Tuesday 17th October 2017

Resource Clips


Posts tagged ‘Stornoway Diamond Corp (SWY)’

Crucial commodities

September 8th, 2017

Price/supply concerns draw end-users to Commerce Resources’ rare earths-tantalum-niobium projects

by Greg Klein

“One of the things that really galls me is that the F-35 is flying around with over 900 pounds of Chinese REEs in it.”

That typifies some of the remarks Commerce Resources TSXV:CCE president Chris Grove hears from end-users of rare earths and rare metals. Steeply rising prices for magnet feed REEs and critical minerals like tantalum—not to mention concern about stable, geopolitically friendly sources—have brought even greater interest in the company’s two advanced projects, the Ashram rare earths deposit in northern Quebec and the Blue River tantalum-niobium deposit in southeastern British Columbia. Now Commerce has a list of potential customers and processors waiting for samples from both properties.

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F-35 fighter jets alongside the USS America:
Chinese rare earths in action.
(Photo: Lockheed Martin)

Of course with China supplying over 90% of the world’s REEs, governments and industries in many countries have cause for concern. Tantalum moves to market through sometimes disturbingly vague supply lines, with about 37% of last year’s production coming from the Democratic Republic of Congo and 32% from Rwanda, according to the U.S. Geological Survey. One company in Brazil, Companhia Brasileira de Metalurgia e Mineração (CBMM), produces about 85% of the world’s niobium, another critical mineral.

As Ashram moves towards pre-feasibility, Commerce has a team busy getting a backlog of core to the assay lab. But tantalum and niobium, the original metals of interest for Commerce, have returned to the fore as well, with early-stage exploration on the Quebec property and metallurgical studies on the B.C. deposit.

The upcoming assays will come from 14 holes totalling 2,014 metres sunk last year, mostly definition drilling. Initial geological review and XRF data suggest significant intervals in several holes, including a large stepout to the southeast, Grove’s team reports.

“We’re always excited to see this project’s drilling results,” he says. “We know we’re in carbonatite basically all of the time and over the last five years, in all the 9,200 metres we’ve done since the last resource calculation, we’ve basically always hit more material than was modelled in the original resource—i.e. we’ve always found less waste rock at surface, we’ve always hit material in the condemnation holes and we’ve always had intersections of higher-grade material. So all those things look exciting for this program.”

Carbonatite comprises a key Ashram distinction. The deposit sits within carbonatite host rock and the minerals monazite, bastnasite and xenotime, which are well understood in commercial REE processing. That advantage distinguishes Ashram from REE hopefuls that foundered over mineralogical challenges. Along with resource size, mineralogy has Grove confident of Ashram’s potential as a low-cost producer competing with China.

As for size, a 2012 resource used a 1.25% cutoff to show:

  • measured: 1.59 million tonnes averaging 1.77% total rare earth oxides

  • indicated: 27.67 million tonnes averaging 1.9% TREO

  • inferred: 219.8 million tonnes averaging 1.88% TREO

A near-surface—sometimes at-surface—deposit, Ashram also features strong distribution of neodymium, europium, terbium, dysprosium and yttrium, all critical elements and some especially costly. Neodymium and dysprosium prices have shot up 80% this year.

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Commerce Resources’ field crew poses at the Eldor property,
home to the Ashram deposit and Miranna prospect.

Comparing Ashram’s inferred gross tonnage of nearly 220 million tonnes with the measured and indicated total of less than 30 million tonnes, Grove sees considerable potential to bolster the M&I as well as increase the resource’s overall size and average grade.

This season’s field program includes prospecting in the Miranna area about a kilometre from the deposit. Miranna was the site of 2015 boulder sampling that brought “spectacular” niobium grades up to 5.9% Nb2O5, nearly twice the average grade of the world’s largest producer, CBMM’s Araxá mine, Grove says. Some tantalum standouts showed 1,220 ppm and 1,040 ppm Ta2O5. Significant results for phosphate and rare earth oxides were also apparent.

