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Jericho Diamond Mine
On July 19, 2010 Shear announced the signing of an agreement to acquire the Jericho Diamond Mine. This acquisition was approved by the courts on July 28, 2010 and the final acquisition closed as announced on August 27, 2010.
Jericho was the newest Canadian "gem" when its doors opened in early 2006 as Nunavut's first diamond mine. Over 780,000 carats were extracted from the mine, located 420 kilometres northeast of Yellowknife, including a 59 carat diamond which sold for $450,000. Over $300 million was previously invested in Jericho and we were able to purchase 100% of the asset for a $6 million cash and stock deal through a court sanctioned process. The resource today contains approximately 3 million carats in the inferred and indicated categories. Significant infrastructure exists on site, including a 2,000 tonne per day diamond recovery plant, maintenance facility, fuel farm, offices and accommodation for 225 personnel. Shear will systematically evaluate all data prior to committing to re-opening the mine; this evaluation will also enable a better understanding of the operation and how best to improve it.
Jericho Fast Facts
| Shear's Ownership: | 100% (Caz Petroleum retains 2% royalty) |
| Location: | Nunavut |
| Previously Mined & Processed: | January 2006 – May 2008 |
| Kimberlite Mined: | 1.5 million tonnes |
| Kimberlite Processed: | 1.2 million tonnes |
| Carats Recovered: | 780,000 carats |
| Mine Type: | Open pit mine |
| Previous Investment: | C$350 million (includes exploration and infrastructure) |
| Indicated Resource: | 1.88 million carats* |
| Inferred Resource: | 1.13 million carats* |
*1 See July 2010 Technical Report filed on SEDAR
Jericho History
1993: Jericho land staked during diamond staking rush
1995: Jericho kimberlite discovered
1998 – 2004: Exploration and development
2005 – 2006: Construction of the Jericho diamond mine
2006 – 2008: Operated by Tahera Diamond Corporation
2008: Tahera granted bankruptcy court protection and suspends operations
2010: Shear completes court-sanctioned transaction and acquires Jericho in August 2010
Large Diamond Potential
- Over 1,000 stones greater than 10 carats each previously recovered at Jericho
- 59 carat gem sold for $450,000
- 200 carat stone crushed by previous milling
Jericho Location
The Jericho claims are located along the northwest and northeast shores of Contwoyto Lake, approximately 430 kilometres north of Yellowknife, NWT, 350 kilometres southwest of Cambridge Bay (Ikaluktutiak) and 200 kilometres southeast of Kugluktuk, respectively.
The property is accessible year-round by air or by winter road from January through March. The latitude and longitude of the aggregate center of the claims is 111.1°W and 65.9°N.
Mineral rights for the Jericho Project consist of 20,990 acres covering 8 mining leases. The contiguous claims referred to as the Carat Property encompasses an additional 133,000 acres of mineral rights, that includes newly staked 75,000 acres as press released on July 6, 2011.
Infrastructure
Over $200 million was previously invested in infrastructure at the Jericho mine. The main camp at the Jericho Diamond Mine Camp is located 1 kilometre south of Carat Lake, just north of the east end of the Long Lake fine processed kimberlite containment area. The camp is a modular trailer camp with three accommodation wings. Cafeteria / kitchen, recreation area and office wings are also located in the camp. All wings are connected by an arctic corridor. The camp's arctic corridor connects the camp to the process plant, power station and mechanic shop.
The camp contains about 100 rooms and can accommodate staff of approximately 200 people. A sewage treatment plant is located 50 metres south of the camp, near the Long Lake fine processed kimberlite facility, which is where treated effluent is discharged. A modular power generating system is located northeast of the accommodation.
A 10 ML tank farm is located just north of the main camp and is hard-lined into the main generator day tank. The tank farm includes four large tanks and eight smaller tanks. All tanks are connected with fuel lines for both filling and discharge, which is controlled through a single fuelling control building. At the present time Shear has approximately 1.5 Million litres of diesel fuel on site, enough to power full operations for one year.
A 1,067 metre airstrip provides all-weather access to the Jericho site for personnel and supplies. The airstrip is also equipped with runway lights and a 10 m tower weather station. An all weather road that is approximately 4 kilometres long connects the airstrip to the main camp.
Mine infrastructure includes an open pit, waste dumps, a till dump, explosives storage and mixing facility, coarse and fine processed kimberlite containments, and various water diversion and collection ponds.
A 2,000 tonne per day diamond recovery plant is on site.
Geology and Mineral Resource
Jericho is located in the northern portion of the Slave Structural Province of the Canadian Shield, north of Contwoyto Lake within the Contwoyto-Itchen Lake Region. The Slave Structural Province is an Archean granite–greenstone terrain containing belts of 2.67 to 2.70 billion year old metasedimentary and metavolcanic rocks of the Yellowknife Super Group. The underlying rocks of the property are Archean granitoids of various ages. An age date of approximately 170 million years has been determined for the many of the Jericho and surrounding property kimberlites. The Jericho kimberlite is an elongate body with a straight, nearly vertical eastern wall formed by two eruptive events (see Geological Model below). The kimberlite is a NNW trending elliptical body with a length of approximately 300 metres and a width of up to 100 metres. It has been confirmed by drilling to a depth of at least 350 metres below surface.
Jericho Geological Model
On July 21, 2010 Shear announced the Jericho resource estimate, provided in the July 2010 National Instrument 43-101 technical report authored by SRK Consulting (Canada) Inc. entitled "Technical Report on the Jericho Diamond Project, Nunavut Canada". This report is filed on SEDAR under Shear Diamonds Ltd.
