Market Snapshot
  • U.S.
  • Europe
  • Asia
Ticker Volume Price Price Delta
DJIA 16,408.54 -16.31 -0.10%
S&P 500 1,864.85 2.54 0.14%
NASDAQ 4,095.52 9.29 0.23%
Ticker Volume Price Price Delta
STOXX 50 3,155.81 16.55 0.53%
FTSE 100 6,625.25 41.08 0.62%
DAX 9,409.71 91.89 0.99%
Ticker Volume Price Price Delta
NIKKEI 14,516.27 98.74 0.68%
TOPIX 1,173.37 6.78 0.58%
HANG SENG 22,760.24 64.23 0.28%

Dominion Diamond Corporation Issues Updated Mine Plans for the Ekati and Diavik Diamond Mines



   Dominion Diamond Corporation Issues Updated Mine Plans for the Ekati and
                             Diavik Diamond Mines

  PR Newswire

  TORONTO, February 3, 2014

TORONTO, February 3, 2014 /PRNewswire/ --

Dominion Diamond Corporation (TSX:DDC, NYSE:DDC) (the "Company") is pleased to
release an updated life-of-mine plan for each of the Ekati and Diavik Diamond
Mines, including current estimates for anticipated annual production by pipe,
with associated operating costs and capital costs.

Highlights:

  * Both mines are performing well; Diavik as an all underground mine and
    Ekati as a combination open pit-underground mine.
  * The operating cost forecasts in the updated Diavik mine plan demonstrate
    substantial savings compared with the previously published mine plan
    (2012), whilst mining and processing an increased amount of ore.
  * The new Ekati Mine Plan includes the first detailed production forecast
    based on reserves only to the Dominion Diamond fiscal year end (January
    31st) with production currently forecast to run through to fiscal 2020.
  * The synergies, cost savings and efficiencies brought about by the
    integration of the Ekati and Diavik sales and sorting processes and
    resources are already demonstrating benefits.

Unless otherwise specified, all financial information is presented in Canadian
dollars, on a 100% basis, and references to years are to calendar years unless
otherwise stated. The Company has an 80% interest in the Ekati Diamond Mine as
well as a 58.8% interest in the surrounding areas, and a 40% interest in the
Diavik Diamond Mine.

About Dominion Diamond Corporation

Dominion Diamond Corporation is a Canadian diamond mining company with
ownership interests in two of the world's highest rock value diamond mines.
Both mines are located in the low political risk environment of the Northwest
Territories of Canada. The Company is the fourth largest diamond producer by
value globally and the largest diamond mining company by market
capitalization, listed on the Toronto and New York Stock Exchanges.

The Company operates the Ekati Diamond Mine through its 80% ownership as well
as a 58.8% ownership in the surrounding areas containing additional resources.
It also sells diamonds from its 40% ownership in the Diavik Diamond Mine.

