Gahcho Kue Project

Overview

The Gahcho Kue diamond project is located 300km east-northeast of Yellowknife in the District of Mackenzie, Northwest Territories, Canada. 

Diamonds were first discovered in the Northwest Territories in 1989. The Gahcho Kue property was initially staked in 1992 by Inukshuk Capital Corp., and optioned to Mountain Province Diamonds, Inc (MPD) later the same year. MPD sold 51% interest to De Beers in 2009. 

The Gahcho Kue kimberlite field occurs in the southeast of the Slave Craton.  Three diamondiferous kimberlite pipes are to be sequentially open pit mined: the 5034, Hearne and Tuzo. 

Mineral reserves estimates for 5034, Hearne and Tuzo diamondiferous kimberlite pipes are 31.3 Mt at 1.57cpt for 49.0 million carats. Mine life is estimated at 11 years with start-up in 2014. 

Mine plans call for the processing of 3 million tonnes of kimberlite ore per year in a processing plant – crushing, secondary grinding, dense media separation, recovery plant.

 The main risk and/or opportunity for the project are represented by diamond prices. 

The mine will create 1,000 jobs during the two year construction phase and some 400 permanent jobs during the 11 year mine life. Territorial and Federal coffers would receive an estimated $800 million as royalties and taxes.

Location

The Gahcho Kue diamond project is located 300 km east-northeast of Yellowknife in the District of Mackenzie, Northwest Territories, Canada, and 150 km south-southeast of the Diavik and Ekati diamond mines. Access is by plane, helicopter and during the winter months by ice roads that also connect other NWT diamond mines withYellowknife. 

Northwest Territories is located in northern Canada. It borders Nunavutto the east, Yukon to the west, the provinces of British Columbia,Alberta and Saskatchewan to the south, and the Arctic Oceanto the north. 

The territory was created in 1870 through a land transfer from the Hudson Bay Company to the government of Canada. The Arctic Archipelago was transferred from the United Kingdom to Canadain 1880. In 1898, Yukon stopped being part of Northwest Territories. Alberta and Saskatchewan were created from parts of the Northwest Territoriesin 1905. 

The very first Europeans to reach it were the Vikings around 1000 A.D. They were followed by English explorers - Martin Frobisher in 1576 and Henry Hudson in 1610. 

For hundred of years the territory was mainly valued for its furs until the time of the Yukon Gold Rush when for the first time a passing prospector staked gold claims - that weren’t worked and were forgotten - in the Great Slave Lake area. In the 1920’s oil was discovered at Norman Wells on theMackenzie River. In 1930, Gilbert LaBine discovered uranium ores atGreat Bear Lake. In 1933, Johnny Baker and Herb Dixon rediscovered the gold outcrops ofYellowknifeBayonGreat Slave Lake. 

In 1989, after a decade long search geologists Chuck Fipke and Stu Blusson were the first to discover diamonds in North Americaon the shores of a little lake in the Northwest Territories (NWT). Their discovery developed into a rich diamond mine – the Ekati which began production in 1998. Other NWT diamond mines were subsequently opened: Diavik (2003), Jericho (2006), and Snap Lake (2007).  

The Northwest Territories encompass the Great Bear Lake, the Great Slave Lake, the Arctic Ocean flowing Mackenzie River and islands of the Canadian Arctic Archipelago. 

Aboriginal people are in the majority with 50.3% of the population. 

Some 120 to 310m deep permafrost underlies the Kahcho Kue project area. The active layer is 0.4 to 4.0m deep. Water ground flow is seasonal and restricted to the active layer. 

The dominant ecosystem types are Scrub Birch – Labrador Tea Tundra and Scrub Birch – Cloudberry Low Shrub Bog. 

Wildlife in the project area include barren-ground caribou (project not located on calving grounds), grizzly bears, wolves, Arctic and red foxes, wolverines, muskoxen, moose, upland and waterbirds. 

The project is located some 230 km south of the Arctic Circle and the climate is extreme and semiarid. Freeze-up and ice break-up occur in November and June, respectively.

Geology and Mineralization

The Gahcho Kué kimberlite cluster occurs in the southeast Slave Craton. It comprises four pipes; the Hearne, 5034, Tuzo, and Tesla bodies. The Hearne Pipe, most of the 5034 Pipe, and the Tuzo and Tesla pipes occur underKennadyLake, which has an average depth of 8 m. At 540 Ma the kimberlites may represent the oldest known occurrences of kimberlite on the Slave Craton. 

