TORONTO, March 14 /PRNewswire-FirstCall/ - Harry Winston Diamond
Corporation (TSX:HW; NYSE: HWD) made the following announcement today
regarding its 40% owned Diavik Diamond Mine.
Prior to the commencement of commercial production at the Diavik Diamond
Mine the proven and probable ore reserves stood at 25.7 million tonnes (106.7
million carats). Subsequently, 4.0 million tonnes (11.7 million carats) of
reserves in the A-21 kimberlite pipe were removed leaving start-up reserves of
21.7 million tonnes (95.0 million carats). As of December 31, 2007, the
reserves were 21.9 million tonnes (77.1 million carats) despite having mined
10.1 million tonnes (41.5 million carats) since commercial production began in
August 2003. The increase in proven and probable ore reserve is largely a
result of a new mine plan which confirms the economic value of the underground
mining of ore that had previously been in the resource categories.
http://investor.harrywinston.com/pdf/HWDC_Diavik_Schematic.pdf
At start-up, the resources additional to the reserves were 11.7 million
tonnes (31.4 million carats). As of December 31, 2007, they were 7.7 million
tonnes (24.2 million carats). This revised resource statement does not include
"geological" depth extensions of the kimberlite pipes identified by
geophysical techniques, but not yet well enough defined to constitute
resources. The bottom of the A-154 South kimberlite pipe has not yet been
investigated in this manner because it would have required a disruption of
current production to do so. This work is planned to be completed when full
production shifts to the A-418 open pit next year.
Mineral Reserves at Diavik Diamond Mine - December 31, 2007
-------------------------------------------------------------------------
PROVEN RESERVES PROBABLE RESERVES PROVEN and PROBABLE
--------------------------------------------------------
M t ct/t M ct M t ct/t M ct M t ct/t M ct
-------------------------------------------------------------------------
A154S
Open Pit 1.2 5.8 7.1 0.7 7.3 5.0 1.9 6.3 12.2
Underground - - - 3.0 4.9 14.8 3.0 4.9 14.8
----------- ----- ----- ----- ------ ----- ----- ------ ----- ------
Total A154S 1.2 5.8 7.1 3.7 5.4 19.8 4.9 5.5 27.0
-------------------------------------------------------------------------
A154N
Open Pit 0.1 3.3 0.3 - - - 0.1 3.3 0.3
Underground 2.8 2.3 6.3 5.9 2.2 12.7 8.7 2.2 19.0
----------- ----- ----- ----- ------ ----- ----- ------ ----- ------
Total A154N 2.9 2.3 6.6 5.9 2.2 12.7 8.7 2.2 19.3
-------------------------------------------------------------------------
418
Open Pit 4.3 3.4 14.6 - - - 4.3 3.4 14.6
Underground 0.5 4.2 2.1 3.5 4.1 14.2 3.9 4.1 16.3
----------- ----- ----- ----- ------ ----- ----- ------ ----- ------
Total A418 4.8 3.4 16.6 3.5 4.1 14.2 8.3 3.7 30.8
-------------------------------------------------------------------------
TOTAL
Open Pit 5.7 3.9 22.0 0.7 7.3 5.0 6.3 4.3 27.0
Underground 3.3 2.5 8.4 12.3 3.4 41.7 15.6 3.2 50.1
----------- ----- ----- ----- ------ ----- ----- ------ ----- ------
Total Reserves 9.0 3.4 30.3 13.0 3.6 46.7 21.9 3.5 77.1
-------------------------------------------------------------------------
Mineral Resources at Diavik Diamond Mine - December 31, 2007
-------------------------------------------------------------------------
MEASURED INDICATED INFERRED
--------------------------------------------------------
M t ct/t M ct M t ct/t M ct M t ct/t M ct
-------------------------------------------------------------------------
A154S - - - - - - 0.6 4.3 2.5
-------------------------------------------------------------------------
A154N - - - - - - 1.7 2.6 4.4
-------------------------------------------------------------------------
A418 - - - - - - 0.6 4.5 2.7
-------------------------------------------------------------------------
A21 - - - 4.1 3.1 12.7 0.7 2.8 1.9
-------------------------------------------------------------------------
Total Resources 4.1 3.1 12.7 3.6 14.2 11.5
-------------------------------------------------------------------------
Since both Rio Tinto, with 60% Diavik Diamond Mine ownership, and Harry
Winston, with its 40% interest, sell the same rough diamonds to the same
markets, they are constrained from signaling their achieved diamond pricing to
one another through public disclosure. WWW Diamond Consultants Ltd. ("WWW")
have provided an independent view of diamond prices for the reserve categories
based on the examination of both production and bulk sample diamond parcels.
During the past six months, WWW modeled and assigned diamond prices of $93 per
carat to A-154 South, $117 to A-154 North and $85 to A-418.