Should Miranna prove drill-worthy, the synergies with Ashram would be obvious.

That’s the early-stage aspect of Commerce’s tantalum-niobium work. In B.C. the company’s Blue River deposit reached PEA in 2011, with a resource update in 2013. Based on a tantalum price of $381 per kilo, the estimate showed:

  • indicated: 48.41 million tonnes averaging 197 ppm Ta2O5 and 1,610 ppm Nb2O5 for 9.56 million kilograms Ta2O5 and 77.81 kilograms Nb2O5

  • inferred: 5.4 million tonnes averaging 191 ppm Ta2O5 and 1,760 ppm Nb2O5 for 1 million kilograms Ta2O5 and 9.6 million kilograms Nb2O5

Actually that should be 1,300 kilograms less. That’s the size of a sample on its way to Estonia for evaluation by Alexander Krupin, an expert in processing high-grade tantalum and niobium concentrates. “As with Ashram, we’ve already found that standard processing works well for Blue River,” Grove points out. “However, if Krupin’s proprietary method proves even more efficient, why wouldn’t we look at it?”

We’re always excited to see this project’s drilling results. We know we’re in carbonatite basically all of the time and over the last five years, in all the 9,200 metres we’ve done since the last resource calculation, we’ve basically always hit more material than was modelled in the original resource.—Chris Grove,
president of Commerce Resources

Back to rare earths, Commerce signed an MOU with Ucore Rare Metals TSXV:UCU to assess Ashram material for a proprietary method of selective processing. Others planning to test proprietary techniques on Ashram include Texas Mineral Resources and K-Technologies, Rare Earth Salts, Innovation Metals Corp, the University of Tennessee and NanoScience Solutions at Tufts University in Massachusetts.

Should proprietary methods work, all the better, Grove states. But he emphasizes that standard metallurgical tests have already succeeded, making a cheaper process unnecessary for both Blue River and Ashram.

Potential customers show interest too. Concentrate sample requests have come from Solvay, Mitsubishi, Treibacher, BASF, DKK, Albemarle, Blue Line and others covered by non-disclosure agreements. Requests have also come for samples of fluorspar, a potential Ashram byproduct and another mineral subject to rising prices and Chinese supply dominance.

A solid expression of interest came from the province too, as Ressources Québec invested $1 million in a February private placement. The provincial government corporation describes itself as focusing “on projects that have good return prospects and foster Quebec’s economic development.”

Also fostering the mining-friendly jurisdiction’s economic development is Plan Nord, which has pledged $1.3 billion to infrastructure over five years. The provincial road to Renard helped make Stornoway Diamond’s (TSX:SWY) mine a reality. Other projects that would benefit from a road extension towards Ashram would be Lac Otelnuk, located 80 kilometres south. The Sprott Resource Holdings TSX:SRHI/WISCO JV holds Canada’s largest iron ore deposit. Some projects north of Ashram include the Kan gold-base metals project of Barrick Gold TSX:ABX and Osisko Mining TSX:OSK, as well as properties held by Midland Exploration TSXV:MD.

But, Grove says, it’s rising prices and security of supply that have processors and end-users metaphorically beating a path to his company’s door. And maybe nothing demonstrates the criticality of critical minerals better than a nearby superpower that relies on a geopolitical rival for commodities essential to national defence.

Diamonds—2016 glitter in review

December 22nd, 2016

by Greg Klein | December 22, 2016

The stones began the year still mired in their 2015 slump, in which rough prices reportedly fell 15%. The two biggest players, representing nearly two-thirds of global production, didn’t exactly agree on strategy. De Beers cut production and lowered prices while Alrosa initially boosted production, held prices stable and stockpiled some output. By April De Beers raised prices and Alrosa lowered production. The following month had De Beers talking about a “fragile recovery.”

Diamonds—2016 glitter in review

Sales records for polished got pulverized, though. In May Sotheby’s raked in $32 million for the 15.38-carat Unique Pink in a jewelry sale that totalled a world record $175.1 million. The next day Christie’s scooped up $58.25 million for the 14.62-carat Oppenheimer Blue, “a new record price for any gemstone and per carat.”

