PEA extends Ekati minelife by 7 years to 2042

Dominion Diamond runs the iconic Ekati mine and owns 40% of Diavik (pictured), Canada’s largest diamond mine in terms of carat production. (Image courtesy of Dominion Diamond)

A preliminary economic assessment (PEA) of the Ekati mine in Canada’s Northwest Territories has the iconic diamond operation staying open seven more years.

Dominion Diamond Corporation (NYSE, TSX:DDC) said last week that spending $628 million going underground in the mined-out Fox open pit would involve processing 31.3 million tonnes of ore and recovering 11 million carats from Fox Deep – extending the Ekati mine from 2035 to 2042 including the recently-approved Misery Deep project which extended the mine from 2033 to 2035.

The Fox Deep extension would be done via the underground incline mining method, and cost $1.4 billion to operate. 

The company which owns 40% of the Diavik mine and 88.9% of Ekati was recently purchased by U.S.-based Washington Companies for $1.2 billion. Dominion Diamond is the world’s third largest producer of rough diamonds by value.

According to the PEA, the Fox Deep extension would be done via the underground incline mining method, and cost $1.4 billion to operate. The economics of the project including a $187 million net present value post-tax, and a 23% internal rate of return, are based on a reverse-circulation drilling program done on the pit last year. The drill program confirmed the continuity of mineralization at depth and identified a higher-grade zone, pushing up indicated resources by 32.6%, to a total 62.1 million tonnes from previous estimates of 46.8 million tonnes.

The open-pit Fox operation produced over 8.7 million carats between 2005 and 2014. A prefeasibility study is expected to be completed by the end of 2018.

CBC quotes diamond industry analyst Paul Zimnisky saying that the project’s viability will depend on future diamond prices, mine costs and the regulatory timeline.

“As they conduct further studies, a lot of the factors and the variables could change. If diamond prices significantly go down… or if they had new technologies developed, they could change potentially the mine’s plans” he said.

Located 310 kilometres northeast of Yellowknife, Ekati was Canada’s first diamond mine. It has been in production since 1998, though exploration and development work dates back to 1981.

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