For more information, please visit  http://www.ddcorp.ca

Forward-Looking Information

Information included herein that is not current or historical factual
information, including information about estimated mine life and other plans
regarding mining activities at the Ekati Diamond Mine and Diavik Diamond Mine,
estimated reserves and resources at, and production from, the Ekati Diamond
Mine and Diavik Diamond Mine, projected capital and operating costs, and
future diamond prices, constitute forward-looking information or statements
within the meaning of applicable securities laws. Forward-looking information
can generally be identified by the use of terms such as "may", "will",
"should", "could", "expect", "plan", "anticipate", "foresee", "appears",
"believe", "intend", "estimate", "predict", "potential", "continue",
"objective", "modeled", "hope", "forecast" or other similar expressions
concerning matters that are not historical facts. Forward-looking information
is based on certain factors and assumptions including, among other things,
mining, production, construction and exploration activities at the Company's
mineral properties; mining methods; currency exchange rates; required
operating and capital costs; labour and fuel costs; world and US economic
conditions; future diamond prices; and the level of worldwide diamond
production. While the Company considers these assumptions to be reasonable
based on the information currently available to it, they may prove to be
incorrect. Forward-looking information is subject to certain factors,
including risks and uncertainties which could cause actual results to differ
materially from what the Company currently expects. These factors include,
among other things, the uncertain nature of mining activities, including risks
associated with underground construction and mining operations, risks
associated with joint venture operations, including risks associated with the
inability to control the timing and scope of future capital expenditures, the
risk that the operator of the Diavik Diamond Mine may make changes to the mine
plan and other risks arising because of the nature of joint venture
activities, risks associated with the remote location of and harsh climate at
the Company's mineral property sites, risks resulting from the Eurozone
financial crisis, risks associated with regulatory requirements, the risk of
fluctuations in diamond prices and changes in US and world economic
conditions, the risk of fluctuations in the Canadian/US dollar exchange rate
and cash flow and liquidity risks. Actual results may vary from the
forward-looking information. Readers are cautioned not to place undue
importance on forward-looking information, which speaks only as of the date of
this disclosure, and should not rely upon this information as of any other
date. Due to assumptions, risks and uncertainties, including the assumptions,
risks and uncertainties identified above and elsewhere in this disclosure,
actual events may differ materially from current expectations. The Company
uses forward-looking statements because it believes such statements provide
useful information with respect to the currently expected future operations
and financial performance of the Company, and cautions readers that the
information may not be appropriate for other purposes. While the Company may
elect to, it is under no obligation and does not undertake to, update or
revise any forward-looking information, whether as a result of new
information, future events or otherwise at any particular time, except as
required by law. Additional information concerning factors that may cause
actual results to materially differ from those in such forward-looking
statements is contained in the Company's filings with Canadian and United
States securities regulatory authorities and can be found at 
http://www.sedar.com   and  http://www.sec.gov , respectively.

2014 Mine Plan for Ekati and Diavik Diamond Mines

Introduction

Dominion Diamond Corporation (the "Company") is a Canadian diamond mining
company with ownership interests in two of the world's highest rock value
diamond mines. The Company supplies rough diamonds to the global market from
its controlling interest in the Ekati Diamond Mine, and its 40% ownership
interest in the Diavik Diamond Mine, both located approximately 300 km
northeast of Yellowknife in the Canada'sNorthwest Territories.

The Diavik Diamond Mine is an unincorporated joint arrangement (the "Diavik
Joint Venture") between Diavik Diamond Mines (2012) Inc. ("DDMI") (60%) and
Dominion Diamond Diavik Limited Partnership ("DDDLP") (40%) where DDDLP holds
an undivided 40% ownership interest in the assets, liabilities and expenses of
the Diavik Diamond Mine. DDMI is the operator of the Diavik Diamond Mine. DDMI
and DDDLP are headquartered in Yellowknife, Canada. DDMI is a wholly owned
subsidiary of Rio Tinto plc ("Rio Tinto") of London, England.

The Ekati Diamond Mine was acquired by the Company from BHP Billiton on April
10, 2013. The Ekati Diamond Mine consists of the Core Zone, which includes the
current operating mine and other permitted kimberlite pipes, as well as the
Buffer Zone, an adjacent area hosting kimberlite pipes having both development
and exploration potential. The Core Zone Joint Venture is held 80% by the
Company and 10% each by Dr. Charles Fipke and Dr. Stewart Blusson. It
encompasses 176 mining leases, totalling 173,024 ha, and hosts 111 known
kimberlite occurrences including the Koala, Koala North, Fox, Misery, Pigeon,
and Sable kimberlite pipes. The Buffer Joint Venture is held 58.8% by the
Company, 10% by Dr. Charles Fipke, and 31.2% by Archon Minerals Ltd. It
contains 106 mining leases covering 89,151.6 ha, and hosts 39 known kimberlite
occurrences including the Jay and Lynx kimberlite pipes. Dominion Diamond
Ekati Corporation, a wholly-owned subsidiary of the Company, is the operator
of the Ekati Diamond Mine.

