TORONTO (miningweekly.com) – Global legal practice Norton Rose Fulbright’s teams in London, Ottawa and Toronto have successfully advised a syndicate of Canadian and international lenders on the financing of the Gahcho Kué diamond project, in Canada’s Northwest Territories (NT), which reached financial close on Tuesday.

The mine was the largest new diamond mine currently under construction globally.

The Gahcho Kué Joint Venture (JV) was a collaboration between De Beers Canada (51%) and Mountain Province Diamonds (49%), with De Beers being the operator.

The lending group provided financing and hedging arrangements to the MPD group, for its $370-million share of the construction costs, in the largest mining project financing to close for some time. An unincorporated JV structure was unusual in mining project financing and laid the foundation for a bespoke structure, the legal practice said in a statement.

The loan was provided by a syndicate of lenders led by Natixis, Scotiabank and Nedbank, and included ING Capital, Export Development Canada and the Bank of Montreal.

Norton Rose teams in London and Canada worked closely together on all aspects of the transaction, from structuring to closing. The team was led by Martin McCann in London, assisted by Lisa Koch, Geoff Gilbert and Alison Babbitt in Canada.

“People often ask us why we have spent time building the global business we have. Well it’s to be able to advise on deals like this. It was seamless,” McCann said.

He noted that the pipeline in mining project finance in North America looked “very strong” for this year, adding that this deal could place Norton Rose perfectly for those potential mandates.

WHERE RABBITS (AND DIAMONDS) ARE FOUND
Gahcho Kué, which is Chipewyan for ‘a place where big rabbits are found’, was located at Kennady Lake, 280 km north-east of Yellowknife and 80 km east of De Beers’ existing Snap Lake mine, in NT. The diamond prospect was one of the largest new diamond projects under development globally.

The project consisted of the Hearne North and South pipes, the 5034 West pipe, the Central and North-East pipes, the 5034 South pipe, the 5034 North pipe, Wallace and the Dunn Sheet, Tuzo and Tesla diamondiferous kimberlite pipes, sheets and dykes.

A revised and updated feasibility study on the Gahcho Kué project had confirmed the remote project’s robust metrics.

The Gahcho Kué deposit had current National Instrument 43-101-compliant total probable reserves of 55.5-million carats, contained in 35.4-million tonnes, grading 1.57 ct/t.

The mine life had been estimated at 12 years, during which the operation would produce about 53.4-million carats at an average yearly rate of 4.45-million carats using standard drill and blast and truck and shovel equipment, and pit designs, which were similar to those of other openpit diamond mines operating in the area.

The average yearly output for the first three years of full production from 2017 to 2019 would be about 5.6-million carats.

Ore would be fed to a three-million-tonne-a-year processing plant, with three stages of crushing, dense-media separation and X-ray/grease diamond-recovery circuits.

Supporting infrastructure comprised a 14.1 MW packaged diesel power plant, a 1 350 m gravel airstrip, a five-bay truck shop, an emulsion plant, a 40-million-litre fuel storage facility and a 432-bed accommodation/office complex.

According to the revised and updated feasibility study, the project would cost C$859-million to construct and the operation would require working capital of C$80-million.

Costs to ramp up the operation to January 2017 had been estimated at C$82-million.