Sable pipe to make mine more robust
Development adjacent to Jay project would keep processing plant at full capacity to 2033
Meagan Leonard
Northern News Services
Wednesday, March 2, 2016
SOMBA K'E/YELLOWKNIFE
Another pipe has been identified for development as part of the Jay project and could make Ekati's production more robust toward the end of its lifespan, Dominion Diamond Corp. announced Feb. 22.
According to a news release, incorporating the nearby Sable deposit would allow the existing processing plant to remain at full capacity until 2033.
Recently approved by the Mackenzie Valley Environmental Impact Review Board, the Jay Pipe expansion was already expected to add 10 years to the mine's life, with mining activities commencing in 2021. The original mine is anticipated to run out of diamonds in 2023.
Sable would be an incremental development and included in Jay's feasibility study - scheduled for completion in May.
"Sable's higher-value ore will allow for optimal mine sequencing and operational flexibility to maximize the value of Ekati operations," the release states.
The project is expected to recover 10.1 million carats with a recovery of 94 per cent.
The pipe is located beneath Sable Lake approximately 17 kilometres from the original mine site and would require construction of an access road, site infrastructure and sedimentation pond, carrying a price tag of approximately $142 million. De-watering and pre-stripping is expected to begin in 2019.
Winter drilling at the Jay site recovered 1,904 carats with a sample grade of 1.85 carats per tonne. The company is now estimating a marginally higher diamond price for Jay coupled with a lower grade than anticipated will result in an approximately seven per cent decrease in value. The Jay pipe has an estimated 85 million carat reserve.
In a Feb. 23 news release, Dominion reported "excellent" performance at the Ekati mine with carat production 42 per cent higher than the same period in 2015 following changes to its diamond recovery process implemented in July. However, diamond sales were down for the quarter, finishing at $178 million compared to $240.6 million last year. The full-year sales were also significantly lower at $720.6 million compared to $915.7 million in 2015.
Diamond demand, which had previously been growing since 2010, dropped six per cent in 2015 with prices for a one-carat stone dropping 13 per cent.
"In China, consumers continued to buy diamond jewelry, but the previous overstocking by retailers meant much lower replenishment of inventory during the period," the release states.
Production is anticipated to decline in 2016 as the company starts mining new deposits Misery and Pigeon. Diamond production is expected to increase again in 2017 when those two pits come online.
Dominion says it plans to produce 3.7 million carats from 3.6 million tonnes of ore this year and 5.5 million carats in 2017 from 3.9 million tonnes of ore.
The company plans to have two rough diamond sales in 2017. As of January 2016, it had approximately two million carats available with an estimated market value of approximately $97 million.
Dominion shares were trading low this week, down 2.8 per cent on the Toronto Stock Exchange to $15.38 per share.
