Rio Tinto delays Argyle underground decision

Vancouver – A decision by Rio Tinto’s (RTP-N) board of directors on whether the Argyle diamond mine in Western Australia continues as an underground operation has been deferred until later this year.

Delays in sinking the 2.4 km exploration decline have been cited coupled with escalating costs for the tunnel construction, now estimated at about Aus$100 million.

Rio Tinto’s board was originally scheduled to make its decision by mid-2005 to approve underground mining at the world’s largest diamond producer. Cost estimates for the initial phase of development, which include block-caving, have swollen from US$600 million to US$800 million due to rising costs of labour, material and fuel.

Production from the current open pit is expected to cease by 2008. Initial block-caving could extend Argyle’s production by about a decade to 2017, with later-stage sub-level caving potentially adding another several years of mine-life to about 2024.

For the first half of 2005, Argyle produced over 18 million carats of diamonds, up almost 200% from the corresponding period in 2004 when lower grade ore was processed. About 4.7 million tonnes of ore was processed to yield the 18 million carats, giving a recovered grade of over 3.8 carats per tonne.