Sourcing

Dominion Reduces Ekati FY 2017 Production Estimates

SourcingJul 12, 2016

Dominion Reduces Ekati FY 2017 Production Estimates

The diamond miner has shut down the Ekati processing plant for three months for repairs after a small fire, causing them to lower the production outlook by 16 percent.


Yellowknife, Northwest Territories--Due to Dominion Diamond Corp. shutting down the processing plant at its Ekati mine for repairs after a small fire last month, the company has revised its production outlook for fiscal 2017.

Dominion said that it now expects to produce 4.7 million carats of diamonds during the full year, down 16 per cent from the 5.6 millions of carats originally estimated.

Early on the morning of June 23, a fire broke out during a planned outage in the process plant at the Ekati mine.

According to Dominion, damages were limited to a small area with no damage to the main structural components. Surface and underground mining also weren’t affected by the fire. (The company still is investigating the cause of the fire.)

Repairs will require, however, the replacement of one of the main degritting screens and associated instruments, as well as some electrical wiring and related infrastructure. The repairs, and subsequent processing plant shut-down, are expected to take three months.

As a result, late last month, Dominion began executing a plan to reduce operating and capital costs, which includes adjusting mining operations to pause mining at lower priority and lower value ore bodies.

The company is continuing to mine higher value material during the process plant shutdown. Mined ore will be stockpiled, to be processed once operations resume.

The preliminary cost of repair is predicted at about $19 million at current exchange rates.

The company said all personnel were evacuated from the area and that no injuries were reported. There also have been temporary layoffs of affected staff across the company, impacting approximately 330 temporary and permanent contractors and employees.

Despite the loss of revenue and a lower production from the mine during the shutdown, the diamond miner said that it still was moving forward with development of its Jay project, what it calls “the most significant undeveloped kimberlite pipe deposit” at Ekati.

The project was approved by the Mackenzie Valley Environmental Impact Review Board in February and by the board of directors last week.

Processing at the site is expected to start in 2022. Dominion estimates that the Jay pit will push the Ekati mine life to 2033, offering new development opportunities.

In other company news, Dominion announced that Chief Financial Officer Ron Cameron will leave the company effective July 15. Cara Allaway, currently the vice president group controller, will step in as acting CFO until Dominion can find a
permanent successor to the role.
Brecken Branstratoris the senior editor, gemstones at National Jeweler, covering sourcing, pricing and other developments in the colored stone sector.

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