Gold ramps up, diamonds change hands, rare earths hit roadblock

By Derek

Below is a summary of developments from operating mines in the NWT and Nunavut.

NWT Gahcho Kue

Owner: De Beers Canada (51 per cent) and Mountain Province

Diamonds (49 per cent)

Resource: Diamonds

Location: 280 km northeast of Yellowknife

Update: Mountain Province Diamonds sold 961,024 carats to bring in $128.7 million during quarter one of 2023, marking the highest quarterly revenue in the history of the company.

Mountain Province yielded 1.3 million carats at Gahcho Kue during Q1, an 11 per cent improvement over the first quarter of 2022, the company stated on April 13. The average grade was 1.72 carats per tonne, which marked a three per cent increase compared to the first three months last year.

For the 2022 full year, the company reported total sales revenue of $388.9 million, a significant increase from $298.3 million recorded in 2021.

Also among its 2022 highlights, Mountain Province alluded to “a significant discovery beside and connected to the Hearne open pit that has potential to transition Gahcho Kue to an underground producer, and potentially increasing mine life.”

Senior partner De Beers does not publicly report its recoveries or sales figures.

Diavik

Owner: Rio Tinto

Resource: Diamonds

Location: 300 km northeast of Yellowknife

Update: Rio Tinto extracted 954,000 carats at Diavik during the first quarter of 2023. That figure was down 28 per cent from the final quarter of 2022 and retreated by four per cent compared to the first quarter of 2022.

With 2022 marking the first full year of 100 per cent Rio Tinto ownership of Diavik — after taking over the 40 per cent previously held by Dominion Diamond Mines in November 2021 — Rio Tinto realized 4.65 million carats recovered in 2022.

In February, the global mining giant announced that it had approved a $40-million investment to proceed with underground mining of Diavik’s A21 pipe, below the existing A21 open pit. During the first phase of underground mining of Diavik’s A21 pipe, an additional 1.4 million carats of rough diamonds are expected to be delivered.

Diavik is now expected to end commercial production in the first quarter of 2026 instead of in 2025.

“Rio Tinto’s decision to support the underground development of the A21 pipe was prefaced on compelling industry fundamentals,” stated Sinead Kaufman, chief executive of Rio Tinto’s minerals portfolio. “Our proven capacity is to safely develop diamond mines in extreme conditions and a track record in competing successfully in the global diamond industry. This is good news for our employees, partners, suppliers and local communities in the Northwest Territories.”

Since mining began at the site in 2003, Diavik has produced more than 100 million carats of diamonds.

Ekati

Owner: Arctic Canadian Diamond Company

Resource: Diamonds

Location: 310 km northeast of Yellowknife

Update: Australia’s Burgundy Diamond Mines Ltd. announced in March its intentions to purchase the Ekati diamond mine from Arctic Canadian Diamond Company for approximately

$186 million.

Rio Tinto extracted 954,000 carats at the Diavik mine during the first quarter of 2023. NNSL file photo

Ekati generated revenue of (US)$494 million based on the sale of 4.2 million carats of diamonds in 2022.

The mine, with a workforce of close to 1,100, has probable ore reserves of 26.1 million carats.

Arctic Canadian Diamond Company acquired Ekati in February 2021 after Dominion Diamonds filed for insolvency protection in April 2020. Prior to that, the Washington Companies, a private entity, purchased Ekati for (US)$1.2 billion in November 2017.

The site has been in production since October 1998. The mine life is currently projected to run until 2028, however, ongoing exploration could extend that.

Burgundy’s CEO is Kim Truter, who was formerly the CEO of De Beers Canada, making him familiar with the NWT mining scene. He also has past experience as a senior manger with Rio Tinto.

The prospective new Ekati owner stated that its immediate strategy will consist of “optimizing Ekati’s current mine performance and extending mine life through, among other things, underwater remote mining, assessment of the Jay deposit and Fox Underground opportunities, and systematic exploration using newly applied machine learning (artificial intelligence) technology, capturing incremental margins along the diamond value chain by cutting and polishing coloured Ekati diamonds at Burgundy’s commercial facilities in Perth (Australia) and leveraging collaborative sales and agreements with international jewelers.”

Nechalacho

Owner: Avalon Advanced Materials

Resource: Rare earths

Location: 100 km southeast of Yellowknife

Update: The rare earths processing facility under construction in Saskatoon that is intended to intake ore from the Nechalacho mine was halted in April as Vital Metals, parent company to operator Cheetah Resources, announced that it would spend three months seeking other sources of funding to potentially build a sustainable business model for the facility.

Future mining, shipping and processing from the mine’s North T zone, as planned, “will not achieve positive cashflow from the project,” Vital Metals stated in a news release.

