Top 10 Canadian-based diamond companies

Dominion Diamond’s Ekati diamond mine in the Northwest Territories, in 2016. Geologists say that high temperature and pressure 55 million years ago in the Lac de Gras region’s Archean-aged crust set the stage for diamond creation. Credit Dominion Diamond.Dominion Diamond’s Ekati diamond mine in the Northwest Territories, in 2016. Credit: Dominion Diamond.

Canada is the fifth-largest diamond producer in the world, according to the Mining Association of Canada. Last year two new diamond mines came into production: Gahcho Kué in the Northwest Territories and Renard in Quebec. Here are the top 10  Canadian-headquartered diamond companies by market capitalization, as of early July.

1. DOMINION DIAMOND: Market capitalization of $1.5 billion

Dominion Diamond (TSX: DDC; NYSE: DDC) is Canada’s largest diamond producer and the world’s third-largest diamond miner after De Beers and Alrosa. Dominion operates the Ekati mine, in which it owns a controlling interest, and owns 40% of the Diavik mine. Both mines are 300 km from Yellowknife and 200 km south of the Arctic Circle in the Lac de Gras region of the Northwest Territories. Ekati began production in October 1998, and Diavik in January 2003.

Dominion also owns a 55% stake in the Lac de Gras joint venture with North Arrow Minerals (TSXV: NAR), which holds the other 45% interest. The joint-venture property adjoins the mineral leases that host the Diavik mine, 10 km north, and the Ekati mine, less than 40 km northwest. Dominion also has sorting and selling operations in Canada, Belgium and India.

In an agreement with Archon Minerals (TSXV: ACS) in June, Dominion raised its ownership stake in the Buffer zone at the Ekati diamond mine to 100%. Of the 150 kimberlite pipes found at Ekati, 38 are in the Buffer zone, including Jay, a large, high-grade kimberlite that was approved for mine construction in July 2016. The Jay kimberlite is described as the most significant undeveloped deposit at Ekati, and will extend Ekati’s mine life by 10 years to 2033. Jay is beneath Lac du Sauvage, a moderate-sized lake north of Lac de Gras, 30 km southeast of the main Ekati mine infrastructure. The Buffer zone also contains the Lynx kimberlite pipe, which started commercial production in April 2017. Lynx is 3 km southwest of the Misery pipe.

Earlier this year the company received an unsolicited $1.1-billion takeover offer ($13.50 per share) from privately held, U.S.-based Washington Companies. Dominion’s board dismissed the proposal as highly opportunistic.

Washington Companies came back to the table in a big way on July 17 with a US$14.25 per share, all-cash offer valuing Dominion at US$1.2 billion (C$1.5 billion).

Dominion’s board unanimously approved the sweetened offer.

During the 2018 fiscal year ending on Jan. 31, 2018, Dominion expects Ekati will produce 6.3 to 7 million carats on a 100% basis, from processing 3.7 to 4 million tonnes. During 2017, Diavik could  produce 7.1 to 7.6 million carats on a 100% basis from processing 2 to 2.2 million tonnes.

The company had planned to spend $11 million on exploration in the Lac de Gras region during fiscal 2018. The program prioritizes the 150 kimberlite pipes at Ekati and plans for a bulk-sampling program in 2019. Diamond drilling could occur on up to six targets in the Core and Buffer zones at Ekati. At Diavik, the company plans to drill three kimberlites during 2017.

2. LUCARA DIAMOND: Market cap of $1.2 billion

Lucara Diamond’s Karowe diamond mine in central Botswana. Credit: Lucara Diamond.

Lucara Diamond’s Karowe diamond mine in central Botswana. Credit: Lucara Diamond.

Lucara Diamond’s (TSX: LUC) producing asset is the rich Karowe diamond mine in Botswana. The open-pit mine started commercial production in July 2012 and could produce between 290,000 and 310,000 carats in 2017 from processing 2.2 to 2.5 million tonnes of ore. In 2016, the mine produced 353,974 carats from 2.6 million tonnes, which was in line with the company’s forecast.

The company says open-pit operations will continue until 2026, with further underground potential. The mine plan is based on probable reserves from surface to a 324-metre depth of 36.2 million tonnes containing 6.3 million carats. Indicated resources from surface to 400 metres encompass 51 million tonnes containing 8.2 million carats, and inferred resources from 400 metres to 750 metres measure 21 million tonnes containing 4 million carats.

