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Positive Prefeasibility Study - Jericho Diamond Project To Produce 2,700,000 Carats Over Eight Years |
11/30/1999 |
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TORONTO, Nov. 30 /CNW/ - The Jericho Diamond Project, wholly owned byTahera Corporation ('Tahera'), is located in the new Territory of Nunavut, approximately 420 km northeast of Yellowknife, Northwest Territories, and 170 km north of Ekati, Canada's first diamond mine.
SRK Consulting (Steffen, Robertson and Kirsten Canada Inc.) have completed a prefeasibility study for the Jericho Diamond Project. DRA MineralPlant Design Engineers, who have extensive experience in design and construction of diamond plants world-wide, provided detailed diamond plant engineering for the study.
The prefeasibility study indicates that approximately 2.7 million caratswill be produced over an eight year mine life. The current plan consists ofopen pit mining of the Jericho kimberlite, and processing 300,000 tonnes of kimberlite ore per annum.
DRA examined two options for the location of the proposed diamond plant, namely adjacent to the Jericho open pit or sited at the Lupin Gold Mine (ownedby Echo Bay Mines Ltd.), located 28 km southeast of the Jericho kimberlite.The Facilities Use Agreement between Echo Bay Mines Ltd. and Tahera provides that upon completion of a positive feasibility study, and subject to the terms set out in the agreement, the Lupin Mine site and facilities will be available to Tahera for the purpose of construction and operation of a long-term commercial production facility.
Based on the prefeasibility study, the option to construct a new diamond plant at the Lupin Mine site is favoured. Current plans call for ore to be mined by contractor and stock piled at the Jericho site. A contractor will haul ore seasonally via a winter road from the Jericho site to the Lupin Mine site where it will be stock piled next to the proposed diamond plant. The proposed diamond processing plant will have a 50 tonne per hour capacity and operate year round.
Tahera favours the option to use the Lupin facilities as the location ofthe diamond processing plant due to its central location in relation to the Company's extensive exploration landholdings in the area. Future economic kimberlite discoveries could be treated at the proposed Lupin Mine site diamond plant. In addition, Tahera believes that permitting of the mining project will be facilitated, environmental impacts will be minimised and capital cost savings will be achieved as a result of locating the diamond plant at the Lupin Mine site.
The following pre-tax parameters have been defined for the proposed minein the prefeasibility study:
Total Geological Resource 6.5 million tonnes @ 0.82 carats/tonne
Potential Mining Reserve 2.345 million tonnes @ 1.13 carats/tonne
Diamond Valuation US$65 per carat (C$96 per carat)
Capital Cost
Process Plant C$13.8 million
Infrastructure at Lupin C$2.6 million
Jericho Site (site prep., roads, & pre-stripping) C$8.8 million
Other (Echo Bay credit, contingency, working capital) C$15.1 million
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C$40.3 million
Production Rate 300,000 tonnes per annum
Diamond Production 2.7 million carats
Operating Costs C$63/tonne
Gross Revenue C$254 million
Operating Cash Flow C$106 million
Mine Life 8 years
IRR 33.2%
Payback 2 years
Tahera has very considerable tax pools that will be allocated to theproject.
Sensitivity analysis indicates that the project economics are mostsensitive to diamond valuation, grade and the US-Canadian dollar exchangerate. The prefeasibility study concluded that the project is economicallyviable based on the current assumptions.
Feasibility Study
SRK Consulting recommended that further resource definition of theJericho kimberlite at depth be undertaken to complete the feasibility study.This work program, entailing a four-hole 1,800 meter diamond drilling programhas recently commenced. The objective of the program is to provide better definition of the geometry of the Jericho kimberlite between the 100 and 300meter level, and convert the resources in this area from inferred toindicated. Due to the conservative nature of the geometric modeling in this area, the drill program is expected to add to the current resource base. A conceptual underground mine plan has been developed for resources below the proposed open pit in anticipation of the resources being converted to reserves which could potentially improve the project economics significantly.
A re-valuation of the 10,500 carat parcel of diamonds, extracted from theJericho kimberlite during the underground bulk sample program, is currently underway. The updated diamond valuation was commissioned to provide valuation numbers for the feasibility study that reflect current world diamond market conditions. Tahera plans to sell the diamonds on completion of the analysis.
Results from both the drilling program and the diamond re-valuation will be incorporated into the final feasibility study.
Project Development
The permitting process for the Jericho Diamond Project is underway. Awater license application for the proposed Jericho minesite was submitted tothe Nunavut Water Board in November 1999. The application is supported by a revised Project Proposal which was prepared to meet the requirements of theNunavut environmental assessment and review process. This Project Proposal will assist the various regulatory bodies in their evaluation and assessmentof the Jericho Diamond Project.
Echo Bay Mines Ltd. and Tahera negotiated a Facilities Use Agreement inOctober 1996. The agreement entitles Tahera to construct and operate the proposed production facility at the Lupin Mine site, subject to termsset out in the agreement. A joint technical committee will review the proposed development and ascertain the capital and operating cost benefits achieved bylocating the diamond plant at the Lupin Mine site. The agreement stipulates that one half of the capital cost savings will be credited to Echo Bay MinesLtd.
Current plans call for completion of the feasibility study in Q2 2000.Subject to obtaining regulatory approvals, finalizing arrangements with Echo Bay and project financing, plant commissioning is planned for Q4 2001, followed by commencement of commercial production in Q1 2002. Tahera iscurrently evaluating options to finance the proposed Jericho Mine development.
Tahera Corporation (TAH:TSE) is engaged in the exploration for and development of diamond deposits in Canada's Northwest Territories and Nunavut.
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For further information: Roy Meade, Deputy Chairman & Feasibility Study Co-ordinator - OR - Grant Ewing, VP Investor Relations & Corporate Development Tel: (416) 777-1998, Fax: (416) 777-1898, Toll Free: (877) 777-2004, Email: investor@tahera.com, www.tahera.com
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