Gahcho Kue kimberlites are overlain by varying thickness of glacial boulder outwash and lake sediments (averaging 10 m thick), and have a combined water and sediment cover as much as 25 m thick. The pipes are steep-sided and were formed by the intrusion of several distinct phases of kimberlite in which the textures vary. 

Mineral reserves estimates for 5034, Hearne and Tuzo pipes are 31.3Mt at 1.57cpt for 49.0 million carats.

Mining & Operation 

Kahcho Kue’s diamondiferous pipes would be open pit mined in a sequential order according to their value: 5034, Hearne and Tuzo. 

The kimberlite pipes have the following estimated mine life: 5034 – 4.2 yrs; Hearne - 1.4 yrs; Tuzo – 3.8 yrs for a total of 9.7 years. Strip ratio varies from 7.8 to 9.6. Final pit elevations are at 121.0 masl for 5034; 217.0 masl for Hearne; and, 121.0 masl at Tuzo. 

The Pre-strip activities would commence in 2013, the Pre-production activities in 2014 and Production is scheduled for 2015. Mine life was estimated at 10 years. 

During the mine plan, 31,265,064 ore tonnes are mined at an average grade of 157 carats per hundred tonnes for a total 49,027,565 mined carats. 

Orebodies are overlain by 10 m to 15 m of water and mining would involve the construction of dykes and partial dewatering of theKennadyLake. Slopes would be dewatered into the pit and from there pumped out and discarded. 

Waste rock from the peninsula of 5034 would be used in the construction of roads, dykes and other earthwork projects. Both the 5034 and Hearne once mined out will be used to store waste rock and processed tailings. 

Haul roads and in-pit ramps were designed at a 10% gradient and 30 m width, which will provide a running surface that is triple the width of a CAT 793D haul truck (7.68 m). Bench heights of 12 m were selected. 

The mine would purchase and operate all mining equipment. Maintenance would be performed by the owner with support from major suppliers. 

Mining, service and support equipment include: Two O&K RH340B Shovel (33 m3); One O&K RH90C Excavator (12 m3); One CAT 994F FEL (17 m3);  Two CAT 992K FEL (12 m3); Nine CAT 793D Truck (218 t); Three CAT 777F Truck (90 t); Four CAT D10T Track Dozer; Two CAT 16M Grader; Two CAT 834H RT Dozer; Two Sandvik DR460 Drill (250 mm);  Two Sandvik D25KS Drill (165 mm);  One Sandvik DX800 (102 mm); One Water/Sand Truck (777F); Four Tool Carriers (CAT 930H); Two Track Excavators (CAT 336DL); Two Articulated Trucks (CAT 740); Two Service Trucks; Two Fuel trucks; Two welding Service trucks; 22 Pick-ups.

Processing

The main requirement for the plant was to be able to process 3 Mtpa of kimberlite ore (dry basis) and to recover liberated diamonds from -28 mm to +1 mm size fraction. 

The process consists of primary secondary crushing followed by wet screening. Screen oversize is fed to a high pressure grinding rolls (HPGR). Product from the rolls is screened and fed to the dense media separation (DMS) cyclone plant. Concentrate from the DMS reports to recovery where a combination of X-ray and grease table technology recovers the diamonds for final sorting before dispatch to Yellowknife. 

Water is supplied from Kennady Lake and used for specific plant clean water requirements. At the same time process water would be sourced from pit dewatering, and recycling of process water. 

Power needs would be covered by an on-site diesel generation plant. 

Materials and consumables would be transported during the winter over an ice road and year round by aircraft.

Environment & Community

The project is environmentally sound. Environmental risks associated with the project were identified and are going to be successfully mitigated as they are well known from other similar mining projects in the Arctic. 

The project provides socio economic benefits. The mine will create close to 1,000 jobs during the two year construction phase and some 400 permanent jobs during the 11‐year operational phase. Additional employment will be created by service providers to operations. Territorial and Federal taxes and royalties are estimated to be close to $800 million. In addition, property and payroll taxes will add significant tax revenues to the local municipality.