After 25 years, the Ekati discovery still rocks the NWT, mining and the world of diamonds
by Greg Klein
This is the first of a two-part feature. See Part 2.
“You know, there’s something fishy going on around Lac de Gras.”
Tom Hoefer remembers hearing that from a local mining guy who dropped by his Yellowknife office one autumn day in 1991. “At the time nobody really cared about Lac de Gras because that was granite country,” Hoefer explains. But a visit to the mining recorder’s office showed someone staked “a huge block of ground, abnormally large. Doubly suspicious, I think it was registered to Norm’s Manufacturing or Norm’s Mattress Company or something. It was so bizarre. Someone was hiding something.”
Hoefer’s friend offered an explanation. “The only thing I think this could be for is diamonds.” He had previous experience with Monopros, De Beers’ Canadian exploration company. He was also an habitué of the Miner’s Mess, a YK cafe where industry rumours circulated as thickly as the cigarette smoke.
The buzz was confirmed on a date variously given as November 6 or 7, 1991. That’s when the secretive Chuck Fipke stopped pretending to be a gold explorer and faxed a Dia Met news release reporting Northwest Territories diamond recovery, some of it gem quality. It was the first significant find in Canadian history.
“Of course it just went crazy,” recounts Hoefer, now executive director of the NWT and Nunavut Chamber of Mines. “We saw the entire Slave province staked in around two years.”
That may well be the biggest staking rush the world’s seen. As crews fanned out across northern and not-so-northern Canada, suppliers couldn’t provide claim posts fast enough. Helicopters couldn’t keep up with demand. Work continued through the winter, despite hostile weather, despite darkness that restricted flying time to six hours or less.
“It just kept getting bigger and bigger,” Hoefer says. But for many people it couldn’t have happened at a better time.
“The junior exploration sector was just about dead,” he recalls. “I think the juniors saw the news as a life preserver. Whether it was real or not, something was going on and they wanted to grab onto it. I think people scraped money from wherever they could, whether they mortgaged houses or borrowed, just to get into this play. They were on their last legs anyway—if you’re going to go down, you might as well go down in flames.”
Competition was all but cutthroat, as recounted in books like Treasure Under the Tundra by L.D. Cross and Matthew Hart’s Diamond: The History of a Cold-Blooded Love Affair. Readers learn of stakers wearing camouflage clothing to evade detection by rivals, of efforts to foil geophysical espionage from enemy aircraft, and of a diplomatic incident provoked by Thor, Eira Thomas’ supposed bodyguard, said to be 50% dog, 50% wolf and 100% chickenshit.
Staking wasn’t all that went crazy. Once a penny stock, Dia Met passed $8 less than three months after the announcement, according to Hart. In other examples, he noted that pre-discovery Aber Resources shot from 25 cents to $1.35, and later to $2.34. An ex-Dia Met employee started SouthernEra Resources at a penny a share. Within months the company hit $1.90. Speculative fever eventually cooled off but, as Aber approached discovery at Diavik in late 1994, its shares shot from $4 to $6 in one day.
Ekati and Diavik, of course, went on to become NWT diamond mines, joined later by De Beers’ Snap Lake. But as the territory’s other mines closed due to depletion or commodity prices, and Snap shut due to technical challenges, Gahcho Kué began operations. That continues Lac de Gras’ status as the world’s third-largest supplier of diamonds by value.
Fipke and Ekati co-discoverer Stewart Blusson succeeded where De Beers had thus far failed. They also helped bring down the giant’s near-monopoly. Dia Met partner BHP, like Aber partner Rio Tinto, couldn’t be intimidated by De Beers, then a company with a reputation for muscling in on much smaller diamond hopefuls. Lac de Gras hastened a process that began when a Rio predecessor started mining diamonds at Western Australia’s Argyle in the early 1980s. De Beers went from controlling about 80% of global rough in the early 1990s to 34% in 2015.
Hart suggested an additional factor to the giant’s decline. The rush “happened in Canada, where the mineral exploration scene is dominated by a host of small, unruly companies, called ‘juniors’…. The idea of yoking such a promoter-driven and combative group to some larger purpose, such as commodity price control, would be laughable.”
Lac de Gras also helped restore confidence in the ethical standards of gems. Holding among the world’s highest environmental and corporate social responsibility standards, Canada guaranteed consumers a source of conflict-free stones. Canadians played a strong role in launching the Kimberley Process, an organization that guards the global diamond market from illicit supply, Hoefer says.
Here at home, diamond miners emphasize community engagement, community responsibility and community benefits, he adds. Lac de Gras mines constitute the NWT’s largest private sector employer, creating 29% of the territory’s GDP. Indirect benefits bring that up to about 40%, according to the Chamber’s data.
“If you look back at where we’ve come from and what we’ve achieved, it really is a cause to celebrate,” he emphasizes. “Now we’re looking forward to the next 25 years. It doesn’t come without challenges, so we have to ask what we can do to have another strong 25 years.”
This is the first of a two-part feature. See Part 2.