Thorunn Howatt
Northern News Services

Yellowknife (Aug 28/02) - Yellowknife cutting houses that want to buy Diavik diamonds will have to get them from Belgium.

Diavik is expected to begin producing diamonds by next April, but how many will be cut and polished in the North remains unclear, said a company spokesperson.

"There is no percentage set to our agreement - unlike the one that BHP has. Given the conditions, we may sell less or we may sell more than 10 per cent to the Northwest Territories," said Diavik Diamond Mines Inc.'s Pierre LeBlanc.

"We are in the process of identifying our custom base. That's going to take place in the next six months or so."

BHP Billiton, owner of Ekati, the other NWT diamond mine, has an agreement with the NWT government to sell 10 per cent of its rough stones to Northern diamond cutters. It's an attempt to build a diamond cutting industry in the North.

Diamonds mined from Diavik will be split between the project's two partners.

Aber Diamonds Corp. will receive 40 per cent of the gems produced at the Lac de Gras mine. Most of its diamonds will be sold to up-scale jewelry retailer Tiffany and Co.

British-based Rio Tinto plc, owns a 60 per cent share.

A Rio Tinto subsidiary, Rio Tinto Diamonds (RTD), will market Diavik gems from its headquarters in Antwerp, Belgium. RTD also markets diamonds produced from its parent company's mines in Africa and Australia.

According to LeBlanc, Diavik will have two groups of customers.

The first is "customers based in the Northwest Territories."

"They would be customers that have been approved by the government of the Northwest Territories to cut and polish diamonds in the territory."

There are three diamond polishers in Yellowknife: Arslanian Cutting Works, Sirius Diamonds and Deton'cho Diamonds. Diavik has a memorandum of understanding with the GNWT to provide an unspecified quantity of rough diamonds to Northern diamond cutters.

The second group of customers will be international clients "that will be buying significant amounts of rough diamonds," said LeBlanc.

"Rio Tinto Diamonds will sort the diamonds for sale and sell the diamonds on our behalf to international customers," said LeBlanc. No contracts have been signed yet.

One challenge is identifying the exact range of size and quality of the stones.

"The production is estimated right now based on a number of drill holes that are made. But it's only once you start mining the diamonds that you have a better understanding of what's on the surface," said LeBlanc.

The diamond company is guessing what is below the ground's surface based on what it found in bulk samples drilled to 150 metres below the surface.

They give a pretty good model of what can be found in the rest of the mined area.

It will be about four years before the actual mine is at a depth of 150 metres. But it's not a gamble insists LeBlanc.

"There has been quite a bit of analysis of the kimberlite pipe. Nobody would commit $1.3 billion on a shot in the dark."