Global diversified miner Rio Tinto (NYSE, LSE, ASX:RIO) has officially opened the A21 kimberlite pipe ahead of schedule at its 60%-owned Diavik mine, in Canada's remote Northwest Territories.
The expansion is key to extend the operation's mine life two years from 2023 to 2025, while sustaining production levels at the Rio-operated site.
The A21 pipe is next to Diavik's existing Lac de Gras mining operations. Following the first ore deliveries in March, the pit is expected to reach full production during the fourth quarter. That follows a four-year construction period and an investment of about US$350 million, shared by US$85.4 billion Rio Tinto and its 40% joint-venture partner Dominion Diamond Corporation, which was taken private mid-2017 by Washington Companies for US$1.2 billion.
The mine life extension, based on a 2017 technical report, was calculated to yield an increase of 6.3 million carats, or 16% above the previous estimate, and was expected to reach 46 million carats recovered between 2017 and 2025. Forecast total revenue would rise 22% to about $9 billion and total operating cash flow would increase 32% to about $3.7 billion between 2017 and 2025.
The expansion also resulted in an after-tax net present value of about US$2.6 billion, at a 7% discount rate.
Despite these increases, total operating costs between 2017 and 2025 were expected to remain consistent with the previous estimate, as the impact of cost escalation and the increase in mine life and reclamation were offset by efficiency improvements.
"This investment to sustain production levels at Diavik reflects the strong outlook we see for the diamond industry," Rio Tinto copper and diamonds CEO Arnaud Soirat said in a news release Monday.
