Results of a preliminary economic assessment (PEA) by conducted by SRK Consulting (Canada) Inc. for Dominion Diamond Corporation for the development of underground operations at the Ekati Mine’s Fox kimberlite, have been broadly been positive.   

Fox Deep, as the underground project has been dubbed, will extend Ekati’s life of mine span by seven years, taking diamond production to fiscal 2042 from the current projected 2035, it is envisaged. This includes the recently approved Misery Deep project; and production from Fox Deep flowing in from fiscal 2033 to fiscal 2042. “A total of 11.0 million carats are expected to be recovered from Fox Deep,” Dominion stated.

The PEA puts the “incremental post-tax net present value at 7% discount rate of $187 million (Dominion’s share) and internal rate of return of 23%”, Dominion said.

Further, the Company estimates that costs will amount to: capital development amount of US$ 628 million; sustaining capital cost of US$ 192 million; and total operating expenses of US$ 1.4 billion – or US$51 per dry metric tonne processed.

Dominion has projected the base case diamond price of US$ 232 per carat. This is based on the Company’s July 2017 Price Book, increased at 2.5% per annum during the life of the mine, Dominion said.

Currently, the Company is conducting a pre-feasibility study on Fox Deep and expects to complete the study in late fiscal 2018.  Subject to this, Dominion is “considering a supplementary drilling program on the Fox kimberlite in winter/spring 2018, including additional delineation of the pipe at the proposed extraction level, additional hydrogeological and geotechnical investigation, and collection of additional RC grade samples,” the Company declared.

Meanwhile, in another announcement, Dominion said that Institutional Shareholder Services, Inc. and Glass, Lewis & Co., LLC   two leading independent proxy advisory firms, have both recommended that shareholders of Dominion vote in favour of the special resolution at the forthcoming special meeting of the shareholders to approve the buy-out by Northwest Acquisitions ULC, an entity affiliated with The Washington Companies. Northwest Acquisitions will acquire all of the issued and outstanding common shares of Dominion for a cash consideration of US$ 14.25 per share.