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Diamonds – Mining, Lab-Grown and Conflict/Blood

Canadian Diamond Production Estimated to More than Double in Next 4 Years – by Paul Zimnisky (Analyzing Trends in the Global Diamond Industry – October 14, 2014)

http://www.paulzimnisky.com/

With Gahcho Kué and Renard now officially in construction phase, I think it’s fair to say that in 4 years time Canadian diamond production will look significantly different than it does today.

In July, Stornoway Diamonds (TSX: SWY) completed a C$964 million financing package to fund construction of Renard. In September, Mountain Province Diamonds (TSX: MPV) closed a C$100 million equity financing and is in the final stages of arranging US$370 million in debt to fund its portion of Gahcho Kué’s capital expenditure.

Canada currently represents an estimated 14.2% of the world diamond production in value, and 8.7% in carat volume. The two new mines, set to commence production in 2016/2017, are estimated to boost Canada’s global market share to 25.2% in value, and 15.1% in volume by 2018, which would give Canada the highest compound annual growth rate of production (20.2% in value and 17.4% in volume) among the worlds 8 largest diamond producing nations over the next 4 years.

Outside of Canada, there are only 3 other large-scale commercial mines scheduled to commence operations within the next 4 years: Lace, Botuobinskaya, and Bunder, all of which have annual production profiles that are below that of both Gahcho Kué and Renard.

DiamondCorp’s (LSE: DCP) fully financed Lace project in South Africa is estimated to produce up to 500,000 carats annually, with first ROM production slated for late next year.

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Diamond crunch: Exploration dries up – by Thomas Biesheuvel (Mineweb.com – October 3, 2014)

http://www.mineweb.com/

“You need deep pockets to find kimberlites,” one expert notes. Meanwhile money, efforts have dried up.

(BLOOMBERG) – Diamonds are so hard to find that explorers have pretty much given up trying.

More than $7 billion has been plowed into the hunt for the gem since 2000, according to top supplier De Beers, and the results have been meager, with no major finds. That’s led producers including BHP Billiton Ltd. to pack up their maps and drills and head for home. The amount spent looking for diamond- rich kimberlite formations underground has dropped by half since 2007, when exploration investment topped $1 billion.

The dearth of new projects is putting pressure on an industry where supplies of accessible diamonds near the surface are depleted and the cost of going deeper is rising. De Beers opened the Orapa mine in Botswana in 1971 and its Jwaneng project, the world’s largest diamond mine by production value, in 1982. Botswana, the top producer, saw output drop to 22.7 million carats last year from 33.6 million carats in 2007.

“The odds of finding an economic kimberlite are extremely against you,” said Johan Dippenaar, chief executive officer of Petra Diamonds Ltd., which spent just $2.1 million looking for new mines last year and has abandoned prospective projects in Angola and Sierra Leone. “Exploration, for the foreseeable future, will remain something that we will be involved in, but it won’t command very much of our cash flows.”

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Mining News: Incentives spur exploration projects – by Rose Ragsdale (Mining News – Week of September 28, 2014)

http://www.petroleumnews.com/miningnewsnorth/index.shtml

Inaugural program aims to encourage existing, would-be mineral explorers to chase diamonds, gold and other metals in the North

The Government of Northwest Territories has implemented a new Mining Incentive Program that was oversubscribed by midyear, with strong interest shown by companies and prospectors in the Northwest Territories and across Canada.

“The Mining Incentive Program helps our government support those with the energy, expertise and perseverance that this industry relies on to conduct mineral exploration in an environmentally sustainable way,” said GNWT Industry, Tourism and Investment Minister David Ramsay.

“I especially look forward to using this program to contribute to the success of northern and Aboriginal-owned businesses pursuing mining projects, so more northerners can enjoy the benefits of economic development and a healthy mining sector,” Ramsay said in a statement.

“It’s very positive to get that much interest,” said Pam Strand, director of Mineral Resources for the Government of Northwest Territories. “But it’s not surprising when compared with other jurisdictions such as Yukon Territory and Manitoba. Their programs have grown year by year.”

Yukon Territory, for example, awarded C$1.4 million this year to 44 companies and prospectors, up about C$630,000 from comparable funding in 2013.

