De Beers Group has high hopes for a small Canadian diamond project, as the world’s biggest diamond producer by value seeks to redress a global dearth in new discoveries and further diversify outside of its African base.
Last week, De Beers, which is controlled by global diversified miner Anglo American PLC Group, closed its acquisition of Vancouver-based Peregrine Diamonds Ltd., owner of the Chidliak project in Nunavut. De Beers paid $113-million for the junior, which was founded by Eric Friedland, brother of famed mining financier Robert Friedland.
Chidliak has 74 known kimberlite formations, a rare type of rock that can contain diamonds. According to a preliminary economic estimate (PEA), the inferred resource contains about 22 million carats, about two-thirds of De Beers annual production. It’s not yet known whether the resource can be profitably developed, but the PEA pegs the cost of building a mine that would last 13 years at $521-million.
“When you look at what we’ve acquired here up at Chidliak, it looks like several [kimberlites] could be economic,” said Kim Truter, chief executive officer of De Beers Canada Inc., in an interview.
De Beers, which was founded in 1886, held a virtual monopoly on the diamond market in the early part of the 20th century. But over time, African countries, where most of its mines are located, started demanding a significant portion of the profits, which is one reason the company has looked to Canada to diversify its business.
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