The Diavik mine is Canada’s largest diamond mine, located on a 20 square kilometre island in Lac de Gras, Northwest Territories, approximately 300 km from Yellowknife. Access to the mine is by air year-round and by a 425 km ice road in winter that operates for eight to ten weeks between January and March. Four diamond bearing kimberlite pipes are located just off the eastern shore of the island and although the pipes are relatively small, each having surface expressions less than 200 metres in diameter, they are high in grade making Diavik one of the most profitable diamond mines in the world. The majority of Diavik’s products are gem-quality white stones, which are sold to select diamontaires.
Diavik began producing diamonds in January 2003, and has since produced over 100 million carats of high quality rough diamonds from the A154 South, A154 North and A418 pipes. Open pit mining from the three pipes has concluded and the ore bodies are currently being mined from underground. Rio Tinto is developing a fourth pipe (A21) which requires the construction of a rockfill dike. Diavik’s current mine plan has production continuing to 2025. The Proven and Probable Mineral Reserve at Diavik consists of 16.3 Mt at 2.8 cpt for a total of 46 million carats as of Dec. 31, 2016 (1 mm cut-off).
Sandstorm has a 1.0% gross proceeds royalty on the production from the Diavik mine. Sandstorm acquired the royalty from IAMGOLD Corporation in March 2015 for US$52.5 million in cash and 3 million warrants of Sandstorm. The warrants have a 5 year term, a strike price of US$4.50 per Sandstorm common share and will be exercisable following the initial production from the Diavik Mine A21 pipe.