The mine, which lies on the northern fringe of the Kalahari Desert in central Botswana, is part of the Orapa-Letlhakane kimberlite district, which the company describes as one of the world’s most prolific diamond-producing areas.

The Karowe mine was developed from the AK6 project. De Beers found the AK6 kimberlite in 1969, but early work concluded the kimberlite was too small and low grade. A reassessment in 2003 showed the kimberlite was in fact larger and higher grade.

In 2009, Lucara acquired a 70% interest in Boteti Mining, which had a full interest in the AK6 project. Lucara increased its ownership in Boteti Mining to 100% in 2010 and remains the Karowe mine’s sole owner.

In the fourth quarter of 2016, Lucara bought an interest in Tsodilo Resources (TSXV: TSD; US-OTC: TSDRF) for $2.5 million in a private placement. Tsodilo’s BK16 project is 28 km northeast of Karowe.

3. STORNOWAY DIAMOND: Market cap of $688 million

Stornoway Diamond's Renard mine in Quebec.

Stornoway Diamond’s Renard mine in Quebec. Credit: Stornoway Diamond.

Stornoway Diamond (TSX: SWY; US-OTC: SWYDF) owns 100% of the Renard diamond mine in the Otish Mountains region of north-central Quebec, 350 km north of Chibougamau. Renard, which started commercial production on Jan. 1, 2017, is Quebec’s first diamond mine and the first diamond mine in Canada that can be accessed by an all-weather road.

The mine was completed ahead of schedule and $37 million under budget at a final cost of $774 million. Over its initial 14-year mine life, Renard could produce 22.3 million carats, or 1.6 million carats per year. During the first 10 years, annual production will average 1.8 million carats.

The mine hosts nine diamond-bearing kimberlite pipes. Initial mining will focus on five pipes (Renard 2, 3, 4, 9 and 65) in an open-pit and underground mine. In 2017 and during the first half of 2018, production will come from the R2-3 open pit to a 130-metre depth. Starting in 2018, ore will be sourced from R2 underground from four development levels down to 700 metres. Ore will then be mined from the R3 pipe and the R4 pipe from the same access ramp.

By May 2017, Stornoway had produced 1 million carats of diamonds at Renard. In February, the company outlined 2017 guidance of 1.7 million to 1.8 million carats at an average price of US$100 to US$132 per carat.

Ashton Mining of Canada and Quebec agency Soquem found Renard in 2001. Stornoway acquired 100% of the project when it bought Ashton in 2007.

4. MOUNTAIN PROVINCE DIAMONDS: Market cap of $682 million

De Beers Canada and Mountain Province Diamonds' Gahcho Kue diamond mine in the Northwest Territories. Credit: De Beers Canada.

De Beers and Mountain Province Diamonds’ Gahcho Kué diamond mine in the Northwest Territories. Credit: De Beers Canada.

Mountain Province Diamonds (TSX: MPVD; NASDAQ: MPVD) owns a 49% stake in the Gahcho Kué diamond mine in the Northwest Territories. De Beers, the operator, owns the rest. The mine opened in September 2016 and started commercial production on March 1, 2017.

Gahcho Kué is a fly-in/fly-out mine at Kennady Lake, 280 km northeast of Yellowknife and 90 km east of De Beers’ Snap Lake diamond mine.

Gahcho Kué is made up of four diamond-bearing kimberlite pipes, three of which have a probable reserve of 34.3 million tonnes grading 1.57 carats per tonne for total diamond content of 53.7 million carats.

Under the life-of-mine plan, the 5034 kimberlite will be mined from the third quarter of 2016 until the fourth quarter of 2021.

Pre-stripping of the Hearne kimberlite will start in the first quarter of 2019, and mining will continue until the end of 2024. Pre-stripping of the Tuzo pit will start in the first quarter of 2020, and mining will continue through 2028.

The $1-billion mine, made up of three open pits, could produce 4.5 million carats a year over 12 years.

Another 20-million-carat resource could extend the mine life to more than 17 years. The potential for more resource upside, Mountain Province says, which could extend the mine life beyond 20 years, is through its Tuzo Deep program, where drilling has defined kimberlite to below 740 metres.

