Excerpt From Michael Barnes New Book – More Than Free Gold:Mineral Exploration in Canada Since World War II

More Than Free Gold - Michael Barnes

Our Best Friend
Kimberlites with Diamonds

With the discovery of diamonds in the kimberlite bodies of the Lac de Gras district in the N.W.T., Canada emerged as a major diamond producer, challenging South Africa, Botswana, Australia and Russia in both quality and quantity of diamond production.

Diamond hunting is difficult because kimberlite outcrops are rare, due to the fact that the rock is easily eroded; often a chunk of the stuff will crumble in the hand.

The big mining news in the eighties was of the gold at Hemlo, but in that decade two men were searching for a much more elusive quarry. Veteran prospector Chuck Fipke and geologist Dr. Stu Blusson spent all they had and all they could borrow to finance a quest for diamonds.

Diamond exploration in Canada had been ongoing since the early sixties, but it was not until this  prospecting team worked out a more systematic approach that there was a real possibility of success.

Fipke and Blusson found the source of the diamonds that they had sought for a decade in 1991. The Dogrib and Dene people have a name for the area round Lac de Gras, 300 kilometres northeast of Yellowknife. The location was called e’kati or ‘fat lake’ and refers to the whiter quartz veins seen there. The streaked rocks are not unlike caribou fat, a commodity prized long before diamonds brought the remote location into prominence. The diamond hunters formed their own company, DiaMet Minerals and utilized a new aerial sonar technology to pinpoint the host kimberlite pipe.

Diavick Mine in the N.W.T. Photo-Jiri Herman, Diavik D.M.

All this took time, and the partners spent all available funds on drilling and workers.The searchers drilled the little unnamed lake which was in the centre of a peninsula called Point de Misère and gave it their own name, Point Lake. After they had collected 1,200 samples, an authority examined the data and felt the grade would be better than sixty carats per one hundred metric tonnes. When the ore was concentrated, Fipke found eighty-one tiny diamonds.

In the age-old tradition of realistic prospectors, the partners realized early that a major player with deep pockets would be necessary for further progress in the venture. They teamed up with Australian miner BHP Billiton and received 10% each of what would become The Etaki Mine for their well-deserved share.

Once the news of the staking became public, the rush was on; fifteen mining companies sent field workers to stake the ground. Since that diamond rush took place in 1991, almost a century after the Klondike gold stampede, Canada has been ranked among the top three diamond producers in the world in terms of value delivered.

The discovery of the Diavik deposit is the sort of story that has investors reaching for their cheque books. In 1992 Eira Thomas was a young geologist leading an exploration crew east of what became the Etkai Mine. The area was around Lac de Gras and the company was Aber Resources, and one of the directors was her mining engineer father Grenville Thomas.

Eira Thomas on the Cover of Canadian Diamonds - Up Here PublishingThe twenty-four-year-old geologist, who had only received her professional designation two years before, had a crew drilling for days without success in the middle of a big lake, which was starting to melt. The drillers were agitating to pack up the rig when Ms. Thomas looked at the latest sample and discovered a perfect 2.5 carat diamond.

As ever, a partner with large resources was needed to ensure financing of the lengthy evaluation and development process for this property. Rio Tinto came in at 60% with Aber holding the 40% balance of the property.

Permitting, bulk sampling, and construction (which included the first of three dykes to enable
dewatering the lake) located on an island, took from 1992 to 2003, when the first diamond production began after an outlay of $1.3 billion.

In the first five months of operation Canada’s second diamond mine produced one million carats.
At peak the operation should produce 10 million carats annually. In 2007 the company had exceeded $1 billion in business with Aboriginal firms. As for the geologist, she became Vice President of Exploration.

Nunavut’s first diamond mine, and the third in Canada, was opened in August 2006, eight years after the diamond potential of its claims was realized. A smaller property than the Etkai and Diavik mines, it has an expected mine life of eight years, but Tahera Diamond Corp’s Jericho Mine enjoys the distinction of having had prestigious New York jewelers Tiffany & Co. purchase a significant portion of its output and promote the diamonds.

The mine had a much lower capital cost than its predecessors, at $104 million, but, after opening, had to make a strategic alliance with Teck Cominco to obtain both financial and technical backing. The mine, 420 kilometres north east of Yellowknife, is just inside the Nunavut border.

The diamonds come from a land-based pipe with three phases or lobes. Average annual production is hoped to be in the range of 100,000 carats; so far, financial results have been disappointing.

De Beers’ Snap Lake project is 220 kilometres north east of Yellowknife and will be the first entirely underground diamond mine in Canada.

The mineable resource of 22.8 million tonnes should ensure a mine life of twenty years from its October 2007 start up. Since De Beers acquired the ground in 2000, capital costs should top out at $975 million.

The world’s major diamond player also has the first diamond mine in Ontario, the Victor Mine in the James Bay lowlands, ninety kilometers west of Attawapiskat. Investment here is also huge, at $982 million, and during the estimated twelve years of mine life, beginning in 2008, the plant should give up close to 600,000 carats a year. De Beers has 51% of the Gahcho Kue property, 80 kilometres south east of Snap Lake, and will be the operator of the mine, which is scheduled to open in 2012.

Michael Barnes is a published Canadian author who has written extensively on Northern Ontario. Michaelbarnes53@hotmail.com

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