In the Lac de Gras area of the Northwest Territories, some 300 km northeast of Yellowknife, Canada’s lone diamond mine churned out 4.56 million carats of stones for the fiscal year ended June 30, 2002.
This represents a 63% increase over the corresponding period a year ago, during which time Ekati produced 2.8 million carats. The improved production is attributed to higher ore grades and higher recoveries of lower-quality diamonds. The increase in carat production has been driven by the introduction of the mine’s second open-pit operation, the Misery pipe, in December 2001 and the continued optimization of the process plant. Up until December, production had come solely from the Panda kimberlite pipe.
Ekati is Canada’s first diamond mine. It officially opened in October 1998 at a capital cost of $900 million and currently produces nearly 4% of the world’s diamond production by weight and 6% by value.
Under the mine development plan outlined in the 1997 feasibility study, five kimberlite pipes, Panda, Misery, Koala, Fox and Sable, are to be mined by open-pit methods, followed, in the case of Panda and Koala, by underground mining. The Panda, Koala and Fox pipes lie within a few kilometres of each other. The Sable pipe is a further 17 km northeast, and the Misery pipe, 25 km southeast, of the main camp.
A sixth, smaller pipe, known as Koala North, has been added to the mine plan. It sits between the Koala and Panda pipes in the existing permitted area. Only 70 metres in diameter, Koala North contains a minable underground reserve of 1.3 million tonnes grading 0.4 carat per tonne. A bulk sample taken from Koala North in February 2001 returned a carat value of US$143. Koala North will serve as an underground test mine in preparation for mining at Panda in 2004 and Koala in 2005. An access ramp has been driven into Koala North under the direction of mining contractor Procon Mining & Tunneling, in joint venture with KeTe Whii. The underground miners cut their first kimberlite in late July.
Proven and probable reserves of the six commercial pipes, at June 30, 2001, totalled 59 million tonnes averaging 1 carat per tonne, based on a 1.5-mm bottom stone size cutoff. Estimated carat values for the individual pipes were recalculated at the end of 2000 and range from a low of US$34 for the Misery pipe to US$168 for Panda. Despite the lower diamond value, Misery contains an open-pit ore reserve of 6 million tonnes grading 3.5 carats per tonne, equivalent to US$119 per tonne of rock.
Breakdown
What follows is a breakdown of the proven and probable reserves for each of the pipes:
n Panda pit — 5.6 million tonnes grading 0.9 carat per tonne at US$168 per carat.
n Panda underground — 2.5 million tonnes grading 0.8 carat per tonne.
n Misery pit — 6 million tonnes grading 3.5 carats per tonne at US$34 per carat.
n Koala pit — 8.8 million tonnes grading 0.9 carat per tonne at US$139 per carat.
n Koala underground — 3.3 million tonnes grading 1.5 carats per tonne at US$138 per carat.
n Fox pit — 16.4 million tonnes grading 0.3 carat per tonne at US$129 per carat.
n Sable pit — 15 million tonnes grading 0.8 carat per tonne at US$82 per carat.
n Koala North underground — 1.3 million tonnes grading 0.4 carat per tonne at US$143 per carat.
n Koala North pit — 100,000 tonnes grading 0.4 carat per tonne.
Open-pit mining has reportedly started on the Koala pipe, with development under way on the Fox pipe. The Ekati mine continues to seek regulatory approval to incorporate two other pipes, Beartooth and Pigeon, into the mine plan, along with the Sable pipe. The addition of Sable, Beartooth and Pigeon would add three years to the mine life for a total of 18 years. BHP initiated the permitting process for these three pipes some three and half years ago.
The land-based Pigeon pipe is 4.5 km northwest of the Panda pit and has a surface area of about 2 hectares. It contains a measured, indicated and inferred open-pit resource of 4.3 million tonnes grading 0.5 carat per tonne. A 114-carat parcel recovered from a 214-tonne mini-bulk drill sample taken in the summer of 1998 from the upper crater zone of Pigeon was valued at US$71 per carat.
Beartooth pipe
The Beartooth pipe, with a surface area of 1 hectare, lies less than 1 km northwest of Panda under a small lake. Open-pit resources are estimated at 1.3 million tonnes grading 1.1 carats per tonne. The value of a 227-carat parcel recovered from a 189-tonne drill sample of the pipe in 1998 was estimated at US$79 per carat.
BHP Billiton has stopped reporting the results of its exploration programs at Ekati since acquiring Dia Met Minerals and its 29% minority stake in the mine more than a year ago. At that time, 138 kimberlites had been found on the Ekati mine properties, including 41 pipes on the outlying Buffer zone claims, which are held 58.5% by BHP Billiton, 31.2% by
BHP Billiton’s share of production from Ekati for the year ended June 30, 2002, was in excess of 3.6 million carats. The mine contributed US$180 million in earnings before net interest and taxation for the year 2002, up from US$128 million in the prior year.
The 2002 financial year-end marks BHP Billiton’s first full year as a combined group. BHP and Billiton merged in late June, 2001. Earnings before interest, tax, depreciation and amortization totalled US$4.91 billion, down 7.2% from 2001. The decline is blamed on weaker commodity markets and lower revenues. Earnings before interest and tax, excluding exceptional items, was US$3.19 billion, off 12.1% from the previous year. Attributed profit in 2002 was US$1.93 billion, down 11.6% from a year ago, and earnings per share fell 12.8% at US32.1. Operating cash flow was maintained at US$3.92 billion.
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