A glittering future? Canadian diamond reserves
After three years of falling sales, the demand for diamonds is increasing. Michael Forrest talks to Patrick Evans of mining firm Mountain Province about Canadian diamond reserves.
Diamond prices have increased over the past year to a high point not seen since the 1980s. The usual fourth quarter overhang has been replaced by a shortage that mainly results from low production in 2009 and declining stockpiles. Calculating the value of a diamond deposit depends on a combination of size, quality and grade. Diamond resources are valued by the grade of diamonds in the ore, usually measured in carats per 100t (CPHT) and in the quality and size of the stones, with an exponential price increase in the larger sizes and increasing clarity. For example, stones from the Jwangeng mine in Botswana average around US $160 per carat while those from the Udachnaya mine in Russia average US$37/ct. Grade is also important, ranging from 1.7CPHT at the Letseng mine in Lesotho to 311CPHT at Diavik, Canada.
Some of the highest value reserves are found in Canada, where numerous kimberlite pipes are found in ancient cratons that comprise the Canadian shield. The Slave Lake craton hosts the Diavik, Etaki and Snap Lake mines, which have some of highest value resources. Kimberlites are the main host rocks, and diamonds are created when carbon is subjected to great pressures (45-55Kbars) and temperatures (1,050-1,200°C) found in the so-called diamond stability zone, deep in the crust. This zone can only be accessed by those long-lived cratons with deep keels.
Diamond exploration in the Canadian Shield was the success story of the 1990s, with the discovery of a number of high grade and good quality diamondiferous kimberlites. Mountain Province Diamonds Mining Inc. has been exploring in the Slave Lake craton since 1992 when geophysical investigations identified a number of kimberlites. CEO Patrick Evans explains that follow-up geochemistry drilling has identified four diamondiferous kimberlites in the Kennady Lake area, around 300km east of Yellowknife in the North West Territories. Evans continues, ‘The discoveries are above the Arctic tree line in a typical lake-tundra environment. Access in summer is by air to the nearby [26 kilometres away] gravel runway then by helicopter to site. In winter, ice roads can be constructed that eventually connect to Yellowknife and are used to bring in fuel and heavy equipment.’ The regional geology is granite-gneiss with a number of cross-cutting dyke swarms and lineaments trending north-east with a secondary north-west trend. Of the four identified diamondbearing kimberlites, the 5034 North pipe is mainly overlain by 80 metres of country rock that forms a lake peninsula. The remaining pipes, including 5034 Centre, East and West, are covered by Kennady Lake with 10-15 metres of water and 5-15 metres of glacial lake sediments. Together these form the Gahcho Kué project.
Evans explains, ‘Mountain Province progressed exploration from 1992 resulting in the discovery of 5034 kimberlite in 1995 and the Telsa, Tuzo and Hearne diamondiferous kimberlites two years later. In 1997, Mountain Province entered a joint venture with Monopros (later De Beers, Canada) for the development of the deposits.’ The joint venture is 51% De Beers and 49% Mountain Province, and all inputs will be in those proportions. Each company will be responsible for the marketing of stones upon production. In December 2010, the joint venture received a feasibility study on the property by JDS Energy and Mining Inc that was fully compliant with the 43-101 standards of disclosure for mineral projects.
The initial exploration of the area was undertaken by Canamera Geological Ltd for Mountain Province between 1992 and 1994. Almost 1,000 geochemical till samples were taken, and an aeromagnetic survey was followed two years later by 1,842 lake sediment samples. These targeted a 68-hole drill programme that discovered the 5034 kimberlite. In 1996, a 105-tonne bulk sample from large diameter (PQ) drilling was taken from kimberlite 5043. Further exploration by the JV identified the Tesla, Tuzo and Hearne kimberlites in the area. During the period from 1996 to 2008, a number of bulk samples were collected from drill cores, in some cases totalling more than 100 tonnes.
The objective of the bulk samples was to obtain a grade for the kimberlites and to assess the quality of the recovered stones. For example, a bulk sample from the Tuzo pipe was taken in the winter of 2008 by a 24’ (610mm) reverse circulation drill that, in nine holes and 1341m, produced a bulk sample of 565 tonnes. Upon processing, some 1,713 carats were recovered, of which 84% were greater than 1.5mm. The majority of the diamond value contained derives from the stones found in larger diamond size distribution. Even for large parcels of diamonds (10,000ct or more) it is often difficult to obtain enough stones in the larger sizes to confidently estimate an average diamond value of the kimberlite. As a result, it is usual in the diamond industry to model the diamond size distribution or the diamond value distribution to obviate the effects of sample size on the estimation process. In estimating the average diamond value for each kimberlite source, both diamond size and diamond value are required. As not all stones will be recovered by the processing plant, during production stones of less than one millimetre were not included in the reserve estimates.
The feasibility study relied on WWW International Diamond Consultants for diamond valuation. WWW is the recognised international leader in this field, and are the valuers to the Federal Government of Canada for the diamond mines in the Northwest Territories. These values were used in the calculation of the values of the resources and reserves as part of the feasibility study.
These reserves identified in the feasibility make the Gahcho Kué project the world’s largest and richest new diamond development project. Of the 12 major projects currently under development worldwide this one has the highest grade, with more than twice the grade of the Renard, Quebec project of Stornoway Minerals – the second highest.
Mountain Province Diamonds has developed a mining plan that will begin with the 5034 kimberlite in 2015. Waste rock mined from the peninsula where the kimberlite part outcrops will be used to construct roads, hard standing and dykes. Lake dewatering is scheduled for completion in the first quarter of 2015 to allow full-scale waste stripping and exposure of ore. As the kimberlites are mined sequentially, the depleted open pits will be used to store waste and tailings. Conventional drill, blast, truck and shovel methods will be used, with the company purchasing its own fleet.
Evans confirms, ‘Gahcho Kué will be an important development for the local economy and confirms the Canadian shield as prospective terrain for high-quality diamonds. With Ekati, Diavik and Snap Lake, together with the prospects identified by the joint venture, the Slave Lake craton is established as one of the major diamond provinces not just in Canada but globally.’
Patrick Evans - phone: +1 (416) 361-3562 email: firstname.lastname@example.org