Airlift Helps Ice Road Recovery

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					Volume 9

2nd QuARTeR 2006

Airlift Helps Ice Road Recovery
Welcome
Welcome to this issue of dialogue, our way of keeping you informed of Diavik’s activities. The biggest news this quarter is that, despite all the challenges created by the premature ice road closure, mining and construction activities are moving forward as planned. This is due in no small part to our hard working and creative workforce, but we have been helped tremendously by a major airlift program. Since we lost a “shovel” to a fire at Christmas, we have been working harder to keep mine operations on track. Thanks to some very dedicated workers, cutting torches, welding machines and a unique helicopter, we now have a brand new shovel operating. This is a remarkable piece of work, never done before, and ahead of schedule with no accidents. Throughout the operation, everyone’s focus on safety has boosted us ahead of our goals this quarter and our attention to safety has paid off in another way, as our Mine Rescue Team won the Mine Rescue Underground Competition for their first time. While we make good inroads into local employment, we are facing a very competitive labour market. We are tackling this with a number of training program investments. One of our upcoming challenges will be to find northerners ready, willing and able to work underground. Seven new Aboriginal and Inuit graduates are showing us the way forward and, with their formal training behind them, have now been hired as miners on our underground feasibility program. It’s been a good three months, with many new challenges faced and overcome. I’m very proud of how our Diavik workforce has risen to the challenges, and I hope that after reading this issue’s stories, you’ll better understand why.
Above, the Mi-26 chopper lifts the Terex shovel engine module. Shown here is the helicopter delivering half of the shovel carbody. For the first time in its over 20 year history, the mining industry’s ice road lifeline was closed prematurely in March by a record warm winter. After collecting our thoughts over this setback, we made the decision in April to do what was needed to keep production and construction as planned. We developed an Ice Road Recovery Plan around a major airlift program, and a conservation program to help us reduce the amount of things we need to airlift, especially fuel. Through brainstorming sessions, our workers identified eight high value projects with the potential to save 2.6 million litres of fuel. Among the first changes was reducing idling of vehicles. Other projects include an energy audit of the mine’s south construction camp and coolant heaters for our haul trucks. At the same time, we developed a three part plan to fly essential supplies to the mine site. The first part has already been completed and involved flying as quickly as possible a much needed 500 tonne hydraulic excavator or "shovel" to the mine. (See separate story this issue.) The second part of the airlift is dedicated to flying, by midyear, hundreds of large bags of cement and bentonite needed to keep the A418 dike construction on schedule. To meet the July target, we contracted Canadian North’s Boeing 737 and a Russian Antonov AN12 to fly around the clock. That program is

Canadian North Boeing 737 flies cement for dike construction. now nearly finished; a very successful outcome that has kept the dike construction right on schedule. In the third phase, we have now begun flying diesel fuel, bags of ammonium nitrate to make explosives, and a variety of other supplies needed to keep the mining operations going for the rest of the year.

Shovel "Flies" into Production
In a remarkable story of creativity and innovation, Diavik has done what no one else in the world has ever done – imported a 500 tonne shovel, cut it into smaller bits, flown it to a remote Arctic mine site, and then put it all back together successfully – and safely – into a premier mining production tool. In a strange story of twisted luck, an engine fire in December destroyed one of two production shovels at Diavik. Finding a replacement in this hot global mining market would be tough, but as luck would have it, a customer changed their mind at the last minute on a Terex O&K RH200 shovel coming off the assembly line in Germany. At almost the same size as the burnt shovel, the timing was right for Diavik to grab it. Again, as luck would have it, after shipping it by boat, rail and road to Yellowknife, the last few hundred kilometres to the mine site were blocked by thin ice and then a closed winter road. The only option was to fly the shovel to the mine, but there was no aircraft that could fly the large pieces that the factory had sent us. Not to give up, Diavik’s team proposed something never done before – cut the shovel into smaller pieces and use the world’s largest helicopter, a Russian Mi-26, to fly them. But could we get this helicopter into Canada? Again, luck was on our side, and we found a Canadian company had already begun the process for an oil company client, paving the way for Diavik’s call. Even as the helicopter began its long ferry flight from Russia, Diavik began reducing the shovel to helicopter-sized loads. By the end of May, after a seamless operation by the big chopper, all the pieces were delivered to the mine site. Specialty welders, machinists and mechanics then began the task of putting the cut pieces back together. Their skills and experience made it look easy, and assembly of the shovel “flew” by. By late June, Diavik’s new shiny white shovel was digging rock in the open pit; truly a remarkable achievement.

