Positive Feasibility Study - Excellent Project Economics Jericho Diamond Project To Produce 3,000,000 Carats Over Eight Years |
06/19/2000 |
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TORONTO, June 19 /CNW/ - Tahera Corporation is pleased to announce theresults of the Jericho Diamond Project feasibility study. Steffen, Robertsonand Kirsten Canada Inc. (SRK Consulting) was contracted to complete thefeasibility study. Dowding Reynard & Associates (Pty) Ltd. (DRA), who haveextensive experience in design and construction of diamond plants in Canadaand throughout the world, provided detailed diamond plant engineering for thestudy. Nuna Logistics, experienced Nunavut mining contractors, provided theopen-pit mining cost estimates. Tahera Corporation plans to proceed to Projectfinancing as the Jericho Diamond Project is technically and economicallyrobust.
The Jericho Diamond Project, wholly owned by Tahera Corporation, islocated in the Territory of Nunavut, approximately 420 km northeast ofYellowknife, Northwest Territories, and 170 km north of Ekati, Canada's firstdiamond mine.
Mine Plan
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The Jericho Diamond Project feasibility study is centered on the land-based Jericho kimberlite pipe. The study indicates that approximately 3.0million carats will be produced over an eight-year mine life. The current planconsists of open-pit mining of 1.9 million tonnes of kimberlite reserves forthe first 4 years, followed by underground mining of 614,000 tonnes ofkimberlite reserves.
Approximately 80% of the mining reserve is derived from the high gradeCentral Lobe, containing a probable reserve of approximately 2.0 milliontonnes with a recovered grade of 1.29 carats per tonne. Approximately 500,000tonnes of ore at a recovered grade of 0.77 carats per tonne will be mined fromthe Northern Lobe, which will be processed at the end of the mine life. Aspart of the mine plan, approximately 780,000 tonnes of inferred resource inthe Southern Lobe and 870,000 tonnes of inferred resource in the Northern Lobewill be mined and stockpiled. The overall stripping ratio is 8.4.
Only 614,000 tonnes of the Central Lobe will be extracted undergroundusing a combination of sub-level caving and open benching mining methods. SRKConsulting has assumed the underground grade delivered to the plant is 0.99carats per tonne, allowing for 30% dilution. Underground mining costs arebased on a contractor's estimate. The underground orebody will be accessedfrom the open-pit via a decline.
The proposed 50 tonne per hour diamond processing plant will beconstructed approximately 1 kilometre from the Jericho kimberlite and willoperate year round. The processed kimberlite containment area for kimberlitefines will be located in close proximity to the plant. The coarse kimberliterejects will be stockpiled adjacent to the plant and used for reclamation asrequired on the processed kimberlite containment area.
During construction approximately 100 people will be employed. Thediamond plant operation will require 40 employees working year round. The open-pit mining contractor will employ approximately 104 people for 9 months of theyear. The underground mining contractor will engage approximately 24 peoplefor 3 years during the development and mining programs.
The following chart shows a comparison between the feasibility study andthe previously released prefeasibility study results. The prefeasibility studynumbers were based on the diamond plant being constructed at the Lupin MineSite and they excluded the site reclamation and diamond marketing costs.
