Richard Gleeson & Doug Ashbury
Northern News Services

Yellowknife (Feb 11/00) - The government wants it all, and wants it early, said a Diavik official yesterday.

"It's my understanding they were asking for a large deposit up front," said Diavik public affairs manager Tom Hoefer.

Asked if that meant the entire $185 million, Hoefer responded "That's my understanding, $185 million, up front."

The money is a reclamation security deposit for the proposed diamond mine. It's one of the final points still to be resolved in the intense three-week negotiation of an environmental agreement for the project.

Such a security deposit would not tie up $185 million in working capital.

During the water board hearing, Department of Indian Affairs and Northern Development (DIAND) reclamation security expert John Brodie said that, while cash is best, an irrevocable letter of credit would be acceptable to the government.

He estimated the annual cost to Diavik of a letter of credit would be one-quarter of one per cent of the security amount -- $463,000 if the deposit is $185 million.

In its water board submission, DIAND also provided reclamation cost estimates for different stages of the mine's development, from $66.3 million for the first year of operation to $187.1 million in the mine's 20th year.

A source close to the negotiation said one of the sticking points in the negotiation is whether part of the deposit should be tied to Diavik's parent company, Rio Tinto.

The source said Diavik, which bills itself as a Northern company, is loath to involve London-based Rio Tinto.

Rio Tinto, a multi-billion dollar mining company, would provide a greater level of security than Diavik Diamond Mines Inc. During the water board hearing, a Diavik spokesperson said the company's assets consist of a 60 per cent share of the Lac de Gras claim and equipment at the mine site and in its Yellowknife office.

As of late Thursday, Hoefer said discussions on the environmental agreement were continuing in Calgary.

Until Thursday, negotiations were held in Yellowknife. Hoefer said he believed the venue was changed because Calgary was more convenient to negotiators.