The new mine plan does not include the mining of the A-21 kimberlite pipe
which is retained in the inferred resource category. A program of large
diameter drilling is currently underway on this pipe with the objective of
collecting a large enough sample of diamonds to deliver a diamond price robust
enough to support a production decision, and, therefore the promotion of part
of this resource into a reserve category. Three out of a planned seven holes
have already been completed to target depth. A diamond valuation is expected
to be in hand by the end of this calendar year.
http://investor.harrywinston.com/pdf/HWDC_Production_Profile_chart.pdf
If the results of the A-21 study do not support commercial production then
it is intended to modify the mine plan to bring underground production forward
to fill the implied production void in years 2012 to 2016.
In calendar 2007, Rio Tinto and Harry Winston contributed on a 100% basis
a total of Cdn$288 million to the underground development program. The
underground capital program for calendar 2008 is budgeted at Cdn$345 million
with an additional Cdn$213 million in 2009 to complete the underground mine
and its supporting infrastructure. From this point, the project requires only
sustaining capital averaging approximately Cdn$39 million per year through the
balance of the mine life to beyond 2020 on the assumption that no new
orebodies are developed. An intensive exploration effort is being carried out
over the next two years with the objective of having sufficient time to permit
and develop any new discoveries ahead of the closure date based on the
existing resources.
Operating costs for underground mining are expected to be higher than open
pit mining costs. Much of the costs in operating a remote site such as the
Diavik Diamond Mine are fixed regardless of the mining method. The underground
mining will use a combination of underhand cut-and-fill mining (with average
life-of-mine mining costs of approximately Cdn$90 per tonne) and blast-hole
stoping (with average life-of-mine mining costs of approximately Cdn$66 per
tonne) depending on the rock stability encountered in actual production.
Estimates are for the majority of the underground mining to be cut-and-fill
but work currently underway is showing that there is an opportunity to improve
on this. In comparison, average mining costs for open pit are expected to be
approximately Cdn$53 per tonne of ore mined over the remaining life of the
open pit.
The new mine plan represents substantial added value to all shareholders
of the Diavik project and an extended mine life for its employees and other
stakeholders. Further opportunities remain in potential depth extensions of
the known orebodies as well as the potential for the discovery of new ones.
The reserve and resource information above was prepared by or under the
supervision of Calvin G. Yip, P.Eng., an employee of Diavik Diamond Mines Inc.
(DDMI) and a Qualified Person within the meaning of National Instrument
43-101.
This press release contains certain information that may constitute
forward-looking information within the meaning of securities laws. In some
cases, forward-looking information can be identified by the use of terms such
as "may", "will", "should", "expect", "plan", "anticipate", "believe",
"intend", "estimate", "predict", "potential", "continue" or other similar
expressions concerning matters that are not historical facts. Particularly,
information about proven and probable reserves, indicated and inferred
resources, future mine development and operating costs and expected mine life
is forward-looking information. Forward-looking information is based on
certain factors and assumptions regarding, among other things mining,
production, construction and exploration activities at the Diavik Diamond
Mine, world and U.S. economic conditions, and levels of worldwide diamond
production. In making statements concerning expected capital and operating
expenditure requirements in connection with the new mine plan, the Company has
assumed that construction will occur on schedule without undue interruption.
While the Company considers these assumptions to be reasonable based on
information currently available to it, they may prove to be incorrect. Forward
looking-information is subject to certain factors, including risks and
uncertainties that could cause actual results to differ materially from what
is currently expected. These factors include the inherent subjectivity of the
reserve and resource estimation process, the uncertain nature of mining
activities (and, in particular, risks associated with underground
construction), risks associated with geographically remote operations, risks
associated with joint venture operations, financing and regulatory risks,
fluctuations in world diamond demand, production and prices and currency
exchange rate risk. You should not place undue importance on forward-looking
information and should not rely upon this information as of any other date.
While the Company may elect to, the Company is under no obligation and does
not undertake to update this information at any particular time, except as
required by law.
About Harry Winston Diamond Corporation
Harry Winston Diamond Corporation (TSX: HW; NYSE: HWD) is a specialist
diamond enterprise with assets in the mining and retail segments of the
diamond industry. The company supplies rough diamonds to the global market
from its 40% interest in the Diavik Diamond Mine, located in Canada's
Northwest Territories. The company's retail division, Harry Winston, Inc., is
a premier jewelry and timepiece retailer with salons in key locations
including New York, Paris, London, Beijing, Tokyo and Beverly Hills. For more
information, please go to www.harrywinston.com or for investor information,
visit investor.harrywinston.com.
SOURCE HARRY WINSTON DIAMOND CORPORATION
CONTACT: Nancy Murray, (212) 245-2000, nmurray@harrywinston.com; Kelley
Stamm, (416) 362-2237 EXT 223, kstamm@harrywinston.com
(HW. HWD)
