Doug Ashbury
Northern News Services

Yellowknife (Jun 19/00) - Diavik's draft water licence, if adopted the way it stands now, would kill the project, said the company's president.

"Sadly, some of the conditions are not fully consistent with the conclusions and outcomes following the community-based comprehensive study review of the project.

"Unfortunately, some of these conditions, if adopted, would preclude the mine from coming into the operation," Stephen Prest said.

Despite these ominous comments, made in a speech to the Yellowknife Rotary Club at a recent meeting, Prest still feels confident the water licence issues can be dealt with to the satisfaction of all parties.

Tom Hoefer, reached Friday morning, said Diavik will be making a full submission to the water board this week "to address the issues."

It is believed the company feels some draft water licence requirements, related to the already-costly lake dams, will make the $1.3-billion Diavik diamond project uneconomic.

To access the diamond-bearing kimberlite pipes, Diavik will have to dam and drain parts of Lac de Gras.

Interveners -- those who gave formal presentations at the water board public hearings -- have until June 20 to file comments on the draft Diavik water licence.

The draft water licence issues come at a time when international investors are showing interest in the NWT.

"The diamond industry, with Diavik Diamond Mines, through its Rio Tinto links, BHP (Australia's Broken Hill Proprietary), De Beers and others, has resulted in significant exposure in the international investment community for the Northwest Territories," Prest said.

Guiding investors

As well, companies like Aber Resources, 40 per cent owner of the Diavik project, and Dia Met Minerals, 29 per cent owner of BHP's Ekati diamond mine, are providing routes directing Canadian investment in the NWT through their ties to diamond projects, Prest adds.

"After a 20-year absence, the oil and gas sector has suddenly blossomed, holding out the prospect of significant capital investment in the western regions of the NWT."

He also listed what he believes will be the key elements which will influence the path of resource development. The biggest is resource access, he says.

Other important elements are political support at community and government levels. Physical and communications infrastructure are also important, Prest said.

Another important factor for an attractive investment climate in the NWT is to make sure regulatory structures, in which business must operate, are clear and even-handed with a limited amount of duplication, he says.

But this is a difficult area for NWT mining projects because they use land and water in ways often seen as destructive relative to traditional uses, he adds. Evaluating environmental and social aspects of the Diavik project took two years.

As a result of the process, Prest said Diavik's environmental agreement sets "new standards" in the Canadian mining industry in terms of security deposits for mine closure costs. As well as the environmental agreement, Diavik has, or is negotiating, impact-benefit agreements with five affected aboriginal communities.