As a permitting decision on the Gahcho Kué diamond project, in the Northwest Territories, draws closer, 49% partner Mountain Province Diamonds (MPV-T, MDM-K) has released a new resource estimate for the project.
The new resource is for Tuzo Deep, the deeper portions of the Tuzo kimberlite, one of three pipes that Mountain Province and majority partner De Beers plan to mine. Tuzo Deep now contains 3.6 million indicated tonnes grading 1.67 carats per tonne for 6 million carats, plus inferred resources of 8.9 million tonnes grading 1.61 carats per tonne for 14.4 million carats.
In a press release, Mountain Province president and CEO Patrick Evans noted that the update increases the project’s overall indicated diamond content by 12% and inferred diamond count by 80%.
Overall indicated resources for Gahcho Kué now stand at 33.8 million tonnes grading 1.67 carats per tonne for 56.6 million carats, with inferred resources adding 11.3 million tonnes grading 1.64 carats per tonne for 18.5 million carats.
Probable reserves total 31.3 million tonnes grading 1.57 carats per tonne for 49 million carats in the Tuzo, 5034 and Hearne kimberlites.
The updated resource is based on geological and grade reports De Beers completed in December on Tuzo from 360 metres depth to 564 metres.
While De Beers provided grade and tonnage estimates based on the work, it did not complete a resource estimate, so Mountain Province commissioned an independent party to prepare a resource to CIM standards.
Evans said the two companies are in talks about a follow-up drill program for Tuzo that would extend to 750 metres depth, and noted that all three kimberlites are open at depth.
The Mackenzie Valley Environmental Impact Review Board is expected to make a recommendation on development of Gahcho Kué this month, based on a two-year environmental impact review that was completed in December.
In other recent news, on Friday, operator De Beers announced it had signed a Socio-economic Agreement with the government of the Northwest Territories covering Gahcho Kué.
The agreement includes the establishment of a training and apprenticeship program, with at least 30 spots reserved for Northwest Territories residents, and provides for incentives to help Gahcho Kué employees living in the territory, including priority hiring and relocation benefits.
Gahcho Kué is 300 km east-northeast of Yellowknife and 80 km east-southeast from De Beers’ Snap Lake mine, and will be the Northwest Territories’ fourth diamond mine if it is approved.
A 2010 feasibility study demonstrated that an open-pit operation at Gahcho Kué could produce 4.5 million carats per year over 11 years. The study pegged the project’s net present value at US$277 million (US$135.9 million after sunk costs), and calculated its internal rate of return at 33.9% (20.7% including sunk costs).
Mountain Province shares traded at $5.23 this afternoon in Toronto, in a 52-week range of $3.40-5.70. The company has 94.2 million shares outstanding.