While much of the global mining industry has been limping along under sagging commodities prices and looming oversupply, one of the brightest spots has been the Canadian diamond-mining industry, which has weathered its wild, rocky youth and settled into its role as a reliable discoverer, developer and miner of top-quality diamonds.
It remains one of the most difficult, long-shot tasks in mining: finding and developing an economic diamond deposit. And it takes a special kind of investor to embrace diamond miners’ extreme risk–reward ratios and extra-long time horizons.
But taking a look across Canada, we see all kinds of positive developments in the next generation of diamond companies and their assets.
This month Dominion Diamond — formerly Harry Winston Diamond — is heading into its second year as owner and operator of the prized Ekati open-pit and underground diamond mine in the Northwest Territories, picked up for US$553 million from BHP Billiton on April 10, 2013.
On a 100% basis, Ekati is home to 18.8 million carats in reserves in four pipes, plus an eye-popping 127 million carats in the measured and indicated category and 19 million carats in the inferred category, all in eight pipes.
The current reserves provide mill feed until 2019 (with 0.9 million carats due to be mined in fiscal 2015), but tapping into the resource base could add to the mine life well beyond that date, even into the 2030s if the Jay pipe is mined from underground.
Dominion is also returning to the marketing game, after having unloaded its downstream Harry Winston retail arm in recent years, with its plan to revive and expand the dormant “CanadaMark” that guarantees a diamond has been ethically mined in Canada.
Nearby at the rich Diavik underground diamond mine, Dominion and partner–operator Rio Tinto are reporting a reserve base of 46.8 million carats, plus another 20 million carats in all resource categories. The mine plan at Diavik foresees at least another decade of mining, with 6.1 million carats set for production in 2014.
Financially, Dominion saw an 118% and 50% rise in sales and earnings before interest, taxes, depreciation and amortization for the year ended Jan. 31, 2014. Even more encouraging, Dominion reported that after a flat 2013, rough diamond prices were up 7.4% in the first quarter.
Also in the Northwest Territories, construction is well underway at Mountain Province Diamonds and De Beers’ $860-million Gahcho Kué diamond mine, where a newly updated feasibility study foresees annual production of 4.45 million carats over 12 years and a 32.6% internal rate of return.
Closer to Yellowknife, operations are going strong at De Beers’ $2-billion Snap Lake mine, which opened in January 2008 as its first mine outside Africa.
In Ontario, De Beers is seriously considering expanding its Victor mine near Attawapiskat, which has so far exploited only one of 20 diamond-bearing pipes on the property, and has annually produced around 600,000 carats of the highest quality.
With the Victor pipe half depleted, De Beers is proposing to mine the Tango pipe situated 7 km to the northwest, using Victor’s existing milling facilities.
In Quebec, Stornoway Diamond has just received a big financial boost at its Renard diamond project in the Otish Mountains in the form of an $944-million, multi-stage financing agreement with Orion Co-Investments I Ltd., Ressources Québec (a wholly owned subsidiary of Investissement Québec) and the Caisse de dépôt et placement du Québec, in a complex deal that would include a public share offering, forward diamond sales and an equipment loan from Caterpillar.
In the greenfields department, works continues at Peregrine Diamond’s intriguing Chidliak diamond project on Baffin Island, and at Shore Gold’s too-big-to-ignore Fort à la Corne and Star projects in Saskatchewan.