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SOMBA K'E/YELLOWKNIFE
BHP Billiton is extending its review of whether or not it will sell its Ekati diamond mine as production at the ageing diamond mine begins to slow.

The mining giant announced last November that it was beginning a strategic review of whether a continued presence in the diamond industry is consistent with its overall group strategy.

A decision on whether BHP would sell its diamond assets - comprised at the time of Ekati and the Chidliak diamond exploration project in Nunavut - was expected by the end of January, when the company hoped its review of its diamond portfolio would be complete.

After selling its interest in the Chidliak diamond exploration project in Nunavut last December, Ekati remains BHP's only diamond asset in the world.

"The sale of Chidliak has no bearing on the process for Ekati and no final decision on the mine's future has been made," Ekati spokesperson Deana Twissell said, adding the review process could continue until June.

Production at the surface and underground mine, located about 310 km northeast of Yellowknife, has dropped, with 938,000 carats recovered in the second half of 2011, representing a 32 per cent reduction from the year before.

According to its most recent report, production is expected to remain constrained in the medium term, as the operations extract lower-grade material.

The lowered production is not related to BHP's review of its diamond business, Twissell said.

"We planned in advance what ore is expected to be put through the mine," she said. "And we mine according to that plan. So the decrease in production from last year was planned and anticipated."

She added the production changes will have no effect on jobs at the mine, which employs about 1,400 people.

Ekati, Canada's first diamond mine, officially opened in October 1998, with a forecast mine life of about 20 years.

Closure and reclamation has been forecast for 2018, with the possibility of extending the mine life.

While the company has not disclosed details of the current review of its diamond operation, one of the possible outcomes being evaluated is the sale of Ekati - a decision now expected to be revealed by June. Any options considered by the review will require detailed analysis prior to a final decision being made, Twissell said.

"As we've said before, we will only pursue those options that preserve Ekati's outstanding safety and environmental standards and protect the benefits that the mine has created for local communities," she said.

Shares of Melbourne, Australia-based BHP Billiton Ltd. closed slightly up on the New York Stock Exchange on Monday, at $78.83.

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