Dominion Diamond Corp. has announced the results of a prefeasibility study (PFS) of the Jay kimberlite pipe located within the Buffer Zone joint venture property of the Ekati diamond mine in Canada’s Northwest Territories. The Ekati mine area consists of the Core Zone, owned 88.9% by Dominion, which includes the current operating mine and other permitted kimberlite pipes, and the Buffer Zone, owned 65.3% by Dominion. The Buffer Zone is adjacent to the Core Zone and hosts kimberlite pipes having both development and exploration potential, including the Jay and Lynx pipes.

The Jay pipe is approximately 7 km northeast of the currently producing Misery pit and related infrastructure and 30 km southeast of the main Ekati mine infrastructure. The pipe is the most significant undeveloped deposit at Ekati due to its large size and high grade.

The pipe is located beneath Lac du Sauvage, approximately 1.2 km from the shoreline. Development will require construction of a water retention dike encircling the pipe, allowing the isolated area to be dewatered ahead of the start of pre-stripping and mining operations.

The Jay PFS evaluated project development as a stand-alone open pit, which would supply ore to the existing process plant at its full capacity of approximately 4.3 million dry mt/y for approximately 11 years beyond the current projected closure of Ekati operations in 2020.

The mine plan assumes mining of 45.6 million mt at a grade of 1.9 carats/mt and recovery of 84.6 million carats. Operating costs are estimated at $75/mt processed.

Dominion’s timetable for the development of the Jay project assumes completion of permitting in 2016, start of construction in the second half of 2016, dewatering of the area isolated by the dike and pre-stripping in 2019, and mining of the Jay pipe and processing of kimberlite beginning in 2020. In 2020, the project would supply approximately half the ore to the process plant as Jay mining activities ramp up and the existing ore sources are exhausted.

The primary capital development cost for the Jay project will be for the construction of the dike and its associated infrastructure, including roads and pumping infrastructure, which amounts to $368 million. Engineering, construction quality control and quality assurance, and construction management are estimated at 12% of this total, or an additional $44 million.

Equipment costs are estimated at $96 million, including the purchase of 14 haul trucks, two hydraulic shovels, two front-end loaders, a dozer and other support equipment. The maximum fleet required for construction would be 24 haul trucks, but the capital cost estimate is based on renting the 10 extra trucks that would be required for only a single construction season. To support a large truck fleet remote from the main Ekati mine site, a new truck shop will be required at the Misery site at a cost of $31 million.

The pre-stripping cost for the first phase of mining is estimated at $33 million. Other capital costs include $13 million for rockfill quarrying, $9 million for a power line from Misery to Jay, and $8 million for construction support.

Dominion compiled and prepared the Jay PFS with the assistance of Golder Associates Ltd. and Peter Ravenscroft of Burgundy Mining Advisors Ltd.