Rough rode roughshod over records, too. The week before Sotheby’s and Christie’s big sales, Lucara Diamond TSX:LUC got $63.11 million for its fresh-from-the-mine 812.77-carat Constellation. High expectations led to disappointment in late June, however, when the company rejected a $61-million offer for its 1,109-carat Lesedi La Rona rough stone, the second-biggest diamond ever found. Lucara wanted at least $70 million.

As for Canadian diamond mining, it thrived.

A 100-million-carat production milestone brought celebrations to Diavik, the Northwest Territories JV of Rio Tinto NYSE:RIO and Dominion Diamond TSX:DDC. In July Dominion finally decided to add the Jay pipe and its 78.6 million carats to the company’s majority-held Ekati mine.

The year brought new mines to Canada too. Gahcho Kué, the world’s largest new diamond producer in 13 years, was officially opened in September by partners De Beers and Mountain Province Diamonds TSX:MPV. October saw Stornoway Diamond TSX:SWY do the same at Renard, Quebec’s first diamond mine. It reached commercial production just days before Christmas.

Looking at potential mines-to-be, Peregrine Diamonds TSX:PGD took its Chidliak project on Baffin Island to PEA in July. In Saskatchewan’s Fort à la Corne region, meanwhile, Shore Gold TSX:SGF continued working on a feasibility update for its majority-held Star-Orion South project. Back in the NWT, Kennady Diamonds TSXV:KDI completed its maiden resource in December.

The company’s Kennady North project sits in the same Lac de Gras region hosting Ekati, Diavik and Gahcho Kué. November marked the 25th anniversary of the Chuck Fipke/Stewart Blusson Ekati discovery that triggered the world’s biggest staking rush, brought diamond mining to Canada and helped transform the diamond industry.

In December the vertically integrated company Almod Diamonds announced plans to broaden the NWT diamond industry, the backbone of the territorial economy, by re-opening a Yellowknife cutting and polishing facility.

A few days after that announcement, the allure of diamonds played out differently in an Atlanta department store. Eighty-six-year-old Doris Payne, a determined, unrepentant and often unsuccessful diamond thief, wracked up another arrest. She’s been stealing stones for over sixty years.

Cash ban hits India’s diamond capital, threatens lower-priced trade

December 2nd, 2016

by Greg Klein | December 2, 2016

India’s sudden ban on 500- and 1,000-rupee notes early last month has suspended at least some operations in the northwestern city of Surat, the world capital of diamond cutting and polishing. Various sources credit the city with transforming approximately 80% of the globe’s rough into jewelry. India is also the world’s third-largest consumer of diamond-ensconced bling.

Cash ban hits India’s diamond capital, threatens lower-priced trade

NDTV reports businesses closing as the lack of cash prevents them from buying rough and paying employees. The government ordered citizens to deposit the notes, worth about $9.77 and $19.54 Canadian, and conduct transactions electronically.

Governments that have limited the use of cash have cited the need to combat terrorism, money laundering, corruption, counterfeiting, tax evasion and the underground economy. Rapaport News stated India’s underground economy constituted 23.2% of GDP, according to 2007 data in the latest World Bank survey.

Only about 30% of Surat’s diamond cutters have bank accounts, NDTV added.

“This industry has been working on an illegal mode of payment in cash until now and to shift to a cashless system will take at least four to six months,” one business owner told the news outlet. But he stated the government decree will eventually benefit merchants and workers. Another source said he expects the suspension to last at least one and a half months.

The two denominations reportedly accounted for 85% or 86% of Indian money in circulation. “The liquidity freeze could influence a global slowdown in demand for lower colour and clarity polished, and in very small melee stones,” Rapaport stated.

Following the first tender of Quebec diamonds in Antwerp last month, Stornoway Diamond TSX:SWY president/CEO Matt Manson attributed India’s demonetization to reduced prices and demand for smaller and lower-quality stones. He said some were removed from the event, to be sold later.

