Dominion Diamond Corporation reports positive results of a pre-feasibility study (Misery Deep PFS) on the development of an underground operation below the Misery open pit at the Ekati Diamond Mine (“Ekati mine”) in the Northwest Territories of Canada.
The Company is also providing an update on the Fox Deep project below the mined-out Fox open pit at the Ekati mine. The Misery and Fox kimberlite pipes are located in the Core Zone Joint Venture in which the Company has an 88.9 percent participating interest. Unless otherwise indicated, all amounts are presented on a 100 percent basis, and all financial information is presented in US dollars.
· Inaugural probable mineral reserve of 1.8 million tonnes and 8.7 million carats at Misery Deep
· Positive pre-feasibility study on Misery Deep project, based on underground sublevel retreat mining method, with incremental post-tax net present value of $92 million (Dominion’s share) and internal rate of return of 40%
· Misery Deep enhances production profile at Ekati mine from fiscal 2020 to 2023, with initial capital development of $94 million, 8.7 million carats recovered, and a construction decision expected June 2017
· Ekati mine life extended from fiscal 2034 to fiscal 2035
· Misery pipe continues to produce outstanding large fancy yellow diamonds, providing upside to modelled diamond prices
· Recently recovered “Arctic Sun” diamond is largest fancy yellow stone recovered to date in North America at 65.93 rough carats, with estimated polished value of $5 million
· Preliminary economic assessment (PEA) on Fox Deep project expected in third quarter of fiscal 2018, and pre-feasibility study scheduled for late fiscal 2018.
- Our exciting high-return Misery Deep project, with a post-tax IRR of 40%, is advancing towards development and is expected to enhance our production profile at Ekati over the medium term, said Jim Gowans, Chairman of the Board.
- The new mineral reserve at Misery Deep reflects the addition of high grade ore close to our existing mining operation and demonstrates the near- to longer-term upside potential at known kimberlites in the Lac de Gras district.”
Misery Deep Project – Positive Pre-Feasibility Study:
The Misery Main pipe is currently in production as an open pit operation, and is expected to account for approximately 20 procent of tonnes processed and approximately 60 percent of carats recovered at the Ekati mine in fiscal 2018.
The Misery Deep PFS evaluated the underground development of the Misery Main pipe as an incremental development opportunity to the existing mine plan. The net present value (NPV) calculation for Misery Deep represents the Company’s share of the incremental NPV.
This analysis includes the positive cash flow effects of the Misery Deep project and incorporates a deferral of the processing of lower value ore from the Pigeon pipe until the end of the Jay project in fiscal 2034. Inclusion of high value ore from Misery Deep enhances the production profile at the Ekati mine from fiscal 2020 to fiscal 2023 relative to the life of mine plan in the most recent technical report, entitled “Ekati Diamond Mine, Northwest Territories, Canada, NI 43-101 Technical Report” which has an effective date of July 31, 2016. It also extends the mine life at the Ekati mine from fiscal 2034 to fiscal 2035.
In 2016, Dominion completed a pre-feasibility study on the Sable project and a feasibility study on the Jay project. These studies demonstrated that the Ekati mine life will extend beyond 2030, and that a substantial opportunity existed at the Misery pit after the completion of open pit mining and before the use of the pit as a water management facility for the Jay project.
A concept study was completed in the summer of 2016, which resulted in the mobilization of an exploration drill rig to the Misery pit in September 2016. A 15-hole core drilling program was conducted between October 2016 and January 2017 and totaled more than 2,200 metres.
The results confirmed the modelled pipe size at depth, and significantly improved grade data coverage based on historical results from reverse circulation (RC) drilling bulk samples and 2016/2017 micro-diamond analysis. Potential exists for further conversion of inferred mineral resources to indicated mineral resources at depth and would require additional drilling to improve the understanding of grade, and geotechnical and hydrogeological conditions.
The pre-feasibility study is based on the mining of Misery Deep from calendar 2018 to mid-calendar 2022. The mine plan includes the extraction of 1.8 million tonnes of kimberlite on five underground production levels, using a sublevel retreat method similar to that employed at the Koala North pipe. A total of 8.7 million carats are expected to be recovered from Misery Deep.
Dominion expects to file permit applications for the Misery Deep project in the third quarter of calendar 2017.
The Company compiled and prepared the Misery Deep PFS with the assistance of its consultant Peter Ravenscroft, FAusIMM, of Burgundy Mining Advisors Ltd.
