If De Beers Canada shuts down its Snap Lake diamond mine it would have devastating effects on the N.W.T. economy, mining analysts say.

Officials with De Beers told CBC on Wednesday that amid a downturn in diamond prices and a costly water problem that required a licence amendment, they're looking at many options including shutting down the mine, located 220 kilometres northeast of Yellowknife.

About 700 jobs are in jeopardy at Snap Lake, 300 of which are held by Northerners.

"I think it will rock our economy quite frankly," says Tom Hoefer, the executive director of the NWT and Nunavut Chamber Of Mines.

"Our economy is not very healthy right now as it is," Hoefer says.

"We've heard the reports from the previous finance minister on the situation. You know, we've got falling revenues, we've got increasing costs. That's not very helpful."

But Paul Zimnisky, an independent, New York-based diamond industry analyst, says a shutdown doesn't necessarily mean the end of Snap Lake.

"This mine has always been a problem child for De Beers and I think the current market weakness just compounds the problem," he says.

"I think a more likely scenario would be to put the mine on care and maintenance or put it up for sale."

De Beers officials won't say when a final decision will be made on the future of the mine, but they did say it could be as early as this weekend.