Given that each mine has different ownership structures, operators, and
operational year ends, the mine plans are each presented separately, on a 100%
basis. Other economic factors that are directly related to the Company, such
as marketing costs, diamond prices, and private royalties, are discussed
separately at the end of this document. Unless otherwise specified, all
financial information is presented in Canadian dollars, on a 100% basis, and
references to years are to calendar years.

Diavik Diamond Mine - Production

This updated plan is derived from DDMI's estimates, based on the current
reserve and resources as of December 31, 2012. The reserve and resource
information that is the basis for this plan was prepared by or under the
supervision of Calvin G. Yip, P. Eng., an employee of DDMI and a Qualified
Person within the meaning of National Instrument 43-101. All other scientific
and technical information set out in this updated plan was prepared by or
under the supervision of Mats Heimersson, P. Eng., an employee of the Company
and a Qualified Person within the meaning of National Instrument 43-101. With
DDMI's support, the Company is preparing an updated technical report on the
mineral resources and mineral reserves at the Diavik Diamond Mine. The Company
expects to file this technical report in the third quarter of calendar 2014.

The Diavik Diamond Mine has been in production since 2003. To December 31,
2013, the mine has produced approximately 84 million carats of diamonds from
the processing of approximately 22 million tonnes of kimberlite and has
transitioned from an open pit operation to a fully underground mine.

Early planning of the underground mining at the Diavik Diamond Mine identified
a number of possible mining methods. Since September 2012, Diavik has been an
entirely underground operation. Presently Blast Hole Stoping ("BHS") is
employed in the A-154 North pipe with lower cost Cemented Rock Fill ("CRF")
being used rather than the more expensive cemented paste that was originally
planned. As a result of the increasing understanding of the ground conditions
as the underground operations were developed, the optimal mining methodology
for the A-154 South pipe and the A-418 pipe resulted in the use of Sub Level
Retreat ("SLR"). This mine plan is based on the current mining method, and
this may change in the future as DDMI is continually looking at improvements
in mining methods, material handling, and cost reduction in general.

Table 1 shows the planned mining tonnage for each ore body, and Table 2 the
corresponding carat estimates. The data is shown on an annualised basis
starting in calendar 2013 and does not include rough diamond stocks at the
mine at the opening of the year. In addition, the plan does not take into
account any rough diamond inventory available for sale that the Company
currently holds. In 2013, Diavik processed an additional 0.15 million tonnes
of stockpiled ore that produced 0.44 million carats, and in 2014 Diavik plans
to process 0.20 million tonnes of stockpiled ore that is estimated to produce
0.54 million carats.

Table 1: Tonnage Mined - Diavik Diamond Mine (100% Basis)


               Reserves (Tonnes Millions)
      Year       A154S     A154N     A418    Total
      2013        0.54      0.72     0.69     1.95
      2014        0.42      0.70     0.79     1.91
      2015        0.40      0.70     0.80     1.90
      2016        0.31      0.77     0.86     1.94
      2017        0.32      0.82     0.74     1.88
      2018        0.31      0.67     0.69     1.67
      2019        0.32      0.77     0.73     1.82
      2020        0.09      0.76     0.60     1.45
      2021           -      0.82     0.53     1.35
      2022           -      0.87     0.48     1.35
      2023           -      0.61     0.34     0.95
     Total        2.71      8.22     7.25    18.18
    Figures may not add up due to rounding.

Table 2: Carats from mined ore - Diavik Diamond Mine (100% Basis)


                  Reserves (Carat Millions)
       Year         A154S    A154N     A418   Total
       2013          2.41     1.50     2.48    6.39
       2014          1.64     1.47     2.85    5.97
       2015          1.40     1.46     3.22    6.08
       2016          1.07     1.75     3.23    6.05
       2017          1.15     1.92     2.89    5.96
       2018          1.15     1.50     2.56    5.22
       2019          1.20     1.67     2.54    5.42
       2020          0.36     1.57     1.97    3.90
       2021             -     1.68     1.59    3.27
       2022             -     1.76     1.29    3.05
       2023             -     1.19     0.95    2.14
       Total        10.40    17.48    25.57   53.45
    Figures may not add up due to rounding.