During the first quarter, mining at Gahcho Kué recovered 867,000 carats from 492,000 tonnes of processed ore for a grade of 1.76 carats per tonne.

Gahcho Kué was discovered in 1995 and De Beers’ largest diamond mine outside southern Africa.

5. KENNADY DIAMONDS: Market cap of $161 million

Kennady Diamonds' Kennady North project in the Northwest Territories. Credit: Kennady Diamonds.

Kennady Diamonds’ Kennady North project in the Northwest Territories. Credit: Kennady Diamonds.

Kennady Diamonds (TSXV: KDI) was created in 2012 as a spinoff from Mountain Province Diamonds, with Kennady’s 100%-owned Kennady North project next to the Gahcho Kué diamond mine in the Northwest Territories.

So far, Kennady has found six kimberlite pipes at the Kennady North project: Kelvin, Faraday 1, 2 and 3, Doyle and MZ. The Kelvin kimberlite was the first discovery on the property, and in 2016 the company estimated a maiden resource for Kelvin of 13.62 million carats of diamonds contained in 8.5 million indicated tonnes grading 1.60 carats per tonne, with an average value of US$63 per carat, using a 1 mm diamond bottom cut-off size.

The Kelvin-Faraday corridor is also an exploration target.

Kennady North, 280 km northeast of Yellowknife, is Canada’s most advanced diamond exploration project and covers an area 20 km long and 15 km wide.

In June, Kennady reported diamond recovery results for the Faraday 3 and Faraday 1 kimberlites. Kennady recovered 460.5 carats of diamonds (+0.85 mm) from Faraday 3 from 276.4 tonnes for a grade of 1.67 carats per tonne. The largest stone recovered is a 7.78-carat white to colourless octahedral gem, with no inclusions. From Faraday 1, Kennady recovered 76.8 carats of diamonds (+0.85 mm) from 26.4 tonnes for a grade of 2.91 carats per tonne. The largest stone recovered is a 3.21-carat white to colourless tetrahexahedron.

In May the company reported results from a bulk sample of Faraday 2, where 737.6 carats were recovered from 262.6 tonnes at 2.81 carats per tonne. The result is similar to the mini-bulk sample grade of 2.69 carats per tonne reported in 2016.

An exploration program in mid-2017 consists of at least 3,000 metres of diamond drilling in the Kelvin-Faraday area and a ground geophysical survey.

6. SHORE GOLD: Market cap of $75 million

A cut 5-carat diamond from Shore Gold's Star kimberlite, in Saskatchewan. Photo by Shore Gold

A cut 5-carat diamond from Shore Gold’s Star kimberlite in Saskatchewan. Credit: Shore Gold.

Shore Gold’s (TSX: SGF) wholly owned Star-Orion South diamond project is in central Saskatchewan, 60 km east of Prince Albert. The flagship project includes the Star and Orion South kimberlites, which have an indicated resource of 393 million tonnes containing 55.4 million carats of diamonds at a weighted average price of US$210 per carat.

The Star and Orion South kimberlites also contain 11.5 million carats in the inferred resource category.

In June, Shore Gold signed an option agreement with Rio Tinto (NYSE: RIO), under which Rio can earn up to a 60% interest in the project. Newmont Mining (NYSE: NEM) owns 19.9% of Shore Gold.

7. ARCHON MINERALS: Market cap of $73 million

Stewart Blusson, a director of New Nadina Explorations and president of Archon Minerals shows off the tools he uses to get around the tundra during a visit to the Monument diamond project in the Northwest Territories.

Stewart Blusson, a director of New Nadina Explorations and president of Archon Minerals shows off the tools he uses to get around the tundra during a site visit in 2008 to the Monument diamond project in the Northwest Territories. Photo by The Northern Miner.

Archon Minerals (TSXV: ACS) is headed by legendary mine finder Stewart Blusson, who, with Chuck Fipke, found Canada’s first economic diamond deposit in the Northwest Territories near Lac de Gras, now known as the Ekati diamond mine.

In June, Archon converted its 34.7% working interest in the Buffer zone at Ekati to a 2.3% gross production royalty.

