Rio Tinto, Harry Winston Going Underground at Diavik

Rio Tinto has approved a $563 million investment in the underground mining phase of the Diavik diamond mine. The funding will come from the two mine partners, Rio Tinto (60 percent) and Harry Winston Diamond Corporation (40 percent).

This will bring the total investment in the underground mine to $787 million.

The investment will be spent over the next two years, adding to the $224 million invested in 2006-07 for the feasibility studies and related capital projects.

Under the current life of mine plan, diamond production from underground would begin in 2009 and continue beyond 2020. Open pit mining is expected to cease in 2012.

Diavik's total mine life remains within the 16 to 22 years projected in the original feasibility study of 1999, Rio Tinto said.

To support underground mining, Diavik must construct new surface works including a crusher and paste backfill plant, expand its water treatment and power generating plants, and construct ancillary facilities including fuel and cement storage, and additional accommodation facilities.

The announcement from Rio Tinto comes on what is becoming a very busy day of public announcements regarding its investments and production forecasts, especially in iron.

The miner is facing a hostile takeover bid by rival BHP Billiton. Analysts view these public announcements as a way of stating that Rio Tinto’s value is much higher than what BHP is willing to pay.

Today (Monday) Rio Tinto will present its annual investor seminar setting out in detail its strategy and growth plans. CEO Tom Albanese and senior management executives will provide additional information on how the group's portfolio of assets and growth options are exceptionally well placed to benefit from the global rise in demand for metals and minerals, the company said.