The current reserve base supports mining operations at Diavik up to 2023. In
addition to the current reserves, there are 2.6 million tonnes of inferred
resources (in the aggregate) distributed amoung the lower parts of each of
A-154 South, A-418 and most significantly, A-154 North, that could potentially
further expand operations. DDMI currently expects to process this material as
part of its mining operations as they reach the lower levels of each pipe.
However, inferred mineral resources are considered too geologically
speculative to have the economic considerations applied to them that would
enable them to be categorized as mineral reserves, and there is no certainty
that they will be mined. They have therefore not been included in the above
mine plan. Mineral resources that are not mineral reserves do not have
demonstrated economic viability. The three pipes currently in production also
extend below the current inferred resource horizons although additional
economic ore may be limited in volume and might not add longevity to the mine
life. DDMI has an ongoing drilling and sampling program intended to support
the mining of the inferred material and, potentially, beyond. In addition, if
a decision is taken to develop the A-21 pipe this would be additional ore at
the end of the life of the mine.

The Diavik processing plant has a potential capacity to process over 2 million
tonnes a year. To supplement mined ore, Diavik plans to continue processing
old coarse ore rejects material ("COR"). The grade of this material is
variable but is generally high as shown by the results from COR production
from 2012 and 2013 contained in Table 3. Based on these historical recovery
rates, the tonnage of this material which is planned to be processed during
calendar 2014 would have produced 0.6 million carats from COR. The remaining
60,000 tonnes of target COR material that could be processed in later years is
not anticipated to be of the same high grade.

Table 3: Coarse Ore Rejects tonnes and carats - Diavik Diamond Mine (100%
Basis)


                        Grade
       COR     Tonnes Cts per Carats
    Production  000's   Tonne  000's
       2012       5.3    26.1  139.0
       2013      14.4    26.9  388.0

Improvements to the recovery process for small diamonds is expected to result
in a 3% increase in carat yield beyond the stated reserve and resource grade.
It should be noted that the average size of diamonds recovered from COR
material and the improvements in diamond recovery are significantly below the
run-of-mine from the main ore bodies, and this is reflected in the modelled
price per carat. The diamonds recovered from COR and improved small diamond
recovery are not currently included in the Company's reserves and resource
statement.

This mine plan does not include any production from the A-21 pipe. The
development of the A-21 pipe continues to be under review but no decision has
been made to develop this pipe at this time since the identification of
extensions to the existing pipes has decreased the urgency to bring the pipe
into the mine plan in the short term. As with the other pipes at Diavik, A-21
is located below the water of Lac de Gras. A pre-feasibility study proposes
mining approximately 3.6 million tonnes of ore on an open pit basis, which is
expected to yield approximately 10 million carats. The Company estimates the
quality of the diamonds to be similar to those from A-154 South. DDMI
continues to refine the project with a focus on reducing capital costs.
Mineral resources that are not mineral reserves do not have demonstrated
economic viability.

Diavik Diamond Mine - Capital and Operating Costs

The initial capital to build the Diavik Diamond Mine was spent between late
1999 and early 2003. Construction was completed on budget and ahead of
schedule. From 2004 to the end of 2012, capital expenditures were for
sustaining the operation and for carrying out planned mine developments.
Sustaining capital included scheduled processed kimberlite containment dam
raises, improvements to the processing plant, planned additions to the mine
equipment fleet, rotating replacements of light vehicles, geology drilling,
purchase of critical spares, and general improvements across the operations.
Mine development capital included the A-418 dike, A-154 & A-418 underground
decline, the A-21 decline, underground test mining and bulk sampling of
kimberlite, a number of studies leading up to the present mine development
plan, and some pre-works construction for the new developments and underground
construction.