The Saskatoon plant is approximately half built and has cost the company close to $20 million so far.

Richard Crookes, Vital’s interim chairman, said low rare earth prices and increased costs have been taking a toll, weaking markets.

“There is no economic imperative to complete this demonstration project at the current time, however, the Saskatoon processing facility can provide valuable intermediate processing capacity for a downstream rare earth hub in Saskatchewan,” Crookes stated in a news release. “North America needs independent downstream processing to further enable the transition to the green economy and Vital is looking forward to working with like-minded parties to deliver a completed project.”

Owner: Baffinland Iron Mines

Resource: Iron

Location: 160 km south of Pond Inlet

Status: Baffinland Iron Mines Corp. is seeking to maintain a shipping limit of six million tonnes of iron ore per year rather than having to revert to its former 4.2 million tonne cap at Milne Inlet, which was in effect prior to 2018. Without such approval, the company stated that scaled back operations will translate into job losses at the Mary River mine.

Baffinland is looking for a recommendation from the Nunavut Impact Review Board on this matter by August.

The company’s bid for a production and shipping increase to 12 million tonnes through its phase two expansion proposal was rejected by Northern Affairs Minister Dan Vandal in November 2022 due to environmental and socio-economic concerns. Baffinland has since abandoned its proposal for a 110-km railway to Milne Inlet and is rekindling the idea of a previously approved 149-km railway railway south to Steensby Inlet. However, the latter project is estimated to cost five times more, so the company is looking for financial backing. The project certificate for the Steensby site permits the shipping of 18 million tonnes of iron ore per year. The company has stated that its objective is to eventually reach 30 million tonnes annually.

Meliadine

Owner: Agnico Eagle Mines

Resource: Gold

Location: 25 km north of Rankin Inlet

Status: At Meliadine, the expectation is to extract up to 375,000 ounces of gold this year. The first quarter saw 90,467 ounces produced. The cash cost to mine each ounce was $937, making it 12.6 per cent higher than the $832 average among Agnico Eagle’s dozen operating mines globally. The company is proposing to expand Meliadine by developing the Tiriganiaq-Wolf underground deposit and going underground at the Pump, Fzone and Discovery zones. The initiative is projected to extend the mine life at Meliadine to 2043, an additional 11 years. It would entail an additional 225 camp rooms for staff, a new airstrip, a wind farm and disposal of tailings and waste rock in a designated pit and a wind farm. Exploration plans at Meliadine in 2023 will cost $16.6 million to pay for 63,200 metres of drilling at the Tiriganiaq, Pump, Normeg, Wesmeg and F-Zone deposits and to further development of the exploration drift.

Amaruq

Owner: Agnico Eagle Mines

Resource: Gold

Location: 160 km northwest of Baker Lake

Status: The objective for the Meadowbank Complex in 2023, where gold from the Amaruq deposit is processed, is to produce just over 400,000 ounces, a significant increase from 275,000 ounces in 2022. The first quarter of this year resulted in 111,110 ounces mined. The cash cost per ounce produced was $1,134, the highest among all of Angico Eagle’s 12 operating mines around the world.

Agnico Eagle expects to spend approximately $15.1 million in 2023 to do 40,000 metres of drilling at Amaruq underground deposits and at near-surface satellite deposits close to the road and infrastructure around the Meliadine and Meadowbank/ Amaruq operations. Any new discoveries at open-pit depths have the potential to extend the life of each mine in conjunction with the extensions of higher-grade underground mineralization at each site, according to the company.

Hope Bay

Owner: Agnico Eagle Mines

Resource: Gold

Location: 125 km southwest of Cambridge Bay

Status: The Doris North gold mine at Hope Bay was not in production in 2022 and it’s looking doubtful that mining will resume in 2023.

Agnico Eagle has been concentrating on exploration in the area. This year will entail $30.6 million worth of work to complete 72,200 metres of drilling, including 30,800 metres of underground exploration drilling at the Doris deposit in hopes of adding to the existing mineral reserves. Surface drilling is also planned at the nearby Madrid deposit.

Martin Plante, the company’s vice-president of Nunavut operations, wouldn’t put a date on when gold production will resume at Hope Bay.

“We need a sufficient volume (of gold) to make that project sustainable,” he said. “Our goal is not to start and shut down again. We want to come with a project that will be opening for a longer-term and for the benefit of the Kitikmeot region.”

A welder works at Baffinland’s Mary River mine. The mining company is seeking to extend its licence to ship six million tonnes of iron ore per year with plans for a railway to Steensby Inlet to the south. Photo courtesy of Baffinland Iron Mines