SOMBA K’E/YELLOWKNIFE
Dominion Diamond Corporation (TSX: DDC), which owns 80 per cent of the Ekati diamond mine, had good news last week for investors and employees alike.

An aerial view of the Ekati diamond mine, approximately 300 km northwest of Yellowknife. The mine will shut down in 2019, but the proposed Jay Pipe extension could extend mine life for at least 10 years, and up to 20 years. - NNSL file photo

Reserves at the Misery Satellite kimberlite pipes have been upgraded from an exploration target to an inferred resource thanks to recent drilling, mining and processing.

Although a fully updated technical report will not be ready until later this year, Dominion reports that it will include inferred resources of five million carats from 3.9 million tonnes of ore from the Misery properties (Misery South and Misery SW Extension).

The Ekati processing mill is also reported to be operating under capacity. Recent improvements to milling processes have increased recovered grade by approximately 15 per cent.

“The concept here is that they (Dominion) have capacity at the process plant to take on more (ore),” said Tom Hoeffer, NWT and Nunavut Chamber of Mines executive director.

“That’s where they can use this extra resource.”

Although the upgraded resources do not translate into an extended mine life, they do more than just add to Dominion’s bottom line.

“It’s not just about profitability,” said Hoeffer. “It makes them more immune to things like fuel price increases or things beyond their control. We always have to deal with a marketplace that is like a roller coaster, whether it’s diamond prices, fuel prices or supply prices.

“It’s good if they’re a little more robust.”

Kelly Stamm, Dominion Diamond manager of investment relations, said the company still expects Ekati to cease production within five years, but employment should remain stable until then.

“The current mine plan is expected to take the mine’s production to calendar (year) 2019,” said Stamm.

“The company’s best estimate at this time is relatively stable levels of employment, although there will certainly be up and down movement depending on how many pipes we are mining at any one time until 2019,” she added.

Total employment related to the Ekati mine is is estimated by the NWT and Nunavut Chamber of Mines to be about 1,400 people, including approximately 800 mine site staff and 600 contractor support services.

In addition, the proposed Jay-Cardinal pipe extension offers up to 20 years of added mine life. The project is located in the southeastern portion of the Ekati mine property, approximately 25 km from the main facilities, in the Lac de Gras watershed.

The existing Ekati processing plant, camp and supporting infrastructure would all continue to serve the Jay-Cardinal project in a relatively seamless transition, assuming the project can pass environmental and regulatory hurdles before Ekati is depleted. Stamm said Dominion remains optimistic that ore from the Jay kimberlite pipe will be coming into production before resources at Ekati are depleted.

Previously, the Jay pipe was expected to be developed along with the Cardinal pipe, but a June 11 Dominion press release indicated the company was optimistic the Jay pipe is viable immediately.

“Improvements to diamond prices and an improved understanding of the geology of the kimberlite and surrounding rocks supports the mining of Jay alone without the early support of the Cardinal pipe,” The company stated in the press release.

This allows for an improved Jay kimberlite mine plan including shorter development timeline and a smaller environmental footprint.

The Jay-Cardinal project will require new surface leases, type-A land and water leases, and a fisheries authorization for a draw-down on Lac du Sauvage to build required dikes and construct and operate the mine. Environmental hearings are expected to begin this fall.

In addition to the 80 per cent interest Dominion has in the core Ekati property, the company also owns 58.8 per cent of surrounding Ekati properties, and 40 per cent of the Diavik diamond mine.