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Jericho Diamond Project Prefeasibility
(Jericho kimberlite) Feasibility Study Study
(pre-tax) (pre-tax)
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Base Case Upside (based
(SRK diamond on WWW modeled
valuation) diamond valuation)
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Total resource 7.1 million 7.1 million 6.5 million
tonnes tonnes tonnes
@ 0.84 cts/t @ 0.84 cts/t @ 0.81 cts/t
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Indicated resource 3.7 million 3.7 million 2.8 million
tonnes tonnes tonnes
@ 1.14 cts/t @ 1.14 cts/t @ 1.08 cts/t
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Diamond valuation US$75/ct US$88/ct US$65/ct
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Mining reserve 2.53 million 2.53 million 2.345 million
tonnes tonnes tonnes
@ 1.19 cts/t @ 1.19 cts/t @ 1.13 cts/t
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Total carats
produced (000's) 3,007 3,007 2,660
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Carats mined
open-pit (000's) 2,397 2,397 2,660
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Carats mined
underground (000's) 610 610 Nil
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Revenue (C$000's) 326,205 387,191 254,378
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Operating cost
(C$000's) 156,872 156,872 146,704
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Operating cost
per carat (C$/ct) 52.17 52.17 55.15
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Marketing (5%)
(C$000's) 16,310 19,360 not included
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Operating cash
flow (C$000's) 153,023 210,959 105,803
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Capital expenditure
- open pit (C$000's)
Diamond plant 10,057 10,057
Facilities/plant set-up 14,092 14,092
Site preparation/road/
tailings dam 5,781 5,781
Mob/demob -
mining contractor 2,679 2,679
Owners costs/indirects 1,329 1,329
Pre-production
stripping/commissioning 7,409 7,409
Working capital 3,175 3,175
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44,522 44,522 40,300
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Capital expenditure -
underground (C$000's) 7,936 7,936 Nil
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Sustaining capital
(C$000's) 2,489 2,489 1,800
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Cash flow after capex
(C$000's) 98,076 156,012 63,645
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NPV @ 10% (C$000's) 46,650 83,391 31,724
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IRR 34.3% 50.7% 33.2%
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Mine life (years) 8 8 8
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Pay back (months) 33 25 24
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Project Timeline
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Since the diamond plant will now be located adjacent to the Jerichokimberlite, Tahera has withdrawn the water permit application made to theNunavut Water Board (NWB), which was based on the plant being located at theLupin Mine Site. The new water permit and land lease applications will besubmitted to the NWB, the Department of Indian Affairs and NorthernDevelopment (DIAND) and the Kitikmeot Inuit Association (KIA) in June 2000. Itis anticipated that project permitting will be complete by the second quarterof 2001.
Following Tahera's decision to build the diamond plant at the JerichoSite, the modified time line below has been established for development of theJericho Diamond Project:
Permits issued Q2 2001
Project financing Q2 2001
Design & procurement of plant Q2 - Q4 2001
Mobilization to site, pre-stripping & starter pit Q1 - Q2 2002
Diamond plant construction & commissioning Q2 - Q4 2002
Open-pit mining Q2 2003 - Q4 2005
Underground development commences Q1 2006
Underground production Q4 2006 - Q3 2008
Financing
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Tahera's goal is to secure project financing for construction of theJericho Diamond Project in early 2001. Discussions have taken place withvarious parties regarding methods of financing, and indications received showthat a substantial portion of the required capital could be debt financed.
Development of the underground mine will be financed from project cashflow.
Upside Potential
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In the feasibility study, SRK Consulting utilized an average modeleddiamond valuation of US$75 per carat. This figure is approximately 17% lowerthan the results from the WWW International Diamond Consultants Limited studycompleted in late 1999. Achieving the WWW modeled diamond valuation wouldsignificantly improve the economics of the Jericho Diamond Project.
As part of the mine plan, approximately 780,000 tonnes of Southern Lobeinferred category kimberlite and 870,000 tonnes of Northern Lobe inferredcategory kimberlite, both of which are not currently in reserve, will bemined. Following adequate bulk sampling, a portion of this resource may beconverted to mining reserves. It may be possible to mine additional indicatedresource from the Northern Lobe if the economics change (i.e. if a higherdiamond valuation is realized).
The underground grades may be improved when further underground drillingis completed and detailed ore outlines are established for stope layouts.
Tahera believes that there is excellent potential to discover additionalkimberlites in close proximity to the Jericho kimberlite. Numerous highpriority kimberlite targets have been generated, some of which will be testedas part of the 2000 exploration program. Future kimberlite discoveries couldbe readily bulk sampled at the proposed commercial diamond plant and anyeconomic discoveries could potentially enhance both the scale and economics ofthe Project.
SRK Consulting and WWW International Diamond Consultants Limited haveapproved the contents of this press release in so far as it relates to them.
Tahera Corporation (TAH:TSE) is focused on exploring its highlyprospective landholdings in Nunavut Territory. In tandem with this diamondexploration focus, Tahera is committed to bringing its wholly-owned JerichoDiamond Project to commercial production. Tahera also has interests inextensive exploration landholdings in Nunavut and the NWT through explorationJoint Ventures with Kennecott Canada Exploration Inc. and Ashton Mining ofCanada Inc.
%SEDAR: 00003313E
For further information: Grant Ewing, Vice President Investor Relations and 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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