India’s government plans to issue new denominations of 500 and 2,000 rupees. But, NDTV reported December 2, an enormous hoard of contraband seized from a group of low-paid government employees included 57 million rupees (in Canuck terms, over $1.11 million) in so-far uncirculated 2,000-rupee notes.

Stornoway Diamond completes first sale

November 23rd, 2016

by Greg Klein | November 23, 2016

Diamantaires in Antwerp got their first look at Quebecois gems over the last nine days, spending $10.2 million on 38,913 carats from Stornoway Diamond’s (TSX:SWY) Renard mine. The average price came to US$195 per carat.

Stornoway Diamond completes first sale

Renard came in ahead of schedule
for construction, processing and sales.

“Pricing met or was close to our expectations on most items,” president/CEO Matt Manson said. “Recent events in India surrounding demonetization have impacted pricing and demand for certain smaller and lower-quality items and, as a result, a quantity of these were withdrawn from the sale. These will be sold at a later date. Because of this, and because of a higher than expected proportion of small diamonds recovered during the ramp-up period, the result of this first sale cannot be taken as representative of the longer-term pricing profile of the project.”

The sale took place two months earlier than anticipated. Three more sales have been scheduled for Q1 2017.

Having begun ore processing in July, Renard has already surpassed the fiscal year’s guidance of 220,000 carats at an average grade of 97 carats per hundred tonnes. As of November 15 the mine gave up 261,353 carats, averaging 107 cpht. Stornoway credited “a better than expected mix of ore available within the open pit for processing.”

The company expects to reach commercial production, 60% of capacity, by year-end. Stornoway estimates average production will reach 1.8 million carats annually for the mine’s first 10 years, selling at an average $155 per carat in March 2016 terms.

Renard has a 14-year life expectancy.

About 100 kilometres south, Stornoway holds the Adamantin exploration project, where 11 kimberlites drilled so far failed to reveal diamonds.

Stornoway Diamond president/CEO Matt Manson celebrates the beginning of gemstone production in Quebec

November 16th, 2016

…Read more

Renard ceremony marks official opening of Quebec’s first diamond mine

October 19th, 2016

by Greg Klein | October 19, 2016

The event marked the “culmination of approximately 20 years of work to bring the Renard project from a greenfield exploration concept to a fully operating new diamond mine,” pointed out Stornoway Diamond TSX:SWY president/CEO Matt Manson. Quebec’s first diamond mine, and Canada’s second to celebrate a grand opening in less than two months, Renard remains on schedule for commercial production by year-end.

Among staff, stakeholders and community reps in attendance were Pierre Arcand, Quebec’s Minister of Energy and Natural Resources, and Chief Richard Shecapio of the Cree Nation of Mistissini.

Renard ceremony marks official opening of Quebec’s first diamond mine

The 20-year project opened well ahead of schedule, having beat its target dates several times. Plant commissioning began in June, eight weeks ahead of a revised schedule that was already five months ahead of a previously projected timeline. Ore processing began in July and went through 91,010 tonnes by September 30, producing 111,556 carats, averaging 123 carats per hundred tonnes. Twenty-one stones surpassed 10.8 carats.

The first sale of Renard diamonds begins in Antwerp on November 14, two months earlier than anticipated.

Renard’s expected to average 1.6 million carats annually for an initial 14 years. The first decade should do even better, with an annual average of 1.8 million carats selling at an average $155 per carat.

Stornoway sees a potentially longer mine life. In addition to a probable reserve of 22.3 million carats, Renard has another 7.9 million carats of indicated resources and 13.35 million carats inferred, with all kimberlites open at depth. The company expects to move from open pit to underground in 2018.

Canada’s only diamond mine accessible by all-season road, the James Bay region operation is fuelled by LNG.

The company has also been drilling kimberlites at its Adamantin project about 100 kilometres south, but so far without success.

