Sustainable Development Report

Introduction...... 3 Economic Prosperity...... 15 Social Well-being...... 25 Our Vision...... 3 Investing in Diavik’s Future...... 15 Community Participation Agreements..... 26 Our Values and Principles...... 3 Diavik Will Become Neighbouring Aboriginal Groups...... 26 President’s Message...... 4 an Underground Mine...... 16 Communities Advisory Board...... 26 Other Northern Communities...... 26 Our Ownership and Management...... 5 Underground Feasibility...... 16 Rio Tinto...... 5 A21 Bulk Sampling...... 17 Community Contributions...... 27 Aber Corporation...... 5 Reserves...... 17 Scholarships...... 27 Our Northern Commitments...... 5 Proven and Probable Reserves...... 17 Bailey House...... 28 Aboriginal Gold Designation Recertified.. 5 A418 Dike Construction...... 18 Apprenticeships...... 29 Location...... 7 Exploration...... 19 Site-based Training...... 29 Diavik at a Glance...... 7 Haul Trucks Adapted Aboriginal Leadership Program...... 29 Diavik Sustainable Development Policy.... 8 to Arctic Environment...... 19 Aboriginal Skills and Employment Sustainable Development Commitments... 8 Employment...... 20 Partnership (ASEP)...... 30 Diavik’s Workplace Centre...... 30 Mine Operations...... 9 Northern Business Participation...... 21 Occupational Health Key Performance Indicators...... 10 Silent Auction and Safety Policy...... 30 Winter Road Program...... 11 Raises Funds for Charities...... 21 Substance Abuse Policy...... 31 Expenditures...... 22 2006 Resupply goes from Ice to Air...... 12 Employee and Family Assistance...... 31 Six Sigma Programs Continue...... 22 2007 Winter Road Program Safety Performance...... 31 Marketing and Diamond Sales...... 22 Opens on Schedule...... 13 Safety Philosophy...... 31 Product Stewardship...... 22 Safety Initiatives...... 31 Rio Tinto’s Statement Operations Safety Performance...... 31 of Business Practice...... 22 Aboriginal Business Surpasses Safety Training System...... 32 $1 Billion...... 22 Take 5...... 32 Job Hazard Analysis...... 32 Code of Conduct...... 23 Safety Interactions...... 32 Kimberley Process...... 23 Emergency Response...... 32 Towards Sustainable Mining...... 23 Cutting and Polishing...... 23 Mine Rescue Team...... 33 Responsible Jewellery Council...... 23 Contents Environmental Stewardship...... 35 Water Management...... 40 Closure Security...... 45 Commitments...... 36 Water Treatment Plant...... 40 Spills...... 45 Governance...... 36 Sewage Treatment Plant...... 40 Fuel...... 45 Environmental Compliance...... 36 Water Monitoring...... 40 Energy...... 46 Inspection and Enforcement...... 37 Managing Acid Rock Drainage...... 41 Greenhouse Gas Reduction Studies...... 46 Environmental Management System...... 37 Constructing Fish Habitat...... 42 Fuel Efficiency Initiative Recognized...... 46 ISO Certification...... 37 Water Licence Renewal...... 42 Electricity...... 47 Wildlife...... 37 Environmental Monitoring Heating...... 47 Wildlife Monitoring...... 37 Advisory Board...... 43 Waste...... 47 Caribou Monitoring...... 37 Community-based Monitoring Camp..... 43 Environmental Monitoring Programs...... 48 Water...... 38 Water Quality Workshop...... 43 Verification Activities...... 50 Lac de Gras...... 38 Dust Monitoring Workshop...... 43 Reporting Activities...... 50 Water Balance...... 38 Fish Palatability and Texture Study...... 44 Inspection Items...... 51 Water Usage...... 39 Closure Planning...... 44 Performance...... 52

Diavik Sustainable Development Report 2006  using resources wisely

 Diavik Sustainable Development Report 2006 – Using Resources Wisely. Introduction

Our Vision Our vision is to be ’s premier diamond producer, creating a legacy of responsible safety, environmental and employee development practice, and enduring community benefit.

Our Values and Principles • We treat ourselves and all those with whom we meet and work with dignity, consideration, and respect. • We are committed to active partnership with local communities, businesses, governments, and non-governmental organizations. • We are dedicated to meeting the needs of our customers and to contributing long-term value to our investors and to the North. • We strive for excellence in all we do. P hoto by Jiri Hermann

iNTRODUCTION  President’s Message

Let me invite you to read this, our 7th Annual Sustainable Development Report since we began construction of the Diavik mine.

At Diavik, we continue to balance the three tenets of sustainable development as we work to create economic prosperity and social well-being while protecting the environment. Conducted under our banner of using resources wisely, this was especially true in 2006 as our workers safely combined a major airlift to recover from a record warm winter with the largest construction program since mine opening, all the while keeping day-to-day operations going strong. I thank everyone involved for meeting these challenges with enthusiasm, hard work, and innovation.

Let me provide a few highlights of Diavik’s accomplishments. In 2006, we: • improved our safety record by more than 30 per cent, including one year of underground development work without an accident; • brought diamond production to 9.8 million carats; • expended $492 million, the largest since mine construction, with 77 per cent, or $379 million, spent with local businesses; • surpassed $1 billion in business with Aboriginal firms, and recertified to Gold Level under the Canadian Council of Aboriginal Business’ Progressive Aboriginal Relations program; • graduated eight new tradespersons, several at the top of their classes, and completed our second Aboriginal Leadership Development Program; and • complied with all environmental permits and licences, maintaining requirements associated with an Environmental Management System ISO 14001 certification.

In the following pages, you will find more information on these and many other activities that we have undertaken this past year, that collectively contribute to sustainable development and our wise use of resources.

Mark Anderson President, Diavik Diamond Mines Inc.

 Diavik Sustainable Development Report 2006 Our Ownership and Management The company has a variety of programs Our Northern Commitments The Diavik Diamond Mine is an whose underlying goal is the betterment of Diavik has formally committed to providing unincorporated joint venture between health, safety, environment, and community. significant socio-economic opportunities Diavik Diamond Mines Inc. (60 per cent) to the and ’s Rio Tinto sells its through its and Aber Diamond Limited Partnership West . This includes marketing arm, Rio Tinto Diamonds, in (40 per cent). Both are Canadian the Diavik Socio-Economic Monitoring line with a strict chain of custody process, companies headquartered in , Agreement, signed in 1999 with the allowing the sale of diamonds according Northwest Territories, Canada. Diavik Government of the Northwest Territories to their mine source in order to gain the Diamond Mines Inc. is a wholly-owned and ratified by the five Aboriginal groups, benefits of origin. subsidiary of Rio Tinto plc of London, individual Participation Agreements with England, and Aber Diamond Limited To learn more, visit riotinto.com and the Tlicho Government, the Yellowknives Partnership is a wholly-owned subsidiary riotintodiamonds.com Dene First Nation, the North Slave Metis of Aber Diamond Corporation of Toronto, Alliance, the Kitikmeot Inuit Association, Aber Diamond Corporation Canada. Diavik Diamond Mines Inc. is the and the Lutsel K’e Dene Band. Aber Diamond Corporation, the world’s manager of the operation. largest publicly traded specialist diamond Diavik’s training commitment includes Rio Tinto company, focuses on the mining and retail support of eight to 18 apprenticeships Rio Tinto is a leader in finding, mining, and segments of the diamond industry. annually. processing the earth’s mineral resources Aber supplies rough diamonds to the For operations, Diavik has employment and through its worldwide operations global market through its 40 per cent commitments of 66 per cent northern and supplies essential minerals and metals that ownership in the Diavik Diamond Mine. 40 per cent Aboriginal, and a northern help meet global needs and contribute to In 2006, Aber acquired full ownership purchasing commitment of 70 per cent. improvements in living standards. of Harry Winston Inc., the premier fine Regulatory requirements, and an The continued success of Rio Tinto business jewellery and watch retailer. Environmental Agreement between Diavik, is underpinned by a strong commitment Aber’s mission is to deliver enhanced Aboriginal groups, and federal and to all aspects of sustainable development, shareholder value through the combination territorial governments, formalize Diavik’s with an integrated approach to economic, of Diavik, a socially and environmentally environmental stewardship commitment. social, and environmental management responsible diamond-mining operation, and effective corporate governance. Diavik formally involves communities in with the eminence of the Harry Winston monitoring and in an advisory capacity Rio Tinto’s Diamonds Group is a leading brand. Aber sells its diamonds into the through the Environmental Monitoring proponent of the Kimberley Process and global rough diamond market following Advisory Board created under the driver of such programs as the Business strict corporate governance and chain-of- Environmental Agreement, the Diavik Excellence Model and partnerships such custody guidelines. Communities Advisory Board under the as the Council for Responsible Jewellery To learn more, visit aber.ca Socio-Economic Monitoring Agreement, Practices. and implementation committees under Participation Agreements.

Aboriginal Gold Designation Recertified In early 2007, Diavik was again The PAR program provides a framework recognized as a leader in Aboriginal for setting objectives, developing relations by reaching the prestigious action plans, measuring performance, Gold level of achievement under the achieving results, and excelling as Canadian Council for Aboriginal a leader in Aboriginal relations. PAR Business (CCAB) Progressive Aboriginal participants detail their performance Relations (PAR) program – the through a self-assessment, which is highest national level of achievement then externally verified by the National obtainable. Quality Institute and reviewed by a jury of prominent Aboriginal and Diavik first received this designation non-Aboriginal business people. in 2005. IntroductioniNTRODUCTION  Airstrip

North Inlet North Inlet Water Treatment Plant

North Country Till Storage Clarification Pond Rock Pile Area

Underground Feasibility Decline

Ammonium Processed Nitrate Kimberlite Bulk Storage Containment Area

Solid East Island Waste Area

Raw Water Intake Plant Site

Explosives Emulsion Plant

Ice Road Access

A21 Decline

0 500 m 1 km 1500 m

Satellite image September 2006

 Diavik Sustainable Development Report 2006 A21 Pipe Location The Diavik Diamond Mine

is located on a 20 square N ORTH T WEST ERRITO YELLO RIES kilometre island informally WKN A154 Dike IFE called East Island in Lac de North Inlet Gras, approximately 300 C A N A D A Water air kilometres northeast of Treatment Yellowknife, Northwest Plant A154N Pipe Territories, Canada, and 220 kilometres south of the Arctic Circle. Workers are transported A154S Pipepipe from a number of communities to the site using various types of charter aircraft. Diavik’s 1,600 metre airstrip is suitable for landing 737 jets and Hercules transport aircraft.

Latitude: 64° 30’ 41’’ Longitude: 110° 17’ 23’’ Elevation: 416 metres above sea level

Diavik at a Glance • production commenced January 2003 A418 Pipe • total operations and construction spending – C $2.6 billion • production through 2006 – 29.5 million carats • estimated diluted mineable reserves – 24.5 million tonnes at 3.3 carats per tonne (31 December 2006) • three ore bodies called A154N, A154S, and A418 A418 Dike • ore production – approximately 2 million tonnes annually • annual production – approximately 10 million carats of rough diamonds at peak • operations workforce – 735 (12-month average) • total mine life – 16 to 22 years • present footprint – approximately 10 square kilometres

Lac de Gras

Introduction

iNTRODUCTION  Diavik Sustainable Sustainable Development • be respectful of community knowledge, Development Policy Commitments customs, values, and cultures At Diavik, we are committed to making a We will: • identify, assess, rank, and manage positive contribution towards sustainable • strive to realize the full economic significant risks to the environment and development, fully embracing our share in potential of the mineral resources workplace that joint responsibility with all legitimate under our care and maximize wealth • provide a secure, safe, and healthy interested parties. generation in terms of financial and working environment, and contribute to social benefits healthy community life We contribute to sustainable development • protect the ecological integrity of the • maintain compliance with all applicable by seeking to maximize the resources we mine area, seeking to reduce the legal requirements, permits, licences mine, by pursuing opportunities to enhance potential for adverse effects on the and authorizations, formal commitments, environmental, social, and economic environment and Rio Tinto