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New wave of diamond fever sweeps Northwest Territories; Prima Diamonds lands prime real estate (Mining and Exploration – September 2014)

http://www.miningandexploration.ca/

Diamond deposits, in the words of one senior geologist, are like pigeons. Where you find one, you’re likely to find an entire flock.

That’s the guiding logic behind a new wave of diamond mine development and claim staking in the Slave Craton in Northwest Territories. The NWT already serves as host to some of the world’s richest diamond mines, starting with Ekati and Diavik, followed by Snap Lake, all in the central corridor of the Slave Craton.

Next to follow is the Gahcho Kué Diamond Project southeast of the prolific Ekati and Diavik diamond mines. When it begins production in 2016, Gahcho Kué is reputed to become one of the largest and richest new diamond mines in the world. This $700 million project has a combined probable mineral reserve estimated at 55.5 million contained carats. De Beers Canada owns 51 per cent of Gahcho Kué and is the operator of the proposed mine. Mountain Province Diamonds, which discovered the Gahcho Kué diamond resource, owns 49 per cent.

Next to Gahcho Kué is the Kennady North Project with four confirmed diamond pipes. Two of the pipes returned diamond sample grades two to three times greater per tonne than Gahcho Kué, as reported by the company.

Circling in the vicinity of Gahcho Kué are projects led by successful veterans of the original 1990’s Canadian diamond rush: Randy Turner, CEO of Canterra Minerals; Buddy Doyle, exploration director and vice-president of Margaret Lake; and Patrick Evans, president and CEO of Kennady Diamonds.

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NEWS RELEASE: GLOBAL DIAMOND DEMAND REACHES RECORD LEVELS – 17 SEPTEMBER 2014 – HONG KONG

Report highlights need for industry investment to sustain future success

The Diamond Insight Report 2014 is available for download at: www.debeersgroup.com/insightreport

Global demand for diamond jewellery reached a record high of US$79 billion in 2013 according to the inaugural Diamond Insight Report, published today by The De Beers Group of Companies.

Demand is expected to continue to grow over the long-term, driven by the ongoing economic recovery in the US (the world’s largest diamond jewellery market) and the growth of the middle classes in developing markets such as China and India. Sales of polished diamonds in the US increased seven per cent in 2013, while both India and China have seen their domestic diamond jewellery markets grow by a compound annual growth rate of 12 per cent in local currency terms between 2008 and 2013.

The report cautions that while diamonds retain their special allure with consumers around the world, future demand levels cannot be taken for granted. The overall category is facing increasingly strong and sophisticated competition from other luxury categories, with diamonds’ share of advertising voice in the US market having reduced within its competitive set.

Global rough diamond production in 2013 increased by seven per cent in carat terms over 2012 levels to a total of around 145 million carats. However, this remains well below the 2005 peak of around 175 million carats. The report further highlights that a forecast reduction in supply from existing sources will likely not be matched by new production coming on-stream in the years ahead and diamond supply is expected to plateau in the second half of the decade before declining from 2020 onwards.

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De Beers studies [Ontario] Victor extension as end of mine life looms (Northern Miner – September 12, 2014)

The Northern Miner, first published in 1915, during the Cobalt Silver Rush, is considered Canada’s leading authority on the mining industry.

With a mine life that ends in 2018, the ore is running out at Ontario’s only diamond mine — De Beers’ Victor mine, 90 km west of Attawapiskat.

The open-pit mine, which began production in 2008, produces around 600,000 carats of high-value diamonds a year from a single 15-hectare kimberlite. But with 15 other diamond-bearing kimberlite pipes at the project, there is potential for an extended mine life at Victor.

De Beers has already started an environmental assessment on the Tango Extension kimberlite, the most promising of the other pipes in the Victor cluster. Situated about 6.5 km northwest of the Victor mine, the company believes it could extend Victor’s mine life by seven years.

The company is studying the potential to mine Tango Extension as an open-pit operation at a rate of 3 million tonnes per year. However, the project is not yet economic. The Tango Extension kimberlite is smaller, lower-grade, and contains less valuable diamonds than Victor.