Another grand opening last month celebrated the world’s largest new diamond mine in 13 years, the Northwest Territories’ Gahcho Kué. A 51%/49% JV of De Beers and Mountain Province Diamonds TSX:MPV, the fly-in/fly-out operation’s expected to produce 54 million carats over a 12-year life, with average prices estimated at $150 per carat.

Why stop there?

September 20th, 2016

The world’s biggest new diamond mine hardly satisfies NWT appetites

by Greg Klein

Self-congratulation might have been irresistible as 150 visitors from across Canada and the world flocked to a spot 280 kilometres northeast of Yellowknife to attend Gahcho Kué’s official opening on September 20. But there’s no evidence the mining and exploration crowd will waste much time resting on their laurels. JV partners De Beers and Mountain Province Diamonds TSX:MPV continue their pursuit of additional resources. And within sight of the Northwest Territories’ new mine, Mountain Province spinout Kennady Diamonds TSXV:KDI hopes success will repeat itself right next door.

Twenty-one years in the making and the world’s largest new diamond mine in 13 years, Gahcho Kué’s expected to give up 54 million carats over a 12-year lifespan. Average price estimates for the three pipes come to $150 per carat. That would provide Canada with gross value added benefits of $6.7 billion, $5.7 billion of that going to the NWT, which would gain nearly 1,200 jobs annually, according to an EY study released earlier this month.

The world’s biggest new diamond mine hardly satisfies NWT appetites

Gahcho Kué partners hope to extend the
mine well past its 12-year projection.

That’s a strong rebound for the territory’s biggest private sector industry, following last year’s shutdown of the Cantung Tungsten mine and De Beers’ Snap Lake. The closures left the NWT with just two mines, both diamond operations in the Lac de Gras region that also hosts the newcomer.

But those two mines, the Rio Tinto NYSE:RIO/Dominion Diamond TSX:DDC 60/40 JV at Diavik and Dominion’s majority-held Ekati, maintained Canada’s place as the world’s third-largest producer by value.

Holding 51% and 49% respectively of Gahcho Kué, De Beers and Mountain Province hope to prolong its duration. Rather expansively maybe, the slightly junior partner outlines a multi-phase program.

Should all go to plan, Phase II would upgrade resources into reserves, maybe adding as much as five years to the operation. Phase III would deepen the Tuzo pipe, bringing another three years. Phase IV would do the same to the 5034 and Hearne kimberlites, as well as bring on the new Tesla pipe. If plans, projections and prayers come to fruition, Gahcho Kué might end up with more than 20 years of operation. With optimism drowning out any puns regarding pipe dreams, Phase V calls for “new targets.”

At least that’s the tale told by Mountain Province. De Beers acts as project operator.

Another company also holds high hopes, as well as about 71,000 hectares to the north, west and south of Gahcho Kué. Mountain Province spun out the Kennady North project into Kennady Diamonds, which has been advancing its own ambitious timeline.

The project’s Kelvin kimberlite has a maiden resource slated for this quarter and a PEA for Q4. Subject to those results, the company hopes to take Kelvin to feasibility next year, and to complete resource estimates for the Faraday 1, 2 and 3 kimberlites less than three kilometres northeast.

On the eve of the Gahcho Kué grand opening, Kennady pronounced itself pleased with this year’s 612-tonne bulk sample recovery, averaging 2.09 carats of commercial-sized stones per tonne from Kelvin’s north limb. With last year’s south limb grade coming to 2.02 carats per tonne, the results show “remarkable consistency in overall diamond grade across the full extent of the body,” said president/CEO Rory Moore. “This is a positive attribute from both an evaluation and a mining perspective.”

In a crucial step, a parcel goes to Antwerp next month for a price evaluation, with results expected about three weeks later.

The world’s biggest new diamond mine hardly satisfies NWT appetites

Kennady Diamonds hopes for a
glittering future just north of Gahcho Kué.

Two rigs currently have the Faraday kimberlites subject to an 8,000-metre summer program of both exploration and delineation drilling. Out of 15 holes reported so far, 14 revealed kimberlite.

