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Posts tagged ‘Archon Minerals Ltd (ACS)’

Dominion Diamond completes Sable pre-feas, construction to begin next year

February 22nd, 2016

by Greg Klein | February 22, 2016

Now boasting a 10.1-million-carat reserve, Dominion Diamond’s (TSX:DDC) Sable pipe could begin production in 2019 and continue to 2027, helping keep the company’s Ekati plant at full capacity until 2033. Dominion released pre-feasibility highlights on February 22 for an open pit 17 kilometres north of Ekati’s existing infrastructure in the Northwest Territories’ Lac de Gras region.

Dominion Diamond completes Sable pre-feas, construction to begin next year

Dominion holds an 88.9% interest in Ekati’s Core zone, which includes Sable. The company has a 65.3% stake in the adjacent Buffer zone and its Jay pipe, with Archon Minerals TSXV:ACS holding the remaining 34.7%. Jay’s January 2015 pre-feas envisioned that pipe as a standalone operation. But in September Dominion decided to defer Jay production to give Sable higher priority.

Using a one-millimetre cutoff, Sable’s pre-feas shows a probable reserve of 12 million tonnes averaging 0.8 carats per tonne for 10.1 million carats.

The resource estimate used a 0.5-millimetre cutoff, with rounded numbers showing:

  • indicated: 15.4 million tonnes averaging 0.9 ct/t for 14 million carats

  • inferred: 300,000 tonnes averaging 0.9 ct/t for 300,000 carats

The study provides all dollar amounts in U.S. currency based on a 2015 exchange rate of C$1.33. With a 7% discount rate, Dominion’s share of the post-tax net present value comes to $137 million and the post-tax internal rate of return comes to 16.2%. The study assumed a base case diamond price of $140, $50 less than last September’s PEA. The lower price results from a re-evaluation of size frequency and price per size, weaker diamond prices and additional recovery of smaller stones, Dominion stated.

Total capital expenditures would reach $55 million in fiscal 2017, $72 million in 2018 and $15 million in 2019, with another $85 million for pre-stripping, which would mostly take place in 2019.

The company plans to begin building the fully permitted mine in fiscal 2017 without a full feasibility study. Production would begin in 2019. Dominion stated it “plans to re-evaluate and further optimize the Sable mining and processing schedule based on the results of the Jay feasibility study, which is currently underway.” Jay’s probable reserve contains 84.6 million carats.

The company has previously stated that Jay could potentially extend Ekati’s mining life by at least 10 years beyond 2020. Ekati’s Misery Main pipe, with a reserve of 14 million carats, has production scheduled to begin in H1.

The world’s third-largest rough producer by value, Dominion also holds the smaller portion of a 40/60 joint venture with Rio Tinto NYE:RIO in Diavik, another Lac de Gras operation. The mine’s fourth pipe, the 10-million-carat A21, has production scheduled for H2 2018.

Read Chris Berry’s analysis of long-term diamond supply and demand.

Read Paul Zimnisky’s report on global diamond mining.

A change of plans for Ekati

September 11th, 2015

It’s a delay for Jay as Dominion Diamond brings the Sable kimberlite forward

by Greg Klein

Its interests in two Northwest Territories mines make Dominion Diamond TSX:DDC the world’s third-largest rough producer by value. With Diavik’s demise expected in 2023, the company hoped to add 11 years to Ekati’s lifespan by bringing the Jay kimberlite into production. But now a change in plans defers Jay for another year to focus on the Sable pipe, which had a preliminary economic assessment announced September 10. This PEA, apparently, trumps Jay’s pre-feasibility, which as recently as January foresaw that kimberlite as a standalone operation.

Fully permitted, Sable has construction planned to begin as soon as the ice road opens, with kimberlite mining and processing projected to begin by 2019. Should Jay’s permits come through, Dominion hopes to begin its construction in H2 next year, but now adding a third year to the building timeline.

It’s a delay for Jay as Dominion Diamond brings the Sable pipe forward

Sable’s addition makes little difference to Ekati’s lifespan, however. Jay was expected to last until 2030 at least. But Sable and Jay combined could keep the mine’s processing plant working at full capacity until 2033, even with Sable quitting operations in 2027. Although lacking a reserve estimate, the pipe shows indicated resources of 15.4 million tonnes averaging 0.8 carats per tonne for 11.7 million carats. The inferred category has another 300,000 carats.

