On the semi-frozen surface of Faraday Lake in Canada’s subarctic, two diamond rigs are drilling around the clock. It’s spring breakup north of the 63rd parallel, which means the Kennady Diamonds Inc. exploration team is running out of time.
“It’s starting to candle,” says geologist Martina Bezzola, scuffing her rubber boot over the fast-melting ice where vertical tunnels, or “candles,” have recently appeared. The thaw means the team has two weeks to extract kimberlite samples from beneath the lake before they’re banished to drilling onshore. “Basically it’s like sticking a needle into a haystack to determine what’s in the haystack.”
Twenty-five years after the first diamonds were found in Canada’s Northwest Territories, it’s still a game of hurry-up-and-wait. For every thousand grassroots exploration projects, only one becomes a mine. Snap Lake, one of three operating mines in the region, was shuttered by De Beers last year, a casualty of harsh geography and falling diamond prices. Government attempts to add production value with a cutting industry collapsed years ago; all that remains of “Diamond Row” in the territorial capital Yellowknife is a line of derelict buildings behind barbed wire.
Gahcho Kué
And yet the dream lives on. At a time when global miners are shedding assets, De Beers is about to open the largest new diamond mine in the world, Gahcho Kué, 280 kilometers (175 miles) northeast of Yellowknife. A little further north, Rio Tinto Group last year found—and just sold—the largest gem-quality diamond ever recorded in North America at its Diavik mine, the 187-carat Foxfire. Dominion Diamond Corp. last week agreed to extend the life of the neighboring Ekati mine beyond 2020.
“The return in diamonds is fantastic, but you need the patience of Job,’’ says Jonathan Comerford, chairman of Kennady Diamonds, on site at the Kelvin Camp on Faraday Lake to represent the interests of Irish billionaire Dermot Desmond.
Desmond owns almost a quarter of Toronto-based Kennady and 23 percent of its former parent company, Mountain Province Diamonds Inc., which these days is focused on developing Gahcho Kué with De Beers. Canada has a couple of marks in its favor that keep the majors interested amid a grim market, says Kim Truter, chief executive officer of De Beers Canada.
Engineering Challenge
Prices for rough stones have rebounded 10 percent this year after plunging 44 percent in the five years ending in January. The country is politically stable and has a long mining history, mitigating the snail’s pace at which projects proceed; Gahcho Kué took 21 years to bring into production. And Canada’s diamond deposits tend to be predictable, with high concentrations of bridal-quality gems.
Canada produces approximately 10 percent of world diamond output by volume but about 15 percent by value, said Truter, 51. “The price we receive for the diamonds in Canada is actually quite high compared to other regions of the world.”