While Victor is a low-grade mine at around 0.23 carat per tonne, its diamond values are among the highest in the world at more than US$400 per carat. So far, samples from Tango Extension indicate the quality is good, but they won’t fetch the same kind of price per carat as Victor diamonds, says Tom Ormsby, De Beers Canada’s director of external and corporate affairs,

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Northern Canada, the Conflict-Free Diamond Frontier – by Christopher F. Schuetze (New York Times – September 11, 2014)

http://www.nytimes.com/

The four C’s of a conventional diamond are color, clarity, cut and carat weight. Deepak Kumar is fond of saying that his stones will have six C’s. “The fifth C is for ‘conflict-free,’ and the sixth C is for ‘Canadian,”’ Mr. Kumar said in a telephone interview from Yellowknife — population 20,000 — the capital of Canada’s Northwest Territories.

Mr. Kumar’s company, Deepak International, announced this summer that it had bought two defunct diamond polishing plants in Yellowknife for 1.9 million Canadian dollars, or $1.7 million, together with the exclusive rights to the polar bear symbol, a quality logo for the Territories’ sustainably mined stones.

As consumers increasingly ask where their diamonds are sourced, polished and cut, Canadian diamonds have a reputational advantage. They are marketed as conflict-free and cleanly mined under the Canadian Diamond Code of Conduct, overseen by the federal government, that goes beyond the Kimberley Process certification program, established in 2003, which sets minimum standards for ethical diamond mining.

“Canada is a wonderful story. It is icy, it is clean, it is cold,” said Dylan Dix, an executive with HRA Group, Canada’s biggest diamond producer.

Industrial-scale diamond mining started in Canada in the 1990s — just as stories of war atrocities and exploitation began to roil the market for African gemstones. Canada has since become the world’s third-biggest diamond producer, after Botswana and Russia.

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Synthetics pose a conundrum for world diamond industry – by Ari Rabinovitch (Reuters U.K. – July 31, 2014)

http://uk.reuters.com/

TEL AVIV – (Reuters) – Diamonds are a girl’s best friend – but only if they are natural.

That is the message mining companies and luxury jewellers are keen to instil in consumers as the diamond trade faces a growing challenge from the production of synthetic diamonds.

Global diamond jewellery sales are worth more than $72 billion (42.6 billion pounds) a year, according to the World Diamond Council, and jewellers like Tiffany (TIF.N) and diamond miners led by De Beers stress that a jewel mined at great expense, and often with great risk, is infinitely more valuable than one made by man.

But it can be hard to tell the difference.

Synthetic diamonds can be manufactured in a laboratory to the extent that they have the same properties as natural ones, raising the risk that a synthetic product could one day inadvertently end up in a luxury jeweller’s showroom.

“God help the major diamond jeweller, be it Cartier, Tiffany, Van Cleef, anybody, who puts a piece of jewellery out there and it’s later found to be having synthetic diamonds in it without disclosure. That fear is what’s driving the industry,” said Martin Rapaport, chairman of the Rapaport Group, which is the primary source of diamond price information around the world.

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Quebec lawyers optimistic about revived Plan Nord – by Julius Melnitzer (National Post – July 30, 2014)

The National Post is Canada’s second largest national paper.

Quebec’s mining lawyers are cautiously optimistic about the impact of the Liberal government’s revival of the Plan Nord mining project.

“What lies ahead for Quebec’s mining industry is better than what the future looked like during the last two years when there was no clear signal from the PQ that the mining industry was welcome here, ” said Jean-Philippe Buteau in Norton Rose Fulbright Canada LLP’s Quebec City office. “That’s not to say we’re just a few weeks or months from being back to the good old days, but now there’s a majority government that has both hands on the steering wheel.”

Indeed, the stars seem to be lining up. On July 8, Stornoway Diamond Corp. closed a $946-million comprehensive funding package for the construction of the company’s Renard Diamond Project in north-central Quebec.

“The government assisted Stornoway in building the access road to the project and was instrumental in obtaining financing,” said Michel Brunet in Dentons Canada LLP’s Montreal office. Significant support from the new Liberal government, then, was instrumental in the deal’s culmination.