Sable lies 17 kilometres northwest of Ekati’s existing infrastructure, within the mine’s Core zone joint venture where Dominion holds an 88.9% stake. The zone includes the Koala kimberlite, where underground mining takes place, Misery, which undergoes open pit expansion, Pigeon, another open pit undergoing pre-stripping, and Fox, a previously mined pipe with a remaining stockpile.

Dominion holds 65.3% of Ekati’s Buffer zone, which hosts Jay and the unmined Lynx kimberlite. Archon Minerals TSXV:ACS owns Buffer’s remainder.

Even with Jay’s construction spread out over three years instead of two, Dominion sees synergies with Sable. “The projects are very complementary,” COO Chantal Lavoie told a September 11 conference call. They would “keep our production balanced with higher-value, higher-grade deposits, they will give us blending flexibility in the process plant and they will share the same mining fleet built around 240-tonne haul trucks.”

Using a 7% discount rate, Sable’s PEA projects a post-tax net present value of $233 million (all dollar figures American, except where noted) and a 17.3% post-tax internal rate of return. Those figures assume Sable fetching an average $190 per carat (last year’s global average was $116.17) and a U.S. dollar costing $1.25 in Canuck bucks.

Initial capex would call for $147.4 million.

The PEA evaluated Sable “as an incremental development opportunity” that includes Jay. “The NPV calculation represents the company’s share of the incremental NPV,” Dominion added.

Although Sable nears construction, the company has the pipe’s pre-feas underway. A possible economic enhancement might come from improved diamond liberation achieved at Ekati’s plant in July. Feasibility studies for Jay continue.

As for Diavik, a JV with 60% partner Rio Tinto NYE:RIO, Dominion expects its doom to be “done by 2023,” CEO Brendan Bell told the conference. “I think it’s been well explored. We’re not expecting any new work or new discoveries on the Diavik property.”

But elsewhere in the NWT? “We firmly believe there are more mines to be found in this jurisdiction and we’ll be focusing on that going forward.”

Dominion increases its Ekati stake, Canada to more than double diamond production

October 15th, 2014

by Greg Klein | October 15, 2014

The world’s third-largest diamond producer by value just got bigger and a world-renown diamond explorer just got richer. Dominion Diamond TSX:DDC announced October 15 it had completed its acquisition of Chuck Fipke’s remaining interest in Ekati, the mine he discovered. In July Dominion stated Fipke’s entire stake would fetch US$67 million. But with co-discoverer Stewart Blusson and Archon Minerals TSXV:ACS exercising their right to pick up a proportionate share, Dominion now pays Fipke a total of $55.4 million.

Dominion increases its Ekati stake, Canada to more than double diamond production

After sorting and pricing its rough diamonds, Dominion
sells them in Antwerp, Belgium and Mumbai, India.

In return the company increases its previous 80% interest in Ekati’s Core zone, which includes the mine and other permitted kimberlite pipes, to 88.889%. Dominion also gets an additional 6.53% of the Buffer zone, which hosts pipes with development and exploration potential, for a total of 65.3%. Blusson now holds the remainder of Core, while Archon holds the rest of Buffer.

Fipke got $27.55 million from Dominion on closing, with the rest to come through instalments. The company may issue him shares to cover one or more instalments.

Dominion also holds a 40% interest in the nearby Diavik mine, which is operated by 60% owner Rio Tinto NYE:RIO.

For production by value, Dominion is the world’s third-largest company and Canada the third-largest country. Even if De Beers’ Victor mine in Ontario were excluded, the three mines of the Northwest Territories’ Lac de Gras region would retain the global third-place standing.

One day before Dominion’s announcement, diamond authority Paul Zimnisky stated Canada’s production would more than double within four years. While this country currently extracts about 14.2% of the planet’s supply by value, two new mines “are estimated to boost Canada’s global market share to 25.2% in value and 15.1% in volume by 2018,” he wrote. That would “give Canada the highest compound annual growth rate of production (20.2% in value and 17.4% in volume) among the world’s eight largest diamond-producing nations over the next four years.”

