De Beers gets approval to flood its Snap Lake diamond mine

June 29, 2016

Canada’s Northwest Territories’ land and water board granted approval to De Beers Canada to flood the tunnels of its underground Snap Lake diamond mine.

The mine, DeBeers’ first diamond mine outside of Africa, had been a drain on the balance sheet and was shuttered last December due to poor market conditions. Reuters reported that DeBeers is weighing whether to sell, close, reopen, or continue suspension at the Arctic mine.

Flooding the mine tunnels will cut costs to pump out water and reduce environmental risk, De Beers Canada said in its extended care and maintenance plan.

The temporary closure, approved on an interim basis pending required updates, could run for three or more years, depending on market conditions.

"The decision is helpful because it really helps us preserve ... a pretty significant resource in the ground," said De Beers Canada spokesman Tom Ormsby.

Snap Lake, which has made no money since production began in 2008, produced 1.2 million carats in 2015 and was due to run until 2028.

The operation, which had 595 employees and 200 contractors before the suspension, currently has some 75 staff for ongoing care and maintenance work.

In its April application, De Beers Canada said it may investigate a remote water monitoring system, which would need no on-site staff. That would require separate approval, the board said in a decision posted on Wednesday.

Last October, De Beers Canada said new Chief Executive Officer Kim Truter would move office headquarters to Calgary as part of a broader restructuring to cut costs as diamond demand and prices waned.

De Beers Canada also operates the Victor diamond mine in Ontario, set to close in 2018 unless an expansion proceeds, and is building the Gahcho Kue diamond mine in the Northwest Territories with 49 percent owner Mountain Province Diamonds Inc.

Gahcho Kue is expected to start production in the next few months with a projected annual output of 4.5 million carats.



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