Engineering & Mining Journal

AUG 2018

Engineering and Mining Journal - Whether the market is copper, gold, nickel, iron ore, lead/zinc, PGM, diamonds or other commodities, E&MJ takes the lead in projecting trends, following development and reporting on the most efficient operating pr

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NEWS-LEADING DEVELOPMENTS 6 E&MJ • AUGUST 2018 team, supported by Newmont and Teck subject matter experts. De Beers to Acquire Peregrine Diamonds De Beers Canada has entered into an agreement to acquire all the outstanding shares of Peregrine Diamonds Ltd., which owns the Chidliak diamond resource lo- cated in Canada's Nunavut Territory, at a purchase price of C$0.24 per share, for a total cash consideration of C$107 million. The Chidliak resource was discovered in 2008 and is located approximately 120 kilometers (km) northeast of Iqaluit on Baffin Island. A total of 74 kimberlite pipes have been identified at Chidliak, in- cluding the CH-6 and CH-7 pipes, which are the current focus of the Chidliak Phase One Diamond Development program. The program has a total Inferred Mineral Re- source in excess of 22 million carats (ct). Peregrine's recent Preliminary Economic Assessment for Chidliak points to the high quality of the CH-6 deposit in particular. An estimated grade of 2.41 ct per met- ric ton (ct/mt) and a diamond valuation of US$151/ct (equating to approximately US$360/mt) make CH-6 one of the most attractive undeveloped diamond resources in Canada, the company said. Peregrine also has exploration properties elsewhere in Nunavut and the Northwest Territories. "This investment reinforces De Beers Group's long-term commitment to Canada, following our investment in the Gahcho Kué diamond mine, which entered com- mercial production last year," said Kim Truter, CEO, De Beers Canada. "Chidliak is a high-value prospect and the Peregrine team has done great work to bring it to this advanced stage. With the transformation of our company in Canada over the past two years, our focused investment in new and innovative mining methods, and our expertise in Canada's arctic environments, we believe we are very well positioned to now develop the resource further." The transaction, which is expected to occur by a plan of arrangement in Sep- tember, is conditional upon Peregrine se- curity holders adopting a special resolu- tion approving it, and the Supreme Court of British Columbia issuing a final order approving the plan of arrangement, as well as the satisfaction of other custom- ary closing conditions. Cameco Suspends Production at McArthur River Indefinitely A weak uranium market continues to take its toll on miners. Canada's Cameco an- nounced it will extend the suspension of production at McArthur River and Key Lake for an indeterminate duration. The compa- ny said it has not seen the improvement needed in the market to restart production. "Our [second quarter] results reflect the impact of a weak uranium market and the deliberate actions we have tak- en driven by the goal of increasing long- term shareholder value," said Tim Gitzel, Cameco's president and CEO. "We con- tinue to expect to generate strong cash flow this year as we draw down inventory and focus on operating efficiently." Approximately 550 McArthur River and Key Lake miners, including those currently on temporary layoff since Jan - uary, will be laid off permanently. A re- duced workforce of approximately 200 employees will remain at the sites to keep the facilities in a state of safe care and maintenance. The workforce at Cameco's corporate office will be reduced by ap- proximately 150 positions. "It was a difficult decision to make, because of the impact it will have on our employees, their families, and other stakeholders, but we must take this ac- tion to ensure the long-term sustainability of the company," Gitzel said. "We will not produce from our tier-one assets to deliv- er into an oversupplied spot market." The company said it will continue to evaluate the market. For 2018 the company expects to de- liver as much as 35 million lb or uranium, revenue between $1.55 billion and $1.64 billion with an average realized price of $46.10/lb, and average unit cost of sales between $40/lb and $42/lb. In addition to its committed purchases, Cameco ex- pects to purchase an additional 2 million to 4 million lb of uranium to meet its de- livery commitments and maintain its tar- get inventory. In 2019, Cameco expects to produce 9 million lb, and it has com- mitments to purchase between 5 million and 6 million lb and deliver between 25 million and 27 million lb. Cameco suspends uranium production indefinitely at the McArthur River operations (above). The CH 6 resource model (above) represents one of the best diamond prospects at Chidliak.

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