The capital, reclamation and operating costs for this latest reserves-based
plan are based on DDMI's estimates. Table 4 shows currently estimated
sustaining capital: with the completion of the underground development in
2013, no further development capital is required under this plan going
forward. The costs shown include estimated contingencies where applicable, but
do not include any escalation or risk contingency amounts for unforeseen
events. In addition to ongoing equipment replacements and general operational
upgrades, sustaining capital will include certain categories of ongoing
underground excavation to maintain mining advances to increasing depths.

Table 4 also shows currently estimated operating costs based on DDMI's
operating experience, adjusted to present-day dollar terms. Given the remote
location of the Diavik Diamond Mine, a large portion of the operating
expenditure is relatively fixed, with the major cost items being human
resources and fuel (for both power and equipment). Not shown in Table 4 are
marketing costs or private royalties as these factors are discussed separately
at the end of this document.

Table 4: Operating and Capital Costs - Diavik Diamond Mine (100% Basis)


    Calendar
      Year          CAPITAL COSTS        OPERATING COSTS
                                           Direct and
             Developing Sustaining Total    Indirect
                C$m        C$m      C$m        C$m
      2013            7         55    62             415
      2014            -         52    52             408
      2015            -         46    46             392
      2016            -         40    40             392
      2017            -         32    32             384
      2018            -         38    38             372
      2019            -         27    27             398
      2020            -         10    10             373
      2021            -          2     2             375
      2022            -          2     2             380
      2023            -          2     2             315
     Totals           7        306   313           4,203

Under this mine plan Diavik will cease mining operation in 2023. The
reclamation costs are estimated at $188 million based on a DDMI closure cost
model that is considered to be equal to or better than others used in the
industry. The majority of these closure costs are expected to be spent in 2022
to 2025 although the full reclamation plan will only be completed in 2030.

Ekati Diamond Mine - Production

This updated plan is derived from the Company's estimates, based on the
current reserve and resources as of December 31, 2012. The reserve and
resource information set out in this life-of-mine plan was prepared by or
under the supervision of Mats Heimersson, P. Eng., an employee of the Company
and a Qualified Person within the meaning of National Instrument 43-101. For
more information see the Company's Technical Report regarding the Ekati
Diamond Mine dated May 24, 2013, filed on SEDAR. Following this winter's
drilling program the Company will be preparing an updated technical report on
the mineral resources and mineral reserves at the Ekati Diamond Mine. The
Company expects to file this technical report in the third quarter of calendar
2014.

This current mine plan assumes production from Fox, Misery, Pigeon and Lynx
open pits, and the Koala and Koala North underground operations. Koala North
is currently in production as a sub level retreat underground operation and is
scheduled to finish later this year. Koala is currently in production as a
sublevel / inclined cave underground operation and is scheduled to finish in
calendar 2019. Fox is currently in operation as an open pit and is scheduled
to finish in calendar 2014. Stripping of waste material and satellite
kimberlite is in progress at Misery open pit with expected full year
production from the Misery Main Pipe in calendar 2016 and completion of mining
in calendar 2018. Stripping of waste material from Pigeon open pit is
scheduled to commence in calendar 2014 with mining of kimberlite commencing in
calendar 2015 and finishing in calendar 2019.

Table 5 shows the planned mining tonnage for each ore body. The data is given
on a full financial year basis from Fiscal 2015, with Fiscal 2014 representing
the period since the Company's acquisition of Ekati on April 10, 2013 to
January 31, 2014. These figures do not include rough diamond stocks held at
the mine at the opening of each year, nor does the model take into account any
rough diamond inventory available for sale that the Company currently holds.

In addition to probable reserves, this plan includes the development and
mining of the Lynx pipe that is currently an indicated resource. Also as part
of the mining of the Koala deposit a small portion of inferred resources is
extracted along with the reserves: this material is not included in the mine
plan estimates but will be processed along with the reserve ore. Mineral
resources that are not mineral reserves do not have demonstrated economic
viability.