Archon says it will immediately realize the benefits of the arrangement, with royalties flowing from the Lynx pipe, which is part of the Buffer zone and saw commercial production begin in April.

The Lynx pipe is an open-pit mine with proven and probable reserves of 1 million tonnes at 0.8 carat per tonne.

The Buffer zone also contains the Jay pipe. Without the agreement, Archon noted it was unlikely it would have received any returns until 2025.

But under the agreement, Archon will receive a gross production royalty equal to 2.3% of the gross value of diamonds produced from the Buffer zone.

Archon also has 100% of the 810 sq. km of mineral leases that were formerly part of the western Buffer zone, as well as interests in other diamond exploration properties in the area.

8. DIAMCOR MINING: Market cap of $44 million

A rough diamond from Diamcor Mining's former So Ver operation, in South Africa. Credit: Diamcor Mining.

A rough diamond from Diamcor Mining’s former So Ver operation, in South Africa. Credit: Diamcor Mining.

Diamcor Mining (TSXV: DMI) acquired the Krone-Endora at Venetia diamond project in South Africa from De Beers in 2011. The 59 sq. km land package is next to De Beers’ large Venetia diamond mine.

Diamcor describes the deposits found on the Krone and Endora properties as a higher-grade alluvial basal deposit covered by a lower-grade, upper eluvial deposit.

Diamcor says the deposits result from the shift in respect to the eluvial deposit and erosion by the alluvial deposit of nearby Venetia kimberlite areas. The deposits on Krone-Endora occur in two layers with less than 15 metres from surface to bedrock.

During the company’s first fiscal quarter ended June 30, it tendered 8,319 carats of rough diamonds at US$222.52 per carat for gross proceeds of US$1.85 million. Rough diamond recovery to date is incidental to the company’s commissioning and testing exercises at the project, and Diamcor has yet to make a production decision.

9. PEREGRINE DIAMONDS: Market cap of $42 million

Drilling at the CH-7 kimberlite at Peregrine Diamonds' Chidliak project, in Nunavut. Credit: Peregrine Diamonds

Drilling at the CH-7 kimberlite at Peregrine Diamonds’ Chidliak project, in Nunavut. Credit: Peregrine Diamonds.

$42 million

Peregrine Diamonds (TSX: PGD; US-OTC: PGDIF) has diamond assets in the Canadian Arctic and Botswana.

Its flagship, wholly owned Chidliak project on Baffin Island is 120 km northeast of Iqaluit. Part of Chidliak’s CH-6 kimberlite has an inferred, open-pit resource of 11.39 million carats in 4.6 million tonnes of kimberlite at an average grade of 2.45 carats per tonne. Part of its CH-7 kimberlite has an inferred resource of 4.23 million carats in 5 million tonnes of kimberlite at 0.85 carat per tonne.

A preliminary economic assessment of a first-phase diamond development has outlined a 10-year, open-pit mine. Preproduction capital expenses of $434.9 million could be paid back in two years. The assessment shows a $471-million, after-tax net present value and a 30% after-tax internal rate of return for the project.

The company also controls the Lac de Gras project, 27 km from the Diavik diamond mine. Peregrine’s 72%-owned, DO-27 kimberlite at the project has an indicated resource of 18.2 million carats in 19.5 million tonnes of kimberlite at 0.94 carat per tonne, and is open at depth.

In Botswana, Peregrine holds 11 diamond prospecting licences grouped into six project areas covering 6,613 square kilometres. Peregrine acquired Diamexstrat Botswana, a privately held diamond exploration and development company, in 2015.

 

10. TSODILO RESOURCES: Market cap of $32 million

Tsodilo Resources' BK16 project

Examining drill core at Tsodilo Resources’ BK16 diamond project in Botswana. Credit: Tsodilo Resources.

Tsodilo Resources (TSXV: TSD) is an exploration company active at its wholly owned BK16 kimberlite project in Botswana’s Orapa kimberlite field.

The company says the BK16 kimberlite is 6 hectares at surface and contains rare and valuable Type IIa diamonds. A geological model based on 3,050 metres of core recovered in 2015 was completed in 2016.

In February, the company started a 3,000-metre-diameter drill program that will help it collect 2,000 tonnes of kimberlite by drilling 14, 24-inch holes.

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