The summer program follows a 10,712-metre winter campaign that discovered Faraday 3 as well as four diamonds in drill core, two each from Faradays 1 and 3.

Two mini-bulk samples released this year for Faraday 1 averaged 4.65 carats per tonne and three carats per tonne respectively. Faraday 2 minis averaged 2.69 carats, 3.04 carats and 4.48 carats per tonne.

Last month Kennady expanded its property by another 4,233 hectares directly south of Gahcho Kué. But the company’s focus remains on the Kelvin-Faraday corridor north of the new mine.

As for De Beers, its other Canadian focus since Snap Lake’s demise has been the Victor mine in Ontario’s James Bay region. With less than five years of operation left, it too faces doom. Another seven years could potentially come from the Tango kimberlite, seven kilometres away and now undergoing a federal environmental review.

Local relations, however, have taken an unexpected turn. Last week De Beers Canada chief executive Kim Truter told CBC the company would go beyond the duty to consult and seek the Attawapiskat community’s outright consent for Tango. “It’s pointless us actually operating in these first nations areas if we don’t have local support,” he said.

The network added, “Support has been shaky in the first nation since the signing of the original agreement with De Beers in 2005. Band officials boycotted and picketed the grand opening of the mine in 2008 and the road into the mine has been blockaded several times, including in 2013.”

But Truter’s remarks drew an angry response from newly elected chief Ignace Gull, the Timmins Press reported September 19. The paper quoted a social media post in which he stated, “Attawapiskat is in a midst of suicide crisis and we need to deal with this first and they have to back off instead of threatening us.”

In Quebec’s James Bay region, Stornoway Diamond TSX:SWY began ore processing at its Renard project in July, expecting to achieve commercial operation by year-end. The province’s first diamond mine expects to average 1.6 million carats annually for an initial 14 years.

Back at Gahcho Kué, visitors celebrated the grand opening as a possible strike loomed. Last week CBC reported that mediation had broken down between a contractor and a Teamsters local representing around 60 camp kitchen and cleaning staff.

Canada’s new diamond mines: Gahcho Kué ramping up, Renard catching up

August 3rd, 2016

by Greg Klein | August 3, 2016

“On time, on budget and in a challenging environment,” as De Beers CEO Bruce Cleaver proudly noted, the world’s largest new diamond mine has begun full commissioning. The Northwest Territories open pit should reach full production in Q1 next year with average output of 4.5 million carats annually over its 13-year lifespan, according to an August 3 statement from Anglo American. Or a 12-year life, according to a same-day statement from Mountain Province Diamonds TSX:MPV.

Canada’s new diamond mines: Gahcho Kué ramping up, Renard catching up

Sub-arctic conditions hardly deter De Beers,
which has opened three diamond mines in Canada’s north.

The company owns a 49% stake in the JV, with operator De Beers holding the rest. De Beers, in turn, is held 85% by Anglo and 15% by Botswana.

Mountain Province reported two large gem-quality stones recovered over the past few days, weighing in at 12.1 carats and 24.65 carats. The company expects its first diamond sale by year-end.

Located about 280 kilometres northeast of Yellowknife, Gahcho Kué sits in the diamondiferous Lac de Gras region that also hosts Dominion Diamond’s (TSX:DDC) majority-held Ekati mine, the Rio Tinto NYSE:RIO/Dominion 60/40 JV at Diavik, and Snap Lake, De Beers’ first mine outside Africa. De Beers also operates the Victor mine in northern Ontario.

Snap Lake, a money-loser since opening in 2008, shut down last December. The company plans to flood the mine unless a buyer can be found. Output from Ekati and Diavik, however, sustained the NWT’s rank as the world’s third-largest diamond producer by value.

The two operations also sustained mining as the NWT’s largest private sector employer, despite the closures of Snap Lake and North American Tungsten’s Cantung mine in October 2015.

In Quebec’s James Bay region, meanwhile, Stornoway Diamond TSX:SWY began processing ore at its Renard project last month, slated to achieve full nameplate capacity within nine months. The company will declare commercial production after 30 days of processing ore at 60% of nameplate capacity, expected to happen by year-end. The combined open pit/underground operation would average 1.8 million carats annually for the first 10 years of its 14-year life. Average prices have been estimated at $155 per carat.