Only three large-scale mines are projected to open outside Canada during that period, Zimnisky added. None of them are expected to match production from either of the upcoming Canadian mines, De Beers’/Mountain Province Diamonds’ (TSX:MPV) Gahcho Kué in Lac de Gras and Stornoway Diamond’s (TSX:SWY) Renard project in Quebec. Meanwhile “some of the largest mines in the world are reaching exhaustion,” Zimnisky pointed out.

Apart from the new mines, Canadian diamond exploration has seen considerable new activity, especially in Lac de Gras.

Read more about Dominion Diamond.

Read more about Canadian diamond exploration.

Kennady and Peregrine report from the Lac de Gras diamond region

July 25th, 2014

by Greg Klein | July 25, 2014

It’s Ekati in the language of the Dene and Lac de Gras in French. They both mean “Fat Lake” and, following the first diamond discovery there, the name extended to that area of the Slave geological province in the Northwest Territories. Roughly 300 kilometres northeast of Yellowknife, the region hosts three diamond mines and a fourth under development. On July 24 Kennady Diamonds TSXV:KDI and Peregrine Diamonds TSX:PGD updated their projects in the region.

Encouraging results from Kennady North—including the project’s longest-yet kimberlite intercept—have prompted Kennady to double its summer drill program to about 10,000 metres. A third rig will join the 61,000-hectare property, currently the site of delineation drilling and mini-bulk sampling, as well as exploration.

Kennady and Peregrine report from the Lac de Gras diamond region

A couple of rough stones recovered from Kennady’s 2013 program.

The Kelvin dyke’s star result was a 183-metre intersection (not true width) of kimberlite starting at a downhole depth of 151 metres outside the current geological model. Another delineation hole revealed 124 metres of kimberlite starting at 114.6 metres. Four mini-bulk samples at shallow depth showed kimberlite results of 102 metres, 110.3 metres, 102.4 metres and 72.6 metres.

The project hosts four known kimberlites, with Kelvin and Faraday undergoing both delineation drilling and mini-bulk sampling while MZ and Doyle get exploration drilling. In addition the company has identified at least four new geophysical targets.

A 25-tonne sample extracted from Kelvin last spring is now being processed, with results expected in early Q4. Diamond recovery from a one-tonne Faraday sample should be announced this quarter.

Last year’s recoveries “returned exceptional sample grades,” the company stated. A 4.3-tonne Kelvin sample showed 5.38 carats per tonne. A 116-kilogram Faraday sample graded 11.23 ct/t. The three largest Kelvin diamonds were a 2.48-carat off-white transparent octahedral, a 1.06-carat off-white broken aggregate and a 0.9-carat off-white transparent irregular. “The recovery of diamonds of this size and quality from a 4.3-tonne sample is very encouraging,” Kennady maintained.

The company has a maiden resource for the Kelvin-Faraday kimberlite corridor scheduled by year-end.

Kennady North lies adjacently north, west and south of Gahcho Kué, scheduled for production in 2016. Owners De Beers (51%) and Mountain Province Diamonds TSX:MPV (49%) like to call it “the world’s largest and richest new diamond development project.”

Immediately south of Gahcho Kué and neighbouring Kennady is Godspeed Lake, a 42,000-hectare property acquired by Prima Diamond TSXV:PMD earlier this month.

In other Lac de Gras news this month, Arctic Star Exploration TSXV:ADD and North Arrow Minerals TSXV:NAR announced their Redemption joint venture would undergo summer drilling of six to eight holes totalling about 1,000 metres.

Not to be ignored, Canada’s original diamond mine was the subject of a July Ekati update from Dominion Diamond TSX:DDC.

The same day Kennady released its drill results, Peregrine announced an updated technical report for its 15,810-hectare Lac de Gras project. The document summarizes work since 2008 on the project, where the DO-27 kimberlite hosts an indicated resource of 18.2 million carats. The company stated it’s “reviewing options, including commercial opportunities, to advance the project” which contains nine known kimberlites.