Table 5: Tonnage Mined - Ekati Diamond Mine (100% Basis)


                    Reserves (Tonnes                               Additional
                       Millions)                                    Resources
                                         Koala             (Tonnes Millions)
    Fiscal Year   Fox   Misery   Pigeon  North Koala Total       Lynx *
       2014        3.50       -        -  0.33  0.40  4.23
       2015        0.52       -        -     -  0.87  1.40                  -
       2016           -    0.02     0.83     -  1.03  1.88                  -
       2017           -    1.34     1.80     -  1.05  4.19               0.13
       2018           -    1.67     0.18     -  0.98  2.82               0.96
       2019           -       -     2.87     -  0.67  3.55                  -
       2020           -       -     1.60     -  0.44  2.04                  -
       Total       4.02    3.03     7.29  0.33  5.44 20.11               1.09
    * Lynx is part of the Buffer Zone. All other deposits are part of
    the Core Zone.
    Figures may not add up due to rounding.

Because of timing differences and blending choices the ore that is planned to
be processed each fiscal year differs, sometimes significantly, from the ore
mined in that fiscal year. Table 6 shows the planned ore to be processed by
fiscal year and source and Table 7 the corresponding estimated carats
produced.

Table 6: Ore Processed - Ekati Diamond Mine (100% Basis)


                                                              Additional
                  Reserves Processed (Tonnes Millions)         Resources
                                        Koala              (Tonnes Millions)
    Fiscal Year    Fox    Misery Pigeon North Koala Total       Lynx *
       2014          2.42      -      -  0.31  0.40  3.13                   -
       2015          1.70      -      -     -  0.87  2.58                   -
       2016             -   0.02   0.41     -  1.03  1.46                   -
       2017             -   0.75   1.30     -  1.05  3.09                0.02
       2018             -   0.87   0.99     -  0.98  2.84                0.87
       2019             -   1.07   2.30     -  0.67  4.04                0.20
       2020             -   0.33   2.28     -  0.44  3.05                   -
       Total         4.12   3.03   7.29  0.31  5.44 20.19                1.09
            * Lynx is part of the Buffer Zone. All other deposits are part of
                                                               the Core Zone.
                                      Figures may not add up due to rounding.

Table 7: Carats Produced - Ekati Diamond Mine (100% Basis)


                      Reserves (Carat Millions)        Additional Resources
                                    Koala               (Carat Millions)
    Fiscal Year  Fox  Misery Pigeon North Koala Total        Lynx *
        2014     0.72      -      -  0.20  0.30  1.22                     -
        2015     0.36      -      -     -  0.51  0.87                     -
        2016        -   0.07   0.16     -  0.48  0.71                     -
        2017        -   2.90   0.57     -  0.53  4.00                  0.02
        2018        -   3.67   0.41     -  0.57  4.65                  0.69
        2019        -   4.55   0.92     -  0.45  5.92                  0.15
        2020        -   1.39   1.09     -  0.27  2.75                     -
       Total     1.08  12.58   3.15  0.20  3.11 20.12                  0.85
             * Lynx is part of the Buffer Zone. All other deposits are part
                                                          of the Core Zone.
                                    Figures may not add up due to rounding.

The Ekati processing plant has the capacity to process up to approximately
4.35 million tonnes a year. In addition to the tonnages presented in Table 6,
Ekati currently plans to process all remaining available Koala North mined
kimberlite in fiscal 2015, the majority of which is 150,000 tonnes of inferred
resources. More significantly, Ekati currently plans to process the Misery
South and Southwest Extension kimberlite that is made available as the Misery
reserves are accessed. Additionally, coarse ore rejects (not currently
classified as resources) will be incrementally processed.