“Stornoway is a great signal that Quebec will stand beside the mining companies if their business plan makes good sense and they are willing to play by the rules,” Mr. Buteau said.

About one month earlier, Agnico Eagle Mines Ltd. and Yamana Gold Inc. completed their acquisition of Osisko Mining Corp. The new owners will take over operation of the Canadian Malarctic gold mine located in the Abitibi-Témiscamingue region about 550 kilometres northwest of Montreal.

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How a Rogue Geologist Discovered a Diamond Trove in the Canadian Arctic [Chuck Fipke] – by Carl Hoffman (Wired Magazine – November 28, 2008)

http://www.wired.com/

(Please note this profile was originally published in November 2008)

Behind an unmarked door in a faded business park outside Kelowna, British Columbia, in a maze of rooms crowded with desks, computers, and floor-to-ceiling shelves, Chuck Fipke sifts through 20-pound bags of dirt.

“We take samples, hey, from gravel and streambeds all over the world,” Fipke says. He sieves the earth, runs it through magnetic drums and centrifuges and electromagnetic separators. Then his technicians, working with scanning electron microscopes, separate out grains and mount them on postage-stamp-sized squares of epoxy. It’s painstaking work but worth the trouble. Fipke has learned to understand those grains of dirt, and that understanding has led him to diamonds.

Eighteen years ago, there was no such thing as a Canadian diamond — as far as anyone knew. Diamonds came mostly from Australia, Botswana, South Africa, Namibia, and Russia. De Beers mined 75 percent of the world’s output, much of it tainted by controversial “blood diamonds,” sold to fund African wars.

Today, Canada is the world’s third-largest producer, by value, of rough stones. In the Northwest Territories, BHP Billiton’s Ekati mine has been producing since 1998 and Rio Tinto’s Diavik mine since 2003. De Beers opened its first Canadian mine, at Snap Lake, in July — a confirmation that Canada is the new center of the world.

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The Queen of Diamonds Eira Thomas has turned her attention to gold – by Tryst Williams (Walesonline.com – July 13, 2014)

http://www.walesonline.co.uk/

Eira’s father Gren, born in wartime Swansea, formed the Aber Diamond Corporation (after his home of Abertawe) to make his big diamond finds

A millionaire Welsh miner’s daughter dubbed “The Queen of Diamonds” after her exploration work with her father made Canada one of the gem capitals of the world has now set her sights on gold.

Eira Thomas, 45, the only woman who can wear diamonds she discovered herself, is now chief executive of Vancouver based Kaminak Gold.

The company has just released a preliminary assessment showing desirable “high-margin low-risk” economics for its Coffee gold mine project in Canada’s legendary Yukon gold fields.

The report, by JDS Energy and Mining, says gold at Coffee is near-surface and importantly not too expensive to extract.

A statement from Kaminak said: “Total gold production over the life of the mine is expected at 1.86m ounces at a grade of 1.23 grams per tonne of gold, yielding operating cash flow of US $1.24bn and gross revenue of US $2.4bn.

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Arctic mine gives Dominion Diamond more stones – by Liezel Hill (Montreal Gazette/Bloomberg News – July 15, 2014)

http://www.montrealgazette.com/index.html

Dominion Diamond Corp. is proving it can operate a diamond mine in the harsh Arctic conditions of Canada’s remote Northwest Territories after selling the luxury Harry Winston jewelry brand last year.

The Ekati mine, acquired last year from BHP Billiton Ltd., is Toronto-based Dominion’s first attempt at running an excavation. With a promise of higher returns for unpolished stones, Ekati, about 200 kilometers (124 miles) below the Arctic Circle, offers the challenge of improving results in tough conditions.

“Inevitably when you buy something that you’ve only really been able to see on paper you hold your breath a little bit,” Chairman and Chief Executive Officer Robert Gannicott said in a phone interview last week. “It’s worked pretty well for us.”

Dominion is increasing recovery at Ekati by capturing more smaller diamonds from crushed ore, Gannicott said. The company plans to make those adjustments permanent and Gannicott believes more improvements can be achieved.

Last week, Dominion said it agreed to buy out one of Ekati’s minority partners, Chuck Fipke, for about $67 million. Fipke and Stewart Blusson, who still has an interest in Ekati, discovered the deposit in 1991.

Initial results have been encouraging, according to Edward Sterck, an analyst at Bank of Montreal.

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Fipke still looking for new diamond finds – by Anna Nicolaou (Globe and Mail – July 12, 2014)

The Globe and Mail is Canada’s national newspaper with the second largest broadsheet circulation in the country. It has enormous influence on Canada’s political and business elite.

Charles (Chuck) Fipke doesn’t like giving interviews, but on this occasion, the multimillionaire geologist has a message to send: Selling his last piece of Canada’s first-ever diamond mine was anything but a retreat.

Rather, it’s his thirst for adventure that spurred him cut financial ties to Ekati, Canada’s first diamond mine and the product of his epic discovery in the Canadian arctic in the 1990s. The chunk of cash he’ll receive – a cool $67-million (U.S.), plus “quite a bit” of adjustments and interest payments – will help him to actively hunt for new sparkling gems.

Dominion Diamond Corp. – formerly known as Harry Winston Diamond Corp. – bought Mr. Fipke’s remaining interest on Wednesday, officially ending his financial involvement with the mine.

“I’m an explorer, not a manager,” Mr. Fipke explained over the phone from his home in Kelowna, B.C., where he studies gravel samples from around the world in his laboratory.

“It was always nice to own part of the [Ekati] mine,” he said, noting that he attended every quarterly meeting since before the mine was born. “It was fun, but I’m more of a geologist than a mining manager,” he repeated. “This allows me to do more exploration.”

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Life after Ekati: Legendary Canadian geologist Chuck Fipke gears up for more exploration – by Peter Koven (National Post – July 12, 2014)

The National Post is Canada’s second largest national paper.

Chuck Fipke fondly recalls the glory days of Arctic diamond exploration in the 1980s and early 1990s.

His budget was so tight that he flew around in a plane by himself, zigzagging across the Northwest Territories over an 800-mile stretch of prospective land. If he brought an assistant, it would have used up more fuel and left him less weight to carry rock samples.

“It was just fun every day,” the famous geologist said in an interview this week. “Most of the time when I’m working, it’s not really work to me at all.”

In 1991, his efforts paid off as he and partner Stewart Blusson hit the motherlode: They found the Ekati deposit, which became Canada’s first diamond mine and remains one of the richest diamond discoveries ever made.

The Ekati find made Mr. Fipke a prospecting legend and triggered a massive treasure hunt across the Arctic. Eventually, other large diamond deposits would be found as well: Diavik, Snap Lake and Gaucho Kué.

Mr. Fipke became a very wealthy man as shares of his company, Dia Met Minerals Ltd., soared through the roof. Dia Met was sold to mining giant BHP Billiton Ltd in 2001, but Mr. Fipke maintained exposure to Ekati through his 10% direct stake in the mine.

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Renewed Plan Nord’s betting on diamonds -by Nicolas Van Praet (Montreal Gazette – July 10, 2014)

http://www.montrealgazette.com/index.html

Declining prices for resources causes an overall re-think

Quebec is turning north again for deal-making and growth. It may find it has to contend with industry contraction first.

Barely a month after sketching out plans to revive the so-called Plan Nord, a multibillion-dollar economic development strategy hatched by former Premier Jean Charest and pinned on natural resource extraction north of the 49th parallel, the reality of world markets has set in. And for many companies active in Quebec’s north, that means shrinking before they expand.

Take Canadian iron ore miner Labrador Iron Mines Holdings. The company, which operates in the Labrador Trough in Quebec, said last week it has stopped operations this year as a flood of new supply cools prices by about 30 per cent so far in 2014. The company is experiencing “considerable strain” on its cash reserves and needs outside investment to continue, its CEO said.

It’s not the only one. U.S.-based Cliffs Natural Resources in February announced a 50 per cent pullback on capital spending this year, putting on hold a planned expansion of its Lac Bloom, Que., facility. It’s also facing a proxy fight from shareholder Casablanca Capital.

Overall, low commodity prices persist after falling significantly last year. Net earnings in the industry remain near a decade low.

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