Diamond Mine open pit, with the camp and facilities in the far back, was taken in May. - photo courtesy of Shear Diamonds Ltd.

More than $1 million in strong grade parcels retrieved by Shear from tailing stockpiles "full of diamonds" at Jericho has proven to the past-producing mine's Toronto-based owners that a significant number of diamonds went unrecovered by former operator Tahera Diamond Corp., Shear president and CEO Julie Lassonde told News/North.

"The tailing are quite full of diamonds," Lassonde said. "So the largest reason for Shear to be processing the tailing is to demonstrate that we are able to recover a significant amount of diamonds from the tailing, number two, to show and demonstrate the previous owners really sort of botched the recovery, and then number three for us, is to better understand the entire diamond population at Jericho, so that when the day comes and we go into full commercial production, we're able to harness that knowledge and ensure a much higher percentage recovery of diamonds than the previous owner."

Tahera closed Jericho in 2008 due to financial and operating constraints, after the mine, located about 350 km southwest of Cambridge Bay, opened in 2006.

In 2010, Shear purchased the mine and its facilities for $38 million, and the stockpiles were sitting on site when the company got there, investor representative Kelly Fearman said.

"Because the piles are so rich -- about 10.9 carats per tonne -- we'll break even or have some cash flow, so that's why we're processing the stockpiles," Fearman said.

To cover the cost of 24-hour operations at Jericho, Shear has been taking advantage of an off-take agreement with Antwerp, Belgium-based diamond trading company Tache Company NV.

Earlier this month, Shear announced that Tache made an initial payment of US$500,000 to Shear for an initial parcel of 11,317.98 carats processed at Jericho.

The company has been in 24-hour operations since June 15, with an average production rate of more than 80 tonnes per day.

Tache is advancing Shear an additional $550,000 for future production, and another parcel of diamonds is due to be delivered to Tache early next month.

Even with the cash flow from its diamond marketing partner, and the promising recoveries processed from the stockpiles to date, Lassonde is cautiously optimistic of meeting the company's late 2013 target date to get the mine back into full production.

"With these economic times it's really, really hard to say what you will be able to get and what you won't be able to get," Lassonde said, noting the company will be seeking financing between $30-$35 million to get to that stage. "We're obviously pursuing the financing for the full commercial production but the world economy is not helping. And so we're proceeding as best we can. We're obviously thinking outside the box, looking for partnerships and other relationships that are different."

While rough diamond prices have softened over the last couple of months, Lassonde is anticipating a rebound in diamond prices.

Processing of stockpiles at Jericho is scheduled to continue for the next seven to nine months, Fearman said.

Jericho is currently employing between 20 to 30 people on site at a time, including Inuit employees mainly from Cambridge Bay, Kugluktuk and Yellowknife.

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