Dominion Diamond Corporation Issues Updated Mine Plan for the Ekati Diamond Mine

YELLOWKNIFE, July 21, 2014 – Dominion Diamond Corporation (TSX:DDC, NYSE:DDC) (the “Company”) announces that the Company has promoted the Misery Satellite material previously identified as an exploration target to an inferred resource. The Company is also releasing today an updated mine plan for the Ekati Diamond Mine, including current estimates for anticipated annual production by pipe, with associated operating costs and capital costs.

Unless otherwise specified, all financial information is presented in Canadian dollars, on a 100% basis, and references to years are to fiscal years.  The Company operates the Ekati Diamond Mine through its 80% ownership interest in the Core Zone, which includes the operating mine and other permitted kimberlite pipes, and 58.8% interest in the Buffer Zone, an adjacent area hosting kimberlite pipes having both development and exploration potential. On July 9, 2014 the Company announced that, subject to the rights of first refusal set out in the applicable joint venture agreements, it has entered into an agreement with C. Fipke Holdings Ltd. to acquire all of Dr. Charles Fipke’s 10% participating interests in the Ekati Diamond Mine at a price equivalent to the price paid to BHP Billiton in calendar 2013 for its interests. It is anticipated that completion of the transactions will occur in September, 2014.

Updated Mineral Resource Estimate

The Company had previously identified in its technical report in respect of the Ekati Diamond Mine dated May 24, 2013 (the “Technical Report”) an exploration target for the Misery South and Misery Southwest Satellite (“Misery SW Extension”) Pipes (collectively, the “Misery Satellite Pipes”). Since the Technical Report, diamond grade and value estimates for the Misery Satellite Pipes have been validated by drilling, mining and processing activities. The Company has now converted the exploration target to an inferred resource with the following tonnage and grade:

Notes:

1. Mineral resources have an effective date of January 31, 2014.
2. Mineral resources are reported on a 100% basis. The Company has an 80% participating interest in the Core Zone joint venture and a 58.8% participating interest in the Buffer Zone joint venture.
3. Mineral resources that are not mineral reserves do not have demonstrated economic viability.
4. Mineral resources are reported at +1.0 mm (diamonds retained on a 1.0 mm slot screen).
5. Mineral resources have been classified based on an assessment of the available drillhole, bulk sampling and production information, and the assumptions made about geological and grade continuity are consistent with the classification as inferred mineral resources.
6. These mineral resources are amenable to open pit mining methods. The conceptual pit designs for open cut Misery Main that includes the extraction of the Misery South and Misery SW Extension material was completed using Whittle shell analysis.  Parameters used in pit shell analysis varied by kimberlite and ranges included; pit slope angles 40-80 degrees, mining costs $5-8/wmt, processing costs $16-26/dmt and G&A costs $17-29/dmt.
7. Tonnes are reported as millions of metric tonnes, diamond grades as carats per tonne (cpt), and contained diamond carats as millions of contained carats.
8. Tables may not sum as totals have been rounded in accordance with reporting guidelines.

Following analysis of this winter’s drilling program, the Company will be preparing an updated technical report on the mineral resources and mineral reserves at the Ekati Diamond Mine that will include further details on the Misery Satellite resources as well as updates to some other pipes. The Company expects to file this updated technical report in the later part of calendar 2014.

The resource estimate for the Misery Satellite Pipes was prepared by Peter Ravenscroft, FAusIMM, of Burgundy Mining Advisors Ltd., an independent mining consultant, and a Qualified Person within the meaning of National Instrument 43-101 (“NI 43-101”). The balance of the scientific and technical information contained in this press release was prepared under the supervision of Mats Heimersson, P. Eng., an employee of the Company, and a Qualified Person within the meaning of NI 43-101. For more information, see the Company’s Technical Report regarding the Ekati Diamond Minedated May 24, 2013 filed on SEDAR.

Updated Mine Plan for Ekati Diamond Mine

Introduction

This updated mine plan is presented on a 100% basis with economic factors that are directly related to the Company, such as marketing costs, diamond prices, and private royalties, discussed separately. Unless otherwise specified, all financial information is presented in Canadian dollars, on a 100% basis, and references to years are fiscal years.

The Company is continuing to make improvements to the Ekati process plant that have, to date, increased the recovered grade by approximately 15%. The resulting additional small diamonds are not currently included in reserves and the mine plan, although the Company expects to incorporate these higher recovery rates into an updated reserve statement later this year.

Ekati Mine – Production

This current mine plan assumes production from Misery, Pigeon and Lynx open pits, and the Koala and Koala North underground operations.  The mining of the Fox pit was completed this year.  Koala North is currently in production as a sub level retreat underground operation and is scheduled to finish later this year.  Koala is currently in production as a sublevel / inclined cave underground operation and is scheduled to finish in fiscal 2020. Stripping of waste material and satellite kimberlite is in progress at Misery open pit with expected full year production from the Misery Main Pipe in fiscal 2016 and completion of mining in fiscal 2018.  Stripping of waste material from Pigeon open pit is scheduled to commence this year with mining of kimberlite commencing in fiscal 2016 and finishing in fiscal 2020.

Table 1 shows the planned mining tonnage for each ore body. The data is given on a full financial year basis from fiscal 2015. These figures do not include rough diamond stocks held at the mine at the opening of each year, nor does the model take into account any rough diamond inventory available for sale that the Company currently holds.

In addition to probable reserves, this plan (the base case) includes the development and mining of the Lynx pipe that is currently an indicated resource. Mineral resources that are not mineral reserves do not have demonstrated economic viability.

Read more: http://www.ddcorp.ca/investors/news-single?id=1949118