Mining News: Northern Neighbors: Study indicates Sable can extend Ekati Mine to 2033

Dominion Diamond Corp. Feb. 22 reported positive results of a pre-feasibility study for mining the Sable kimberlite pipe located 17 kilometers (10.5 miles) north-northwest of the existing Ekati mine infrastructure in Northwest Territories. The pre-feasibility study updates certain key economic and technical assumptions regarding the Sable project from the preliminary economic assessment published in September. The Sable pipe lies beneath Sable Lake within the Core Zone Joint Venture property in which the company holds an 88.9 percent interest. Development of Sable will require construction of an access road, site infrastructure, and sedimentation pond allowing Sable Lake to be dewatered ahead of the start of pre-stripping operations. The pre-feasibility study estimates US$142 million of capital expenditures to develop Sable, plus US$85 million of capital expenditures for pre-stripping. Production is scheduled to begin in 2019 and the Sable pipe is estimated to produce 10.1 million carats of diamonds from 12 million metric tons of kimberlite averaging roughly 0.8 carats per metric ton. Using a base case diamond price of US$140 per carat, the Sable pipe is estimated to produce a post-tax net present value (7 percent discount) of US$137 million and an internal rate of return of 16.2 percent. The Sable pre-feasibility study evaluated the development of the Sable pipe as an incremental development opportunity of the Jay project, and the net present value calculation for Sable represents Dominion’s share of the incremental NPV. Incorporating production from Sable into the Jay kimberlite deposit will keep the existing Ekati process plant at its full capacity until 2033 – with Sable processing ending in 2027. Sable’s higher value ore will allow for optimal mine sequencing and operational flexibility to maximize the value of the Ekati operation. Dominion said it has entered into contracts for substantially the entire fiscal year 2017 Sable construction program, which is focused on the establishment of an all season access road to the project area. Construction of the rock dams and site infrastructure is expected to take place in fiscal year 2018; dewatering and pre-stripping in fiscal year 2019; and mining and processing of kimberlite by late that year. The company plans to re-evaluate and further optimize the Sable mining and processing schedule based on the results of a feasibility study for Jay, which is slated for completion in May.

- Shane Lasley