Ownership is somewhat fragmented, with the project divided into three areas. The DO-27 resource sits on the WO property, held 72.1% by Peregrine, 17.6% by Archon Minerals TSXV:ACS and 10.3% by DHK Diamonds Inc. The project also consists of the LDG Thelon property (70.5% Peregrine, 29.5% Thelon Capital TSXV:THC) and the LDG Peregrine property (100% Peregrine).

Last May Peregrine released an initial resource estimate for its flagship Chidliak project on Nunavut’s Baffin Island.

Disclaimer: Prima Diamond Corp is a client of OnPage Media Corp, the publisher of ResourceClips.com. The principals of OnPage Media may hold shares in Prima Diamond.

Dominion Diamond updates Ekati, forecasts production and prices

July 21st, 2014

by Greg Klein | July 21, 2014

Dominion Diamond updates Ekati, forecasts production and prices

With interests in two mines in the NWT’s Lac de Gras region,
Dominion is the world’s third-largest diamond miner by value.


An updated plan for Ekati forecasts Canada’s original diamond mine producing over 20 million carats between 2015 and 2020. Released by Dominion Diamond TSX:DDC on July 21, the report precedes an updated reserve estimate expected later this year for the Lac de Gras-region mine in the Northwest Territories.

The plan breaks down output for four deposits in Ekati’s Core zone, totalling 19.18 million carats from fiscal 2015 to 2020. Processing from the mined-out Fox deposit would end in 2016, the same year mining would begin in the Misery and Pigeon deposits. Misery would produce 12.28 million carats of the cumulative total by 2020.

An additional 850,000 carats between fiscal 2017 and 2019 would come from the Lynx deposit on Ekati’s Buffer zone.

Dominion also released an initial resource for two Misery satellites, both in the inferred category. Misery South showed:

  • 900,000 tonnes averaging 1 carat per tonne for 900,000 carats

The Misery Southwest extension showed:

  • 3 million tonnes averaging 1.3 ct/t for 5 million carats

Plant improvements have achieved a 15% increase in recovery, Dominion added. The company also outlined plans to extract diamonds from coarse ore rejects that began piling up when Ekati opened in 1998. The mine’s total reserves and resources fall short of the plant’s annual capacity of 4.35 million tonnes.

Rough diamond prices forecast by the company rated most Ekati deposits well above world averages. Different sources vary on the global average, citing figures ranging from about $100 to $130 per carat, the latter provided by Paul Zimnisky in March. But, based on Q1 sales, Dominion’s forecasted rough diamond averages came to $395 for Koala, $440 for Koala North, $315 for Fox, $200 for Pigeon, $235 for Lynx, $105 for Misery Main, $90 for Misery South and SW, $65 to $120 for coarse ore rejects and $70 to $100 for small diamonds now recovered through plant improvements.

By value, the company is the world’s third-largest rough diamond producer.

Dominion currently holds 80% of Ekati’s Core zone and 58.8% of Buffer. But earlier this month the company announced its intention to buy out Ekati co-discoverer Chuck Fipke, whose company holds 10% each of Core and Buffer. Fipke’s teammate in the discovery, Stewart Blusson, retains 10% of Core, while Archon Minerals TSXV:ACS has 31.2% of Buffer.

As well, Dominion holds a 40% interest in the Diavik mine, also in the Lac de Gras region, while a Rio Tinto NYE:RIO subsidiary holds the rest. Dominion sorts its share of diamonds from both mines in Yellowknife, Toronto and Mumbai, India. The rough diamonds then go to market through Dominion’s Belgian and Indian subsidiaries.


Read more about diamond mining and exploration in Canada:

  • A bourse marks its course: The Diamond Bourse of Canada wants to encourage secondary industry while enhancing our global stature

Disclaimer: Prima Diamond Corp is a client of OnPage Media Corp, the publisher of ResourceClips.com. The principals of OnPage Media may hold shares in Prima Diamond.

Diamonds dazzle with deals

July 9th, 2014

Dominion to buy out Fipke, Stornoway funded to production, Mountain Province cashed up

by Greg Klein

Diamonds obviously evoke wealth as well as beauty. But it’s not just the jewellery that attracts money. Some of the projects that would produce the stones have been drawing in deep-pocketed investors, as shown by three recent deals involving Dominion Diamond TSX:DDC, FipkeCo, Stornoway Diamond TSX:SWY and Mountain Province Diamonds TSX:MPV.

