Peregrine Diamonds to focus on $95 million all-weather road before moving ahead with Nunavut mine
Peregrine Diamonds (TSE:PGD), the company behind the Chidliak mine in the Canadian territory of Nunavut, recently revealed promising results for its 10-year open pit project, which is set to produce around 12 million carats during its forecast lifespan.
Peregrine Diamonds estimates that a winter road from the mine to Iqaluit, the closest town, would last six to eight weeks, so a more permanent solution is needed.
But, as most companies searching for diamonds so close to the Arctic, the Vancouver-based firm has a more urgent problem to solve — building a $95 million, 160 km all-weather road to Iqaluit, the mine’s closest town.
"The road in is a critical piece of infrastructure and we need that prior to commencement of construction to minimize our construction capital costs," Peregrine’s president and chief executive officer, Tom Peregoodoff, said in a conference call Tuesday.
Other diamond mines in Canada’s north, such as Ekati and Diavik, are supported by winter roads, mainly built on ice, which operate eight to 10 weeks out of the year. After that, it’s mostly game over for the season.
Peregrine estimates that a winter road to Iqaluit would not even last that long, six to eight weeks at the most, so a more permanent solution is needed.
So far the company, which expects to have phase one of Chidliak operating in 2020, has discovered 74 kimberlites on its property since diamond exploration began in 2005. The miner is already planning about $15 million worth of core drilling and bulk sampling work for next winter.
Canada produces approximately 10% of world’s overall diamond output by volume and about 15% by value.
Prices for rough stones have rebounded 10% this year after dropping 44% in the five years ending in January. Not surprisingly, miners have picked up pace at development projects.
De Beers is about to open the world’s largest new diamond mine, Gahcho Kué, 280 km northeast of Yellowknife. And last week, Dominion Diamond (TSX, NYSE:DDC) decided to proceed with a key expansion to extend the life of its Ekati mine, in The Northwest Territories, beyond 2020.