Permitting Delays and Market Risks Shadow Burgundy’s Ekati Mine Extension

Life of Mine Extension and Economic Outlook

Burgundy Diamond Mines Limited (ASX, BDM) has provided a comprehensive update to the Life of Mine (LOM) plan for its Ekati Diamond Mine, located in Canada’s Northwest Territories. The plan now extends the mine’s operational horizon through to 2040, primarily driven by the development of the Fox Underground Project. The updated prefeasibility study (PFS) for Fox UG demonstrates robust economics, with a post-tax net present value (NPV) at a 9% discount rate ranging from US$272 million in the Ore Reserves Case to US$352 million in the Upside Case, and internal rates of return (IRR) of 30% to 32%, respectively.

The Fox UG project is set to commence development in 2026, employing a sublevel retreat mining method that significantly reduces initial capital expenditure compared to previous plans. This method, combined with the innovative Railveyor haulage system, eliminates the need for underground crushing infrastructure, enhancing operational efficiency and cost-effectiveness.

Resource and Reserve Updates

The update incorporates revised Mineral Resource and Ore Reserve estimates for the Fox pipe, reflecting data from a 2018 drilling campaign. While the overall size of the Fox pipe within Mineral Resource categories decreased by approximately 10%, the Ore Reserves increased by 2.6 million tonnes and 0.3 million carats, maintaining stable grade metrics. The Misery Main pipe resource model was also updated, extending the underground mine plan to the first quarter of 2027, with an Upside Case extending mining to the end of 2027. Notably, the Misery deposit continues to include a high proportion of inferred resources, consistent with historical mining practices, though geological confidence remains lower for these categories.

Point Lake Bulk Sample and Mining Schedule

Results from a recent bulk sample trial at the Point Lake open pit revealed an average diamond value of US$52 per carat, approximately 27% lower than previous estimates based on historical samples. Consequently, mining at Point Lake is deferred to mid-2026, pending more favourable diamond prices. During this suspension, the company plans to utilize existing stockpiles to supplement plant feed, while operating the processing plant on a reduced schedule.

Operational and Regulatory Considerations

The LOM plan integrates indicated, inferred, and exploration target resources, with clear cautionary notes regarding the geological confidence and the uncertainty of converting inferred and exploration targets into economically viable reserves. Key operational risks include potential delays in permitting, infrastructure procurement, and pit dewatering, as well as uncertainties in diamond grade and valuation. The permitting process for Fox requires new land use permits and amendments to existing water licences, with an anticipated timeline of 12 to 16 months.

Burgundy continues to leverage extensive geological data, production history, and advanced modelling techniques to underpin its resource and reserve estimates, adhering strictly to the JORC Code and ASX Listing Rules. The company’s vertically integrated business model positions it to capture value across the diamond supply chain, with Ekati remaining a cornerstone asset.