Dominion to buy out Fipke, Stornoway funded to production, Mountain Province cashed up

Along with Stewart Blusson, Chuck Fipke proved instrumental to the birth of diamond mining in Canada. Each of them held onto part of their Ekati discovery, the country’s first diamond mine. Now Fipke has agreed to sell his interest in the Northwest Territories project to majority owner Dominion Diamond. The company will pay “a price equivalent to the price paid to BHP Billiton [NYE:BHP] in 2013 for its interests”—which would bring Fipke’s company about US$67 million, according to a July 9 statement.

Ekati consists of the Core zone, part of which is currently mined, and the Buffer zone. Fipke’s FipkeCo and Blusson each hold 10% of Core, with Dominion holding the rest. FipkeCo holds 10% of Buffer, along with Dominion (58.8%) and Archon Minerals TSXV:ACS (31.2%).

FipkeCo would get $50 million for its Core stake and $17 million for its part of Buffer. Both amounts are “subject to adjustments to reflect joint venture contributions and distributions since June 30, 2012, as well as interest from that date,” Dominion stated. The company may pay part of the Core price in shares.

Dominion’s Core purchase might be reduced to 8.89% if Blusson retains his right in respect of FipkeCo’s interest. If Archon exercises its right in respect of FipkeCo’s Buffer interest, Dominion’s Buffer acquisition would amount to 6.53%.

Dominion anticipates closing the transactions by September.

Although the sale “ends Fipke’s “financial involvement with Canada’s first diamond mine, his contribution to its discovery and success goes well beyond that,” stated Dominion chairperson/CEO Robert Gannicott. “The history of Canadian mining is full of stories of accidents of fate leading to discoveries but the discovery of diamonds in the Slave Geological Province is a story of years of dedicated technical work led by a focused technical expert with unwavering belief in the outcome.”

The history of Canadian mining is full of stories of accidents of fate leading to discoveries but the discovery of diamonds in the Slave Geological Province is a story of years of dedicated technical work led by a focused technical expert with unwavering belief in the outcome.—Dominion Diamond chairman/CEO Robert Gannicott on Chuck Fipke’s role in mining history

Dominion also holds a 40% stake in another Lac de Gras-region diamond mine, Diavik. A subsidiary of Rio Tinto NYE:RIO holds the rest and acts as operator. The region’s third diamond mine, De Beers’ Snap Lake, was the giant’s first mine outside of Africa. That company also operates Canada’s fourth diamond producer, Victor in northern Ontario.

News of the Fipke buyout follows Stornoway Diamond’s July 8 closing of a deal to fund its Renard project in Quebec through to production. The C$946-million package reflects “the largest-ever project financing package for a publicly listed diamond company.”

The money comes from “a combination of senior and subordinated debt facilities, equity issuances, an equipment financing facility with Caterpillar Financial and the forward sale of diamonds,” Stornoway added.

Taking part in the deal are Orion Mine Finance, la Caisse de dépôt et placement du Québec and subsidiaries of Investissement Québec. The province’s involvement reflects the government’s policy of investing in resource development.

Stornoway has also raked in C$464 million from “public and private offerings of subscription receipts and the private offering of convertible debentures … to allow the immediate commencement of project construction,” the company stated.

Renard, which would be Quebec’s first diamond mine, is scheduled for commissioning in December 2015 and commercial production by June 2016. (July 10 update: The company now states commissioning will begin in late 2016 and commercial production in Q2 2017.)

Late last month Mountain Province Diamonds closed a C$45.5-million private placement that had originally been offered at $35 million. Proceeds will go to the Gahcho Kué project in the Northwest Territories, a 49%/51% JV with De Beers considered “the world’s largest and richest new diamond development project.” Production’s slated for the second half of 2016. Last week Prima Diamond TSXV:PMD announced a 42,000-hectare acquisition immediately south.

Read more about diamond mining and exploration in Canada here and here.

Read about the Diamond Bourse of Canada.

Disclaimer: Prima Diamond Corp is a client of OnPage Media Corp, the publisher of ResourceClips.com. The principals of OnPage Media may hold shares in Prima Diamond.