Company Website:
http://www.ddcorp.ca
YELLOWKNIFE, Northwest Territories -- (Business Wire)
Dominion Diamond Corporation (TSX: DDC, NYSE: DDC) (the “Company” or
“Dominion”) today filed an updated technical report under National
Instrument 43-101 for the Diavik Diamond Mine (“Diavik mine”) with an
effective date of January 31, 2017. The report, entitled “Diavik Diamond
Mine, Northwest Territories, Canada, NI 43-101 Technical Report” (“2017
Technical Report”), was prepared by the operator of the Diavik mine,
Diavik Diamond Mines (2012) Inc. (“DDMI”), a subsidiary of Rio Tinto
plc, and may be found under the Company’s profile on SEDAR and on the
Company’s website at www.ddcorp.ca.
The report includes an updated mineral reserves and mineral resources
statement and an updated “reserves-only” life of mine plan. The Company
has a 40% interest in the Diavik mine; Rio Tinto plc has a 60% interest
and operates the mine through DDMI. Unless otherwise noted, all
financial information is presented in real Canadian dollars, on a 100%
basis, and references to years are to calendar years. An exchange rate
of 1.33 CAD/USD was used for costs denominated in US dollars.
Highlights
-
Mine life has been extended to 2025 from 2023(1).
-
After-tax net present value of approximately $2.6 billion at a 7%
discount rate, based on the assumptions and analysis contained in the
2017 Technical Report(2).
-
46.0 million carats recovered between 2017 and 2025, an increase of
6.3 million carats or 16%, from the previous estimate for the
comparable period(3).
-
Forecast total revenue of approximately $9.0 billion and total
operating cash flow(4) of approximately $3.7 billion
between 2017 and 2025, an increase of 22% and 32%, respectively, from
the previous estimates for the comparable period(3).
-
Total operating costs between 2017 and 2025 are consistent with the
previous estimate for the comparable period(3), as the
impact of cost escalation and the increase in mine life and
reclamation are offset by efficiency improvements.
-
Total capital expenditures between 2017 and 2025 are consistent with
the previous estimate for the comparable period(3), as
lower expected capital expenditures at the A-21 pipe are offset by
higher sustaining capital expenditures related to cost escalation and
the increase in mine life.
“The updated life of mine plan for Diavik extends the mine life,
increases carat production, and grows future revenues and cash flows,
while maintaining operating costs and capital expenditures at levels
that are consistent with earlier forecasts,” said Jim Gowans, Chairman
of the Board of Directors. “The focus on cost efficiency improvements
and development of the A-21 pipe, which underpins the mine life
extension, is consistent with our goal of increasing net asset value per
share.”
(1) |
|
Based on the technical report entitled “Diavik Diamond Mine,
Northwest Territories, Canada, NI 43-101 Technical Report” that has
an effective date of March 18, 2015 (“2015 Technical Report”).
|
(2) | |
Refer to the 2017 Technical Report for the assumptions used in the
calculation of the operating cash flow and net present value. The
cash flow analysis, from which operating cash flow and net present
value are derived, is solely for the purpose of demonstrating
economic viability of the mineral reserve at the Diavik mine, and
does not represent the business plans or cash flows of either
participant of the Diavik Joint Venture.
|
(3) | |
Comparable period for the previous estimate refers to years
2017-2023 in the 2015 Technical Report.
|
(4) | |
Operating cash flow is defined, for the purpose of this discussion,
as revenue less operating expenses and taxes.
|
Updated Mineral Reserves and Resources
As compared to the mineral reserves in the 2015 Technical Report, the
mineral reserves in the 2017 Technical Report reflect exploration
success from the 2015 drilling campaign, as well as the mining
activities that took place in 2015 and 2016. Approximately 2.8 million
tonnes and 6.7 million carats were added to the year-end 2015 mineral
reserves at the A-154 North pipe, through the conversion of mineral
resources to mineral reserves. The current life of mine plan
incorporates this increase in mineral reserves at the A-154 North pipe.
In 2015, approximately 6.4 million carats were recovered, and in 2016,
approximately 6.7 million carats were recovered at the Diavik mine.
