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No buyer for Snap Lake
De Beers will start flooding underground parts of diamond mine in January

Shane Magee
Northern News Services
Tuesday, December 20, 2016

De Beers will flood the underground portion of the Snap Lake diamond mine after the company was unable to secure a buyer for the shuttered facility.

NNSL photo/graphic

The underground parts of the Snap Lake diamond mine, shown in July 2015, will be flooded in January. De Beers stated an attempt to find a buyer has not been successful. - photo courtesy of De Beers

De Beers ceased production at the mine, about 220 kilometres northwest of Yellowknife, a year ago, laying off hundreds.

Over the past year it has received regulatory approval to flood the underground tunnels where diamonds were mined as part of its care and maintenance plan for the site.

This summer it sought to find a buyer for the mine before going ahead with the flooding.

The company announced in a news release Thursday the search hasn't been successful, so flooding will go ahead starting in early January.

The mine opened in 2008 but has never been profitable. The underground tunnels have been plagued with water in-flow issues.

The announcement signals the company has no short-term plans to restart production, which would require removing the water, re-installing various components removed before flooding and getting a workforce in place.

The mine still has an estimated 20 to 30 million carats within the ore remaining that could be potentially recoverable over about 12 years.

"We still believe in the long-term value of the Snap Lake ore body and that the responsible approach is to bring this asset back into production at some point in the future with an improved technical approach and suitable market conditions, whether by us or another qualified operator," stated Terry Kruger, a De Beers spokesperson, in an e-mail on Friday.

In July, Yellowknifer reported De Beers had secured BMO Capital Markets to evaluate potential offers for the mine from other companies.

De Beers had discussions with a company that was qualified to purchase and operate the mine.

However, the news release states an agreement couldn't be reached.

"Due to confidentiality reasons we cannot disclose further details about the sale process nor the interested parties," Kruger stated.

The mine still has 55 workers, though that will drop to about 35 once flooding is done. Those employees will continue environmental monitoring and ensure the power is on and various buildings at the site are maintained.

This is a substantially smaller workforce than the 800 or so people who had worked there before the company announced the end of production in December 2015, laying off more than 400 people.

About 100 of those have now moved over to De Beers' Gahcho Kue mine, which remains on schedule to start production in the first months of 2017.

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