By late June, Diavik’s new Terex shovel was already at work in the A154 pit.

Diamond Production On Track
Despite the winter road challenge, operations staff put their shoulders to the wheel, and in the three months ending June 30, produced 2.72 million carats of diamonds from the A154 North and South pipes. This brings diamond production in the first half of this year to about 4.5 million carats, or just over half of what we had planned for 2006. This good news is due in part to slightly higher diamond grades, but mainly due to hard work by the open pit miners to deliver ore to the process plant (with one less large shovel), by the maintenance crews who kept the equipment running, and by the processing teams who kept large tonnages of rock moving through the plant. It’s now up to the airlift program to help keep the mine supplied with the required fuel, explosives and sundry supplies it needs over the remaining half of the year.

Mark Anderson President

Diavik Diamond Mines Inc. • Phone: 867-669-6500 • Fax: 867-669-9058 • E-mail: diavik@diavik.com • Web site: www.diavik.ca

Dike and Underground on Schedule
Diavik is investing for the future, preparing to open-pit mine the A418 pipe and making plans to begin underground mining. Construction of the A418 rockfill dike is on schedule. Like all of the Diavik ore bodies, A418 is under the lake and the dike is essential for us to “borrow” the lake bottom for mining. Work is well advanced on installing the cement membrane down the centre of the 1.3 km long dike to make it watertight. Thermosyphons to maintain the permafrost where the dike meets land are now in place and operating, and sensors to track the dike’s performance are being installed. Thanks to the smooth airlift of cement and bentonite, we are still on track to begin pumping the water covering the pipe in late summer. This will allow us to begin stripping off the overburden and building that pit. In preparation for underground mining a few years from now, we are building a decline, or tunnel, to test Diavik’s three ore bodies. Of the three kilometres of tunnel needed for underground feasibility studies, the A154 tunnel had reached nearly 1,300 metres from surface, and 450 metres had been completed on the A418 branch tunnel. Diavik is also testing a fourth kimberlite pipe, called A21, to find out if it’s rich enough to be mined. A tunnel to remove a 10,000 tonne bulk sample for diamond testing had reached nearly 900 metres from surface towards its eventual 1.2 kilometre length.

Training for the Future
Diavik has made inroads into local hiring, and nearly 70% of its workforce is from northern communities. But a tight labour market continues to challenge our ability to attract and retain both Aboriginal and non-Aboriginal employees. Training is one key to meeting this labour force challenge. Diavik has just launched a second Aboriginal Leadership Development Training program. Developed in partnership with SAIT Polytechnic, the six-month program offers over 60 hours of leadership training and mentoring from Diavik staff. Course content is built around SAIT’s Applied Management Certificate program, but customized to take into account Diavik’s mining operations. The first program was completed last December. With almost no history or experience in the Aboriginal communities with working underground, Diavik has had its first training success. Seven Aboriginal and Inuit trainees have now completed Diavik’s first Underground Miner Training program. It included six two- week rotations with participants gaining hands-on training operating underground equipment and on proper procedures to safely execute the hard rock mining skills required at Diavik. All graduates have been hired by Diavik’s mining development contractor, Kitikmeot Cementation Mining and Development. Diavik is also providing job placements for six students enrolled in an eight-month Aurora College Mining Administrative Support program, and is also supporting 15 Aboriginal summer students, in partnerships with the NWT Mine Training Society.