Read more about Canadian diamond projects.

See Chris Berry’s report on long-term diamond demand.

Diamonds for future demand

July 8th, 2016

Dominion gives Jay the go-ahead while Peregrine brings Chidliak to PEA

by Greg Klein

Spurned by the forces driving gold and silver, diamonds’ sparkle may have sputtered. But looking further ahead Canadian companies remain optimistic, and demonstrably so. This week Dominion Diamond TSX:DDC announced plans to move forward with the previously postponed Jay pipe addition to the Northwest Territories’ Ekati mine. One day later Peregrine Diamonds TSX:PGD outlined an ambitious scenario for Chidliak, suggesting a possible Nunavut gem operation by 2021. Meanwhile progress continues on two very near-term producers in the NWT and Quebec.

Baffin Island remoteness be damned, Chidliak could come online for well under a half billion dollars, according to a July 7 preliminary economic assessment. The study foresees Phase I open pit mining beginning with the property’s CH-6 pipe, followed by CH-7, 15 kilometres away. Output would average 1.2 million carats per year for a decade, peaking at 1.8 million carats.

Dominion gives Jay the go-ahead while Peregrine brings Chidliak to PEA

Peregrine Diamonds sees potential to expand existing
resources and find new deposits on its Nunavut kimberlites.

Using a 7.5% discount rate, the PEA calculates an after-tax NPV of $471.2 million and a 29.8% IRR. Initial capex would come to $434.9 million with payback in two years. Costs include 160 kilometres of all-weather road to the territorial capital of Iqaluit.

Not mentioned in the announcement, however, is the town’s lack of port facilities. The island’s only operating mine is Mary River, 935 kilometres north of Iqaluit. Operator Baffinland Iron Mines runs its own port at Milne Inlet, another 100 kilometres north. The company has proposed replacing the road with a railway.

A March diamond evaluation gave CH-6 an average $149 per carat and CH-7 $114. But assuming 2.5% annual price increases, life-of-mine averages would come to $178 and $153 respectively, Peregrine stated.

CH-6 holds by far the largest resource, with an inferred 11.39 million carats compared with CH-7’s inferred 4.23 million. Both resources remain open at depth.

Anticipating the direction that pre-feas studies could take, company president/CEO Tom Peregoodoff spoke of “optimization studies of the Phase I mine, including the expansion of the CH-6 resource to depth and through the development of a potential Phase II resource expansion from the numerous other kimberlites on the property, of which six currently show economic potential.” Chidliak’s 564,396 hectares host 74 known kimberlites.

A few thousand sub-arctic kilometres away, the world’s third-largest diamond miner by value has put its on-again, off-again Jay pipe back on again. The Ekati mine’s most significant undeveloped deposit, the kimberlite holds a probable reserve of 78.6 million carats.

With two joint ventures in play, Ekati’s ownership gets a bit complicated. Dominion holds 88.9% of the Core zone, which hosts the current operation. Jay is located in the Buffer zone, 65.3%-held by Dominion. The new open pit would rely on Ekati’s existing infrastructure about 30 kilometres away, resulting in a total capex of US$647 million funded through existing loot and internal cash flow.

The project’s new feasibility reported Jay’s total post-tax NPV at US$398 million with a 15.6% IRR. Dominion’s share shows a post-tax NPV of US$278 million and a 16.7% IRR. Jay’s operations would run from 2022 to 2033, two years longer than envisioned by last year’s pre-feas, with ore processing continuing into 2034.

Jay would operate concurrently with the 10.1-million-carat-reserve Sable pipe, already under development, from 2021 to 2023. The current plan has Jay operating solo from 2024 to 2032. But the company intends to “pursue other incremental growth opportunities near our existing operations,” said CEO Brendan Bell.

