Warm weather dampens Gahcho Ku

Unseasonably warm weather in the Northwest Territories has claimed another diamond victim, with De Beers Canada halving its core-drilling plans at the Gahcho Ku diamond project, 300 km northeast of Yellowknife.

Owing mostly to weather, which reduced access to the property via the seasonal ice road, De Beers trimmed its core-drilling campaign from 42 holes (totaling 11,300 metres) to the currently planned 20 holes. Ongoing core drilling is expected to wrap up by the end of May; another 18 geotechnical holes have been postponed.

The core drilling is aimed at further delineating the kimberlite bodies, obtaining additional microdiamond data, and providing pilot holes for future large diameter (24-inch) drilling.

Meanwhile, operational difficulties dogged De Beers’ large diameter drill (LDD), with all four holes in a scaled-back program striking out before they got going. Problems with casing a pair of holes on each of the north lobe of the 5034 kimberlite pipe and Tuzo kimberlite prevented drilling by contractors. De Beers had initially planned to test 5034’s north lobe with 6 LDD holes, while a single LDD hole would target Tuzo.

In all, the program was designed to upgrade resources in the north lobe to the indicated category, better define the grade and diamond value at Tuzo, and provide data required for final mine design.

“The failure of the winter drill program to meet expectations is disappointing,” said Mountain Province Diamonds (MPV-T, MDM-X) CEO Patrick Evans in a prepared statement.

He added that the joint-venture partners are completing a comprehensive review of the situation, and plan to incorporate the LDD drilling into future work plans without impeding the overall pace of the project.

Evans said that the environmental assessment process remains on schedule, with the Mackenzie Valley Environmental Impact Review Board holding a technical hearing and community consultation meetings in April. The board will use the comments and written submissions to establish the terms of reference for the project’s environmental assessment.

Gahcho Ku is currently envisaged as an open-pit mine capable of average annual production of 3 million carats over 15 years. The plan focuses on indicated resources totaling 14.4 million tonnes grading 164 carats per hundred tonne (cpht), with another 17 million tonnes of inferred material running 135 cpht.

The plan carries an estimated price tag of $ 825 million.

The resources are contained in the Hearne, 5034 and the Tuzo kimberlite bodies. The bulk of the indicated material lies in the 5034 pipe, with more than half of the inferred resource in the Tuzo pipe.

Based on the June 2005 Diamond Trading Company (DTC) price book, stones from the 5034 pipe are valued at US$85.70 per carat, Hearne is worth US$70 per carat, and Tuzo, US$56 per carat. An updated independent valuation model for the Gahcho Ku diamonds by WWW International Diamond Consultants is due shortly.

De Beers Canada is the operator and 51%-owner of the joint-venture project. Mountain Province is carried at 44.1%, and Camphor Ventures (CFV-V, CMVIF-O) holds the remaining 4.9%. De Beers can boost its interest to 60% by taking the project to commercial production.

Shares in Mountain Province were off 83, or 18%, at $3.80 in afternoon trading in Toronto following the news on Apr. 24. Camphor Ventures was trading 7 cheaper at $1.45 on the TSX Venture Exchange.


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