Table 8 shows the Misery satellite pipe material that is scheduled to be
excavated during the pre-stripping operations for Misery Main Pipe. Estimates
of tonnage and grade for the Misery satellite pipes have been made based on
bulk samples collected during exploration programs, and confirmed by more
recent production tests. The total tonnage range of this material is estimated
to be between 2.7 million tonnes and 4.5 million tonnes, and the satellite
pipes grade is estimated to range from 1.0 carats per tonne to 1.7 carats per
tonne. In fiscal 2014, approximately 340,000 carats were produced from
processing 291,000 tonnes of Misery Satellite material. The diamonds that have
been recovered to date display similar characteristics to diamonds from the
Misery Main pipe. Dominion cautions that the potential quantity and grade
remains conceptual in nature as there has been insufficient exploration and/or
study to define this material as a Mineral Resources and it is uncertain if
additional exploration will result in the exploration target being delineated
as a mineral resource. Additional drilling is being planned for mid- 2014 with
the objective of gathering sufficient data to promote this material to a
mineral resource.

Table 8: Misery Satellite Material to be Excavated - Ekati Diamond Mine (100%
Basis)


           Misery Satellite Material Mined (Tonnes Millions)
    Fiscal        Misery SW
     Year         Extension         Misery South         Total
     2014                     0.04           0.20         0.24
     2015                     0.64           0.61         1.25
     2016                     0.95           0.36         1.31
     2017                     1.42           0.08         1.50
     2018                     0.29              -         0.29
     2019                        -              -            -
    Total                     3.34           1.25         4.58

Coarse ore rejects have been stockpiled at Ekati since the start of production
in 1998 to present. Several production periods have been identified during
which high grade feed sources were blended through the process plant using
larger aperture de-grit screens (1.6 mm slot) compared to the current 1.2 mm
configuration. In addition, the re-crush circuit was not utilised during these
periods. The coarse ore rejects from the production periods of interest are
estimated at 3.5 milion tonnes to 4.5 million tonnes. Based on stone size
distributions and recovered grade data, this material has an overall grade
ranging from 0.2 to 0.6 carats per tonne. While the historic recoveries and
valuations may not necessarily be indicative of recoveries or valuations
within the current coarse ore rejects stockpiles, treatment of this material
represents an attractive opportunity to supplement mill feed. A number of
production test runs were successfully completed last year and a full
assessment of the results will be finalised later this year. Dominion cautions
that the potential quantity and grade remains conceptual in nature as there
has been insufficient exploration and/or study to define this material as a
Mineral Resources and it is uncertain if additional exploration will result in
the exploration target being delineated as a mineral resource.

Mineral resources that are not included in the current mine plan include Jay,
Sable and Fox deep. Jay is considered the most significant prospect due its
large size and high grade (36.2 million tonnes of Indicated Mineral Resources
at an average grade of 2.2 carats per tonne, 1 mm slot screen cut-off) and
represents upside potential for the operation. An extensive drilling program
is being conducted over the winter period in support of a pre-feasibility
study for Jay. The program has also targeted the Cardinal pipe which is
located approximately 5 km southeast of the Jay pipe.

The Jay, Sable and Fox deep Mineral Resources represent future plant feed
upside potential, and some or all of this mineralization may be able to be
incorporated in the life-of-mine plan once sufficient additional work has been
undertaken to support estimation of higher-confidence Mineral Resources and
eventual conversion to Mineral Reserves. There is also potential to treat
low-grade stockpiles, primarily derived from open pit mining at the Fox
kimberlite, if the grades in the stockpiles can be demonstrated to be
economic.

Ekati - Capital and Operating Costs

The capital and operating costs for this latest plan are based on the
Company's estimates. The costs shown include estimated contingencies where
applicable, but do not include any escalation or risk contingency amounts for
unforeseen events. In addition to ongoing equipment replacements and general
operational upgrades, sustaining capital will include certain categories of
ongoing underground excavation to maintain mining advances to increasing
depths.

Table 9 shows currently estimated sustaining and mine development capital,
along with operating costs from Fiscal 2014 onward. These capital costs
include costs associated with the development of the Misery and Pigeon pipes.
The total current estimated capital cost of developing the Misery pipe is $405
million, consisting largely of mining costs to achieve ore release, and of
which $201 million will be spent by end of January 2014. The current estimated
cost for developing the Pigeon project is $85 million, and the Lynx project
$30 million: both of these estimates include the construction of access roads,
and pre-stripping of waste material to prepare the pit for production and
contingency.