Last month’s Ekati plant fire, however, forced Dominion to suspend operations on the Pigeon deposit. Mining and stockpiling continues at Ekati’s Misery open pit and Koala underground operations. Preliminary estimates call for about $25 million in plant repairs. Ekati’s 2017 guidance dropped from 5.6 million to 4.7 million carats.

Dominion also has a 40% stake in Diavik, the NWT’s other diamond producer, with Rio Tinto NYSE:RIO holding the rest. The mine’s fourth pipe, the 10-million-carat A-21, has production scheduled for H2 2018. Saying the company’s stock price doesn’t reflect the value of its assets, Dominion this week also announced a proposal to buy back around 7.2% of its issued and outstanding shares.

Meanwhile Canada’s next diamond mine—and the world’s biggest new diamond development—has production slated to begin this quarter. A 51%/49% JV of De Beers and Mountain Province Diamonds TSX:MPV, Gahcho Kué’s expected to average 4.5 million carats a year for 12 years.

Along with those three mines in the NWT’s Lac de Gras region and De Beers’ Victor mine in Ontario, Canada will gain a fifth operation with Stornoway Diamond’s (TSX:SWY) Renard project in Quebec. This one has production scheduled by year-end, bringing an average 1.8 million carats annually for the first 10 years of a 14-year lifespan.

Stornoway Diamond increases Renard’s reserve, life and guidance; advances start date

March 31st, 2016

by Greg Klein | March 31, 2016

Not for the first time, Stornoway Diamond TSX:SWY has exceeded its own expectations for Quebec’s first diamond mine. Late March 30 the company announced increases to Renard’s reserve, lifespan and anticipated output, as well as an earlier start date for commercial production. The company now expects to start processing ore by the end of September, with commercial production (60% of nameplate capacity) beginning by year-end. That marks a five-month improvement over the previously announced start date.

Among other felicitous news, Stornoway announced a 25% increase in probable reserves, from 17.9 million to 22.3 million carats. Grade, however, fell from 75 to 67 carats per hundred tonnes. That “reflects the addition of new lower-grade material within the open pit and underground mining envelopes,” explained president/CEO Matt Manson.

Stornoway Diamond increases reserve, life and guidance; advances Renard start date

Renard’s earlier start date will put a second new
Canadian diamond mine into production this year.

Those 4.4 million extra carats extend Renard’s life expectancy from 11 to 14 years.

But average price estimates dropped to $155 per carat from $190 estimated in March 2014. The company noted a 19% decrease in world average rough prices during those two years. In early February, diamond analyst Paul Zimnisky forecast a 2016 global average of $92 per carat.

Renard’s annual production forecasts for the first decade now come to 1.8 million carats, compared to 1.6 million previously predicted. Beginning in 2018 Stornoway expects to process 2.5 million tonnes per year (7,000 tpd), boosting the earlier forecast of 2.2 million tonnes per year or 6,000 tpd.

An updated mine plan calls for a modified design for the Renard 2-Renard 3 open pit and a deepening of the Renard 2 underground mine.

Initial capex drops to $775 million, down from $811 million estimated in April 2014. The life-of-mine capex increases, however, from $1.013 billion to $1.045 billion.

A dramatic change puts the after-tax NPV at $974 million, previously $391 million, using a 7% discount rate.

The project now boasts “a cash operating margin of 59% after all taxes, royalties and the Renard diamond stream, despite the substantial recent reduction in rough diamond prices,” stated Manson. “We look forward to building on our track record to date of solid project execution as we bring Renard into production later this year.”

As for Canada’s other diamond mine-in-progress, Gahcho Kué reached 87% completion as of March 14 and remains on schedule for H2 production, Mountain Province Diamonds TSX:MPV reported. With a probable reserve totalling 55.5 million carats, it’s the “world’s largest new diamond mine and projected to be amongst the highest margin diamond mines due to the high grade and open-pit nature of the operation,” according to the company.

Mountain Province holds a 49% stake in the Northwest Territories JV with 51% owner De Beers.

See Chris Berry’s research report on long-term diamond demand.