As of December 31, 2016, the Diavik mine had 16.3 million tonnes of
proven and probable mineral reserves containing 46.0 million carats of
diamonds, compared to 18.7 million tonnes of proven and probable mineral
reserves containing 52.8 million carats as of December 31, 2015. The
updated mineral reserves and mineral resources statement reflects a
decrease of 2.4 million tonnes containing approximately 6.8 million
carats, attributable almost entirely to depletion.
During 2016, the mineral resource and reserve models were updated based
on surveying in active mining areas, confirmation of orebody contacts
located by underground drilling, and the results of new samples taken.
In addition, model grades were adjusted from the results of production
batches sole-sourced from A-154 South and A-418 that were processed
separately through the plant. In anticipation of future production from
the A-21 pipe, additional drilling provided updated orebody geometry,
internal geology and grade estimation.
The tables below summarize the mineral reserves and mineral resources at
the Diavik mine as at December 31, 2016. Tonnes are reported as millions
of metric tonnes (Mt), diamond grades as carats per tonne (cpt), and
contained diamond carats as millions of contained carats (Mct). The
mineral reserves account for depletion due to production and sampling to
the end of December 31, 2016. The values shown are on a 100% basis for
the Diavik Joint Venture.
Table 1 – Mineral Reserves as at December 31, 2016 (100% basis)
Pipe |
| Proven |
| Probable |
| Proven and Probable | |
| Mineral Reserve | | Mineral Reserve | | Mineral Reserve | |
|
Mt
|
|
cpt
|
|
Mct
| |
Mt
|
|
cpt
|
|
Mct
| |
Mt
|
|
cpt
|
|
Mct
| |
A-154 North
| |
3.6
| |
2.4
| |
8.5
| |
4.6
| |
2.3
| |
10.8
| |
8.2
| |
2.3
| |
19.3
| |
A-154 South
| |
0.3
| |
3.2
| |
1.0
| |
0.7
| |
3.7
| |
2.8
| |
1.1
| |
3.6
| |
3.8
| |
A-418
| |
1.8
| |
4.1
| |
7.5
| |
1.9
| |
3.1
| |
6.0
| |
3.7
| |
3.6
| |
13.4
| |
A-21
| |
3.3
| |
2.8
| |
9.4
| |
---
| |
---
| |
---
| |
3.3
| |
2.8
| |
9.4
| |
Stockpile
| |
0.03
| |
2.9
| |
0.1
| |
---
| |
---
| |
---
| |
0.03
| |
2.9
| |
0.1
| |
Totals | | 9.1 | | 2.9 | | 26.4 | | 7.3 | | 2.7 | | 19.5 | | 16.3 | | 2.8 | | 46.0 | |
Note: Totals may not add up due to rounding
|
The mineral reserves estimate reflects a bottom screen size of 1 mm.
Stockpiles are minor run-of-mine stockpiles that are maintained at or
near the process plant and are available to maintain blending of
kimberlite sources to the plant.
Table 2 – Mineral Resources(1) as at
December 31, 2016 (100% basis)
Pipe |
| Measured |
| Indicated |
| Inferred | |
| Mineral Reserve | | Mineral Reserve | | Mineral Reserve | |
|
Mt
|
|
cpt
|
|
Mct
| |
Mt
|
|
cpt
|
|
Mct
| |
Mt
|
|
cpt
|
|
Mct
| |
A-154 North
| |
---
| |
---
| |
---
| |
---
| |
---
| |
---
| |
0.5
| |
2.3
| |
1.1
| |
A-154 South
| |
---
| |
---
| |
---
| |
---
| |
---
| |
---
| |
0.4
| |
2.8
| |
1.2
| |
A-418
| |
---
| |
---
| |
---
| |
---
| |
---
| |
---
| |
0.2
| |
2.5
| |
0.5
| |
A-21
| |
---
| |
---
| |
---
| |
0.4
| |
2.4
| |
0.9
| |
0.8
| |
3.5
| |
2.7
| |
Totals | |
---
| |
---
| |
---
| | 0.4 | | 2.4 | | 0.9 | | 1.9 | | 2.9 | | 5.5 | |
Note: Totals may not add up due to rounding
|
(1) |
|
Mineral resources are reported exclusive of mineral reserves, and
represent material remaining after mineral reserves have been
removed for reporting separately elsewhere
|
The mineral resources estimate reflects a bottom screen size of 1 mm.