Aboriginal underground trainees have now been hired as miners.

Jet grouting, top, and curtain grouting, above, ensure the dike is watertight through the glacial till and into the bedrock below.

Auction Benefits Local Charities
Diavik is pleased to announce its 7th Annual Charity Silent Auction raised approximately $23,000 for two local charities, the Yellowknife Association for Community Living - Abe Miller Centre and the Yellowknife YWCA. Held at Diavik’s corporate office and Visitors' Centre in downtown Yellowknife, the auction coincided with summer solstice celebrations. Some 100 companies donated nearly 150 items to the auction, including a 0.75 carat diamond donated by Diavik that raised just over $3,000. Our thanks are due to all the many merchants who donated auction items.

Water Licencing Delays
The new Wek’eezhii Land and Water Board, established under the Tlicho land claim, has informed us that they have delayed public hearings by two months, to November, to allow time to request additional information from DDMI. Diavik has submitted a revised plan for its aquatic effects monitoring program and a revised ammonia discussion paper containing a review of ammonia management options. Diavik’s seven-year licence to use water expires in August 2007. Diavik has asked for a renewal of the licence for 15 years to cover the expected mine life. Diavik started the renewal process very early to allow sufficient time to renew the license by January 2007. At that time, Diavik will be asking its investors for major funding to begin underground mining, and a 15-year licence will add confidence to this major investment decision.

Diavik at a Glance
The Diavik Diamond Mine is located 300 kilometres northeast of Yellowknife, NT. It consists of three diamond-bearing deposits, called kimberlite pipes, located just offshore of a 20-square-kilometre island, under the waters of Lac de Gras. To mine these underwater ore bodies, Diavik is building water diversion structures, called dikes, out from the island, surrounding the pipes. The first dike was completed in 2002. Construction of the second dike began in spring 2005, with the rockfill portion closed in October 2005. • • • • • • • • Initial construction completed – January 2003 Initial capital cost – C $1.3 billion Reserves – 28.2 million tonnes at 3.2 carats per tonne Three ore bodies called A154 South, A154 North, and A418 Annual ore production – approximately two million tonnes Annual diamond production – approximately eight million carats Total mine life – 16 to 22 years Operations workforce – approximately 725

Mine Rescue Safety Success
Two lost time injuries and three medical treatment cases were reported during the quarter. Focused efforts by all employees and contractors have resulted in the targets for Lost Time Injury Frequency Rate (0.61) and All Incident Frequency Rate (1.22) being bettered, with results of 0.23 and 0.91 respectively in the first half of the year. This is commendable given the distractions of the early ice road closure and subsequent airlift program, and the continued large scale dike and underground construction work. In June, the Diavik Mine Rescue Team tied for first place in the Northern Mine Rescue Competition. Importantly, they won the most difficult Underground Obstacle task; an outstanding achievement as it was their first time competing in it. Diavik’s team included Michael Nitsiza, Nathan Pitre, Benn Armstrong, Justin

Diavik’s Mine Rescue Team won the difficult Underground Obstacle event. Grandjambe, Curtis Dunford, Jennifer Butt, with Captain Dean Warren and Coach Jose Godoy.
400 0 400 800 1200 1600 2000

Scale in Metres

Satellite image, taken August 1, 2005, of part of the Diavik Diamond Mine.

Want to Learn More?
For more information about the Diavik Diamond Mine, please visit our web site at www.diavik.ca. Information may also be obtained from the Diavik Diamond Mines Inc. head office in Yellowknife, where you can also visit our diavik Visitors’ Centre, open Monday through Friday from 8:00 a.m. to 5:00 p.m. Diavik Diamond Mines Inc., P.O. Box 2498, 5007 - 50 Avenue, Yellowknife, NT, Canada X1A 2P8


				
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