The estimated operating costs in Table 9 assumes that Ekati is running at full
capacity and is based on the Company's operating experience, adjusted to
present-day dollar terms. Given the remote location of the Ekati Diamond Mine,
a large portion of the operating expenditure is fixed, with the major cost
items being labour and fuel (for both power and equipment). Not shown in Table
9 are marketing costs and private royalties as these factors are discussed
separately at the end of this document.

Under this mine plan, Ekati will cease mining operation in Fiscal 2020. The
reclamation costs are estimated at $347 million based on Ekati's closure cost
model that includes all activities required by the approved Interim Closure
and Reclamation Plan. If the Jay and Cardinal deposits are permitted and
developed, the reclamation costs under the current Mine Plan will be reduced
further.

Table 9: Operating and Capital Costs - Ekati Diamond Mine (100% Basis)


    Fiscal
     Year         CAPITAL COSTS        OPERATING COSTS
                                         Direct and
           Developing Sustaining Total    Indirect
              C$m        C$m      C$m        C$m
     2014          90         42   132             317
     2015         163         41   204             369
     2016         124         42   166             361
     2017          29         32    61             453
     2018           -         16    16             442
     2019           -          -     -             384
     2020           -          -     -             379
    Totals        406        173   579           2,705

Additional Economic Factors

The Company sorts its rough diamonds from Ekati and Diavik in Yellowknife,
Canada and Toronto, Canada and Mumbai, India and then distributes the
resulting aggregated 'boxes' to its Belgian and Indian subsidiaries for sale.
The Company's current budget for marketing 100% of the Ekati goods and 40% of
the Diavik goods is approximately $20 million per annum.

Based on the Company's rough diamond sales during the fourth calendar quarter
of 2013 and the current diamond recovery profile of the Diavik and Ekati
processing plant, the Company has modeled the current approximate rough
diamond price per carat for each of the deposits listed in Table 10 below.

Table 10: Modelled diamond prices by deposit


                                        Average Price per
             Deposit                            Carat $US
    Diavik
             A-154 South                             $140
             A-154 North                             $180
             A-418                                   $100
             Coarse Ore Rejects                       $50
             Small Diamond Project                    $50
    Ekati
             Koala                                   $375
             Koala North                             $420
             Fox                                     $305
             Pigeon                                  $195
             Lynx                                    $225
             Misery Main                             $105
             Misery South & South West            $90-110
             Coarse Ore Rejects                   $65-120

The Company is currently budgeting on the basis of a US$/C$ exchange rate of
1.045, and in its own financial models assumes a real diamond price growth
rate of 2% per annum.

Both the Ekati Diamond Mine and the Diavik Diamond Mine pay royalties to the
Federal Government. For each mine the Federal Government royalty payable is
equal to the lesser of 13% of the value of the 'Output' of the mine or an
amount calculated based on a sliding scale of royalty rates dependent upon the
value of 'Output' of the mine, ranging from 5% for value of output between
$10,000 and $5 million to 14% for value of output over $45 million.

In addition the Company pays three private royalties to third parties. At
Ekati, a royalty is payable on kimberlite production from the Misery pipes
such that C$18.76 per tonne mined and processed is payable on the first
428,390 tonnes, and C$23.42 per tonne mined and processed is payable on the
next 544,000 tonnes. At Diavik, there are two private royalties each paying 1%
of the value of sales revenue.

For further information:

Mr. Richard Chetwode, Vice Preside nt, Corporate Development - +44
(0)7720-970-762 or  rchetwode@ddcorp.ca

Ms. Kelley Stamm, Mana ger, Investor Relations - +1(416) 205-4380 or 
kstamm@ddcorp.ca

(DDC. DDC)
Sponsored Links
Advertisement
Advertisements
Sponsored Links
Advertisement