Revised Feasibility Study re-Confirms Economic Viability of Gahcho Kué Project

In a press release dated April 2, 2014, Mountain Province Diamonds Inc. announced the results of an updated and revised “2014 Feasibility Study Report” dated March 31, 2014, on the Gahcho Kué diamond project located in Canada’s Northwest Territories. The feasibility study report  for the Gahcho Kué joint venture project, between Mountain Province Diamonds Inc. (49%) and DeBeers Canada (51%), was compiled and prepared by JDS Energy and Mining Inc. and Hatch Ltd.

The Gahcho Kué Project Site
The Gahcho Kué Project Site

According to the study, the Internal Rate of Return (IRR) is 32.6% giving an indication of  the  desirabiity of undertaking the project.  Generally speaking, the higher a project’s internal rate of return (IRR), the more desirable it is to undertake the project. the Net Present Value (NPV) of the project is Cdn$ 1.005 billion (US$ 911 million), with Capital to Completion estimated at Cdn$ 858.5 million (US$778.05), including a contingency of Cdn$75.6 million (US$68.5 million). Other financial and project highlights given in the report are Working Capital Cdn$80.1M; Ramp up operating costs through Jan 2017 Cdn$82.0M; Sustaining capital LOM (including closure cost) Cdn$92.7M. The mines operational life is estimated at 12 years, with an average annual production of 3 million tonnes of ore. The operating cost of processing a single ton of ore including sorting is estimated at Cdn$72.51. Total diamond production during the life of the mine (LOM) is estimated at 53.4 million carats, with an average annual diamond production of 4.45 million carats. Revenue per carat of diamond is estimated at US$ 149.66 per carat, giving a total revenue of a staggering US$7,991,844,000 (7.9 billion US dollars).

However, the average annual production for the first three years of full production (2017 – 2019) is estimated at 5.6 million carats. The ramp up costs of Cdn$82.0M noted above does not take into consideration the revenue expected from the estimated production of approx. 1 million attributable carats during the production ramp-up period between September 2016 through January 2017.

Commenting on the revised and updated feasibility study, Patrick Evans, CEO Mountain Province Diamonds Inc. said, “the feasibility study revision and update re-confirms an economically robust, technically credible and environmentally sound development plan for the Gahcho Kué mine”

The updated and revised “2014 Feasibility Study Report” also includes an updated Mineral Reserve estimate for the Kennady Lake kimberlite cluster constituting kimberlite pipes 5034, Hearne and Tuzo that fall within the Gahcho Kué project area, given in a tabulated form (see table below). The Mineral Reserves are the Indicated Resources that can be mined and processed profitably under current economic parameters.

Gahcho Kué Mineral Reserve Estimate

PipeClassificationTonnes (Mt)Grade- Carat-per-tonneCarats (Mct)
5034Probable13.41.7423.2
HearneProbable05.62.0711.7
TuzoProbable16.41.2520.6
TotalProbable35.41.5755.5

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