Shear moves cautiously on Jericho revival plans

Jimmy Haniliak eyes diamonds in kimberlite rocks on display at a Feb. 17 presentation by Shear Diamonds Ltd. on its plans for the Jericho mine site. (PHOTO BY JANE GEORGE)

CAMBRIDGE BAY — The possibility that the mothballed Jericho diamond mine, located about 450 kilometres southwest of Cambridge Bay, may reopen drew some of community’s residents to a Feb. 17 presentation at the Arctic Island Lodge.

Mainly former diamond mine workers, they were curious to hear more about the plans that Shear Diamonds Ltd., the new owner of Jericho, has for the mine site, which shut down two years ago after its owner, Tahera Diamond Corp., ran out of money.

Ruby and Jimmy Haniliak both picked up an eyepiece to look at a display of diamonds embedded in kimberlite rocks from Jericho that Shear brought along, and, yes, they could clearly see the sparkly gems.

Diamonds left in tailings were one of Jericho’s main problems: Jericho’s processing plant apparently didn’t work properly, shooting out tonnes of useable and saleable diamonds along with waste rock.

But this was only one of the problems that caused the former Tahera Diamond-run Jericho mine, Nunavut’s first and only diamond mine to date, to go belly-up in 2008 after only two years of operation, said Shear’s Pamela Strand — the company’s president, chief executive officer and director.

For now, Shear, which picked up Jericho for about $38 million last summer, doesn’t plan to reopen the mine, she said.

She said there are too many other questions that remain about what went wrong, such as the impact of high transportation costs and a Canadian dollar at par with the U.S. dollar, which hurt profits.

Understanding the “snowball” events that eventually led to Tahera closing the mine, is key to getting the mine going again, said Strand.

“Jericho is going to have a second life, but you only get one second chance,” Strand said.

When Shear bought Jericho, it acquired a recovery plant, maintenance facility, fuel farm, offices, accommodation for 225 staff, an open pit and an estimated three million carats of diamonds underground.

But Shear hasn’t reopened the $200-million complex yet; a skeleton crew is now camped out in the airport building.

This year Shear plans to sink $4 million into exploration at the mine site and surrounding properties. Its goal: to shore up the known diamond resources, with the aim of doubling the quantities and the previous nine-year lifespan for the mine.

Shear’s dream is to see Jericho become a “small, nice” mine, which won’t be “big and splashy” like Diavik’s diamond mine in the Northwest Territories, which is 20 times larger.

But, first, before any decision is made to “turn on the lights,” Jericho must look profitable, Strand said.

“We’re optimistic we can raise the money,” she said, admitting that Shear will have to prove the economic feasibility of the operation first.

And Shear also needs to renew the mine’s water license from the Nunavut Water Board — so it can go back in this summer to drill, sample and test.

What happens in 2012 will depend on the results of the 2011 exploration program, Strand said.

That’s the message Strand also planned to bring to Kugluktuk, the Nunavut community that lies closest to Jericho, in a public presentation scheduled for Feb. 18.

In Cambridge Bay, Strand promised jobs and training possibilities would also flow from Jericho, if and when it reopens, but she said she doesn’t want to disappoint people by talking more about its future operations.

When Jericho shut down in 2008, about 200 Inuit from the Kitikmeot had jobs connected with the mine.

Paving the way for more Inuit involvement in Jericho, Shear and the Nunavut Resources Corporation, the first Inuit-owned mining development company, announced Feb. 14 that they had signed a “mutual cooperation agreement.”