Mineral Resource Statement*, Jericho Kimberlite, Nunavut, Canada
SRK Consulting (Canada) Inc, July 21, 2010
Indicated
| Kimberlite Domain | Constrained By | Tonnes | Carats | Grade |
| North Lobe | Open Pit | 720,000 | 490,000 | 0.68 |
| Central Lobe, NW, domain 131 | Open Pit | 673,000 | 996,000 | 1.48 |
| Underground | 224,000 | 332,000 | 1.48 | |
| Mine Stockpiles | 156,000 | 65,000 | 0.42 |
Inferred
| Kimberlite Domain | Constrained By | Tonnes | Carats | Grade |
| F1N Lobe | Open Pit | 445,000 | 155,000 | 0.34 |
| Central Lobe, SE, domain 132 | Open Pit | 564,000 | 649,000 | 1.15 |
| Underground | 34,000 | 39,000 | 1.15 | |
| South Lobe | Open Pit | 671,000 | 282,000 | 0.42 |
| Total Indicated | 1,773,000 | 1,883,000 | 1.06 | |
| Total Inferred | 1,724,000 | 1,125,000 | 0.65 |
*The mineral resource was developed at a cut-off of C$34 per tonne at a diamond value of US$78 for North lobe, US$88 for F1N lobe, US$112 for Central domain 131, US$106 for Central domain 132 and US$90 for South lobe, at a currency exchange rate of C$0.87 per US$. Mineralized material with an estimated value of less than C$100 was limited within a Whittle pit shell using costs of C$5 per tonne mining and C$34 per tonne processing. Material was evaluated for underground mining at a cut-of of C$100 per tonne. All mineral resources were cut-off at the 190m level. Diamond recovery is assumed at a bottom size cut-off of 1mm.
**These results are preliminary in nature and include inferred mineral resources that are considered to speculative geologically to have the economic consideration applied to them that would enable them to be categorized as mineral reserves, and there is no certainty that the preliminary assessment will be realized.
The mineral resource was defined using all available drilling, sampling and production data. The volume model utilized drill core logging data to formulate solid models for each kimberlite domain. Diamond grade-size distribution models were created using PQ mini-bulk, underground bulk sample data as well as production data from focused mining batches. A size dependant diamond recovery model was based upon a 90% recovery of diamonds greater than +3 DTC sieve by weight. This recovery factor is applied to the diamond grade-size models and results in a recoverable diamond grade. The grade model assumes recovery of diamonds larger than 1mm.
Exploration Potential
Shear believes that significant exploration potential exists at Jericho and in the region surrounding Jericho. Over 60,000 till samples were previously collected and analyzed by exploration companies in the region, in combination with quaternary mapping to understand ice movement and the relationship to any indication mineral dispersion trains. Shear has defined 20 indicator mineral dispersion trains in and around Jericho that are not easily explained by known kimberlites (see news release July 6, 2011.). Both airborne and ground geophysical surveys were conducted over the area to further define targets followed by ground checks and prospecting on priority geophysical anomalies. Many of these targets warrant follow-up and drill testing and offer great opportunity for Shear to discover new kimberlites.
Other notable targets include the JD-2 kimberlite and the surrounding Carat Property. The JD-2 kimberlite is a small kimberlite located 250 metres north of the Jericho kimberlite. Although it is small, caustic fusion sampling from two drill holes in 2005 indicate the potential for diamond-size distributions that are similar to the Jericho kimberlite. The surrounding Carat Property has several untested targets which lie within 10 kilometres of the current Jericho mine site and warrant future follow-up.
Stockpiles
In addition to the stockpiles in the Jericho mineral resource, Shear has a number of stockpiles at the Jericho Mine Site that are in our current assessment. Shear collected samples for audit purposes from one stockpile as announced on February 8, 2011. Highlights include a total of 52 macro diamonds representing 3.5 carats recovered from a 308.8 kg sample collected across the recovery rejects stockpile at the mine site, resulting in the sample grade of 11.3 cpt with the largest stone being a 0.54 carat diamond. The purpose of Shear's mini-audit was to confirm the results of a 4,048.5 kg sample from the recovery reject stockpile collected by Tahera Diamond Corporation ("TDC") in late 2007, which yielded 1,345 stones weighing 58.8 carats for a sample grade of 14.5 cpt. The largest recovered stone weighed 0.94 carats.
TDC had also submitted a 1,345 kg sample of coarse processed kimberlite ("CPK") tails for audit purposes in 2007. A total of 45 stones weighing 1.14 carats were recovered for a sample grade of 0.84 cpt. The largest recovered stone weighed 0.22 carats. TDC conducted a much larger on-site audit of the CPK (approximately 11,000 tonnes) which was suggestive of similar results as outlined below.
Estimates from the historic mine records of process plant by-products for the recovery rejects and CPK are 25,000 tonnes and 900,000 tonnes respectively. A portion of the CPK was used for construction purposes and is no longer accessible for re-processing and recovery of diamonds.
Permits and Authorizations
The following authorizations are associated with the Jericho Diamond Mine:
- Type A Water Licence
- Water Compensation Agreement
- IOL Commercial Lease
- Crown Quarry Lease
- Crown Infrastructure Lease
- Project Certificate
- Fisheries Authorization
Shear is in the process of a full Type A Water Licence Renewal as outlined in the March 8, 2011 news release. The following steps have taken place to date for the renewal.
December 2010: Assignment of Type A Water Licence to Shear Diamonds
December 2010: 60 day extension
January 31, 2011: Care & Maintenance Plan plus additional plans submitted
January 31, 2011: Emergency Extension Request
February 28, 2011: Full Type A Renewal Application Submitted
March 2, 2011: INAC and NWB 12-month extension request granted (until March 1, 2012)
June 20-21: Pre-Hearing Technical Meeting and Hearings held in Cambridge Bay, NU.
October 13-14: Public Hearing Dates, Kugluktuk, NU
