THE ECONOMICS OF DIAMOND PROJECTS IN THE CANADIAN ARCTIC
Economic models have been developed for diamond projects in the Canadian Arctic using data from recent exploration and mining projects. The models are reflective of economic conditions as they apply to the diamond mining industry in the Canadian Arctic at the present time.
The economic models capture exploration and development expenditures, production data, and post-production costs. Before and after-tax cash flows are derived from the data along with the relevant economic criteria.
From the corporate perspective, the models provide guidance as to the minimum size and/or grade requirements of targets being sought, the diamond price required for economic success, and probable exploration and development expenditures.
From the government perspective, the models provide an indication of income and mining tax revenues that can be expected from diamond projects.
The models show that diamond projects are expensive to explore for and develop, but are economically robust, providing the best return for mining companies particularly when compared to gold and base metal projects. At the same time, they generate significant amounts of revenue for government. The fact that diamonds can be transported directly from the mine site by air makes them particularly attractive targets for mining companies willing to operate in the Canadian Arctic.