Notification of Suspension of Operations at Snap Lake Mine

DECEMBER 4, 2015 LETTER SENT TO THE NWT CHAMBER OF COMMERCE FROM DE BEERS GROUP OF COMPANIES

As you may know, global diamond markets are experiencing an extended downturn with falling demand and reduced prices. De Beers Canada, as part of The De Beers Group of Companies, has undertaken a thorough review of all available options at all operations around the world to ensure our company can continue to weather the economic crisis.

At Snap Lake Mine in particular, during 2015 we put new leadership in place, improved cost controls, introduced a new long hole stoping mining method, and began restructuring at the mine and across our Canadian operations in an effort to improve efficiencies and contain the costs of production at the mine. Unfortunately, as improvements were made, global markets deteriorated even faster, leading to the unfortunate decision to suspend operations and place the mine on care and maintenance.

De Beers intends to maintain a small workforce on the mine site who will be responsible for ensuring Snap Lake Mine continues to meet conditions of the Mine water licence and other requirements.  Our commitment to the NWT remains and the Gahcho Kué Project is continuing and construction is scheduled for completion in 2016. We are working to transfer as many employees as possible to the Gahcho Kué Project. We recognize the impact on our employees, including valued NWT contractor employees, and are working to ensure everyone’s safe return home from the mine. We have made provisions to meet all requirements for severance and notice under the NWT Employment Standards Act for all impacted employees of De Beers Canada.

We have already identified a number of De Beers’ Snap Lake employees for immediate transfer to Gahcho Kué. We hope that during the first quarter of 2016 we can select additional De Beers’ employees with the required skills and experience for transfer to Gahcho Kué. We are also looking at other opportunities to help employees with the successful transition to new employment and will endeavor to help them and their families through this difficult time.

We recognize the impact the decision to suspend operations at Snap Lake will have on the people and economy of the Northwest Territories. The decision to place Snap Lake Mine on care and maintenance was difficult but with the current sustained economic challenges, it has become necessary.

As the economic climate evolves, we will review the situation to consider whether global markets have improved sufficiently to allow for the resumption of operations at Snap Lake.

Sincerely,
Glen Koropchuk
Chief Operating Officer

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