The mineral resources have reasonable potential to be mined but do not
have mining losses and/or dilution applied at this time, and as such
they represent in situ values. Mineral resources that are not mineral
reserves do not have demonstrated economic viability.
Updated “Reserves-Only” Life of Mine Plan
The life of mine plan has been incorporated into the financial and
operating guidance for the fiscal year ending January 31, 2018, as
released by the Company on March 16, 2017. As such, there is no change
to the previously-announced guidance for the Company’s 40% share of the
Diavik mine.
Production
Between 2017 and 2025, 46.0 million carats are forecast to be recovered
from the processing of 16.3 million tonnes of ore. Production will be
sourced from three existing pipes at A-154 South, A-154 North and A-418,
with production from the A-21 pipe, which is currently in development,
commencing in 2018. Production will cease from the A-154 South pipe in
2019, followed by the A-418 pipe in 2021 and the A-21 pipe in 2023, with
production from the A-154 North pipe continuing until the end of the
mine life in 2025. Production figures do not include rough diamond
stocks at the mine, or any rough diamond inventory currently available
for sale by the Company. The tables below show the planned tonnes
processed and carats recovered for each pipe.
Table 3 – Tonnes Processed (millions) (100% basis)
Calendar Year |
| A-154 South |
| A-154 North |
| A-418 |
| A-21 |
| Total | |
2017 | |
0.46
| |
0.75
| |
0.94
| |
-
| |
2.18(1) | |
2018 | |
0.36
| |
0.83
| |
0.91
| |
0.21
| |
2.30
| |
2019 | |
0.23
| |
0.94
| |
0.77
| |
0.37
| |
2.30
| |
2020 | |
-
| |
0.95
| |
0.75
| |
0.60
| |
2.30
| |
2021 | |
-
| |
1.06
| |
0.36
| |
0.88
| |
2.30
| |
2022 | |
-
| |
1.13
| |
-
| |
1.17
| |
2.30
| |
2023 | |
-
| |
1.20
| |
-
| |
0.11
| |
1.31
| |
2024 | |
-
| |
1.23
| |
-
| |
-
| |
1.23
| |
2025 | |
-
| |
0.12
| |
-
| |
-
| |
0.12
| |
Total | | 1.05 | | 8.20 | | 3.74 | | 3.32 | | 16.34 | |
Note: Totals may not add up due to rounding.
|
(1) |
|
Total ore processed in calendar 2017 includes 27,000 tonnes of
stockpile material containing an estimated 76,000 carats.
|
Table 4 – Carats Recovered (millions) (100% basis)
Calendar Year |
| A-154 South |
| A-154 North |
| A-418 |
| A-21 |
| Total | |
2017 | |
1.60
| |
1.74
| |
4.18
| |
-
| |
7.60(1) | |
2018 | |
1.30
| |
2.00
| |
3.54
| |
0.59
| |
7.43
| |
2019 | |
0.85
| |
2.24
| |
2.69
| |
1.17
| |
6.95
| |
2020 | |
-
| |
2.18
| |
2.17
| |
2.30
| |
6.65
| |
2021 | |
-
| |
2.47
| |
0.85
| |
2.47
| |
5.78
| |
2022 | |
-
| |
2.64
| |
-
| |
2.70
| |
5.34
| |
2023 | |
-
| |
2.87
| |
-
| |
0.21
| |
3.08
| |
2024 | |
-
| |
2.85
| |
-
| |
-
| |
2.85
| |
2025 | |
-
| |
0.27
| |
-
| |
-
| |
0.27
| |
Total | | 3.75 | | 19.26 | | 13.43 | | 9.44 | | 45.96 | |
Note: Totals may not add up due to rounding
|
(1) |
|
The total carats recovered in calendar 2017 include an estimated
76,000 carats from the processing of 27,000 tonnes of stockpile
material.
|
In addition to the current mineral reserves, there are 1.9 million
tonnes of inferred mineral resources, of which 1.1 million tonnes (in
the aggregate) are distributed among the lower portions of A-154 South,
A-154 North and A-418. The operator of the Diavik mine, 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 economic
considerations applied to them that would enable categorization as
mineral reserves, and there is no certainty that they will be mined.
Therefore, they have not been included in the above mine plan. Mineral
resources that are not mineral reserves do not have demonstrated
economic viability.
The incremental 6.3 million carats recovered from 2017 to the end of the
mine life are forecast to be mined primarily from the A-154 North pipe,
which has the highest average carat value amongst the kimberlite pipes
at Diavik.
Diamond Prices
Using the prices realized in the Company's recent sales history, price
forecasts for the future A-21 pipe, and the current diamond recovery
profile of the Diavik processing plant, the Company has modelled the
approximate rough diamond price per carat for the kimberlite pipes at
the Diavik mine.
Table 5 - Modelled Diamond Prices by Kimberlite Pipe
Diavik Kimberlite Pipe |
| 2016 Average Price per Carat (US dollars) |
A-154 South
| | $126 |
A-154 North
| | $166 |
A-418
| | $90 |
A-21
| | $126 |
Capital and Operating Costs
Operating costs over the remaining life of the mine are forecast to
total approximately $2.8 billion. Given the remote location of the
Diavik mine, a large portion of the operating expenditure is fixed, with
the major cost items being human resources and fuel.
Development capital, which totals approximately $173 million including
contingencies, relates to the development of the A-21 pipe that is
forecast to enter production in 2018. Sustaining capital over the life
of mine is forecast to total approximately $216 million.
Table 6 -Capital and Operating Costs ($millions) (100% basis)
Calendar Year |
| Development Capital |
| Sustaining Capital |
| Total Capital |
| Operating Costs | |
2017 | |
95
| |
47
| |
142
| |
334
| |
2018 | |
64
| |
42
| |
106
| |
348
| |
2019 | |
14
| |
49
| |
63
| |
385
| |
2020 | |
-
| |
36
| |
36
| |
374
| |
2021 | |
-
| |
33
| |
33
| |
352
| |
2022 | |
-
| |
6
| |
6
| |
331
| |
2023 | |
-
| |
2
| |
2
| |
296
| |
2024 | |
-
| |
2
| |
2
| |
276
| |
2025 | |
-
| |
-
| |
-
| |
137
| |
Total | | 173 | | 216 | | 389 | | 2,832 | |
Note: Totals may not add up due to rounding
|
Excluded from capital and operating costs are marketing costs, royalties
payable to the government of the Northwest Territories, private
royalties and $165 million of estimated reclamation costs. The majority
of reclamation costs are expected to be incurred between 2024 and 2028.
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 Diavik Diamond Mine, estimated
mineral reserves and resources at, and production from, the 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", "modelled", "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 Diavik Diamond Mine; mining methods; currency exchange
rates; estimates related to the capital expenditures required to bring
the A-21 pipe into production, required operating and capital costs;
labour and fuel costs; world and US economic conditions; future diamond
prices; and the level of worldwide diamond production. These assumptions
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, risks associated with the remote location of and harsh
climate at the Diavik Diamond Mine, 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 www.sedar.com
and www.sec.gov,
respectively.
Qualified person
The scientific and technical information contained in this press
release has been prepared by Diavik Diamond Mines (2012) Inc., operator
of the Diavik Diamond Mine, under the supervision of Calvin Yip, P.
Eng., Principal Advisor, Strategic Planning of Diavik Diamond Mines
(2012) Inc., and a Qualified Person within the meaning of National
Instrument 43-101 of the Canadian Securities Administrators.
About Dominion Diamond Corporation
Dominion Diamond Corporation is a Canadian diamond mining company
with ownership interests in two major producing diamond mines. Both
mines are located in the low political risk environment of the Northwest
Territories in Canada. The Company operates the Ekati Diamond Mine, in
which it owns a controlling interest, and also owns 40% of the Diavik
Diamond Mine. It supplies premium rough diamond assortments to the
global market through its sorting and selling operations in Canada,
Belgium and India.
For more information, please visit www.ddcorp.ca,
or contact:
View source version on businesswire.com: http://www.businesswire.com/news/home/20170331005869/en/
Contacts:
Dominion Diamond Corporation
Jacqueline Allison, (416) 205-4371
Vice-President,
Investor Relations
jacqueline.allison@ddcorp.ca
Source: Dominion Diamond Corporation
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