Further expansion of underground mining operations at the Ekati diamond mine could keep the mine in business until 2042, according to a preliminary economic assessment released by Dominion Diamond Corporation on Wednesday.
Dominion operates the mine, and owns a controlling interest.
The Fox Deep project would expand the mine by developing an underground operation below the mined-out Fox open pit. It follows on the Misery Deep project, which the company says will expand the life of the mine from 2033 to 2035.
Tom Hoefer, executive director of the NWT & Nunavut Chamber of Mines, says Yellowknifers should be doing a happy dance.
"A year ago we thought that Ekati had a life to 2021," says Hoefer. "And so with their work on other pipes and now adding Fox in they've created a very exciting future for the N.W.T.'s mining industry."
Hoefer points to one of the Northwest Territories' other major diamond operations, Diavik Diamond Mine, which is also partially-owned by Dominion.
"We know that in 2025 Diavik is going to close," Hoefer says. "That's going to be a significant hit on our economy because that's about a 1,500-person operation."
Hoefer says the expansion of Ekati's underground operation will be a "significant injection" to the Northwest Territories economy.
The Fox Deep project is expected to cost about $628 million U.S. [$760 million in current CAD] to develop, and $1.6 billion U.S. to operate.
The mine hopes to recover about 11 million carats between 2033 and 2042.
The preliminary economic assessment is only a first step. A pre-feasibility study is now underway, and should be complete by the end of 2018.
Paul Zimnisky, an independent diamond industry analyst based in New York, says Dominion will be looking closely at the numbers.
"It's looking at the actual value of the project and is it worth making an investment and move forward," says Zimnisky. Variables include future diamond prices, the cost to build the mine, and the regulatory timeline.
"As they conduct further studies, a lot of the factors and the variables could change. If diamond prices significantly go down… or if they had new technologies developed, they could change potentially the mine's plans" says Zimnisky.
Zimnisky thinks the good relationship between Ekati and the government will be an asset. "There are existing relationships so that makes this process easier than if it was a brand new company or brand new mine in this area," he says.
Ekati officially began production in October 1998, following extensive exploration and development work dating back to 1981.
The Fox pipe produced more than 8.7 million carats between 2005 and 2014.
An earlier version of this story referred to Misery Deep as "recently approved." That description has now been removed. To clarify: the project was recently approved by Dominion Diamond's board of directors, not regulators.Sep 11, 2017 8:28 AM CT