Ekati Could Add Seven Years with Fox Deep
Dominion Diamond Corporation has reported the results of a preliminary economic assessment (PEA) on the development of an underground operation below the mined out Fox open pit at the Ekati Diamond Mine.
The favourable PEA on the Fox Deep project suggests an internal rate of return of 23 per cent for the company. It projects the processing of 31.3 million tonnes of kimberlite to recover 11 million carats with a base case diamond price of $232 per carat.
If developed, Fox Deep would extend the mine life at Ekati by seven years to fiscal 2042 from fiscal 2035, which also reflects the inclusion of the recently-approved Misery Deep project.
Initial capital development of $628 million and sustaining capital of $192 million would result in total operating expenses of $1.4 billion or $51 per dry metric tonne processed.
A pre-feasibility study (PFS) on Fox Deep is underway and on track for completion in late fiscal 2018.
The Fox pipe was in production as an open pit operation from 2005 to 2014, and produced more than 8.7 million carats in that time.
Incline caving, the mine method of choice indicated in the study, has been used successfully at the Koala underground operation at the Ekati mine. This method has been identified as the most appropriate one to achieve increased height of draw, a lower extraction level, and access to the higher-grade zone identified at depth in the 2016 drill program. The incline cave design is expected to have improved geotechnical stability compared to block caving, and a potentially higher production rate due to a larger number of drawpoints.
A trade-off study between shaft and ramp access to Fox Deep was completed during the PEA and concluded that ramp access is preferable both economically and technically.
The PFS will provide more detail on the economic and technical viability of the project, and will also consider additional production scenarios, including the development of Fox Deep earlier in the mine plan than is assumed in the PEA. The PFS is on track for completion by the end of the current fiscal year.
Subject to the results of the PFS, the Company is considering a supplementary drilling program on the Fox kimberlite in winter/spring 2018, including additional delineation of the pipe at the proposed extraction level, additional hydrogeological and geotechnical investigation, and collection of additional RC grade samples. The Fox kimberlite pipe is located in the Core Zone Joint Venture in which the Company has an 88.9 per cent participating interest.
