Dominion Sees More Life in Diavik Mine

Toronto: Dominion Diamond Corporation has extended the life span of its jointly owned Diavik mine by two years and hiked its estimate of the project’s future production.

The deposit in Canada’s Northwest Territories will last until 2025, compared with a projection of 2023 given in March 2015, the miner said Friday. As a result, estimated output from now till the mine’s closure has risen 16% to 46 million carats, with the revenue forecast up 22% to $6.77 billion (CAD 9 billion) for the eight-year period.

The new estimates are based on a technical report showing figures from January 31, reflecting, among other things, the addition of the mine’s A-21 extension, where production is expected to start in 2018.

The updated plan for Diavik “extends the mine life, increases carat production, and grows future revenues and cash flows, while maintaining operating costs and capital expenditures at levels that are consistent with earlier forecasts,” said Jim Gowans, Dominion’s chairman.

“The focus on cost-efficiency improvements and development of the A-21 pipe, which underpins the mine-life extension, is consistent with our goal of increasing net asset value per share,” he added.

Dominion owns 40% of the Diavik mine, with Rio Tinto holding the rest and running the project operations. The projections are on a 100% basis, meaning they reflect the mine’s entire production as shared by the two companies.

The announcement comes as Dominion considers a sale of the company, with the miner last week establishing a four-person team to assess strategic options, including takeover bids. The company said it was prepared to enter discussions with the Washington Companies over a potential $1.1 billion acquisition, while Reuters reported that Dominion had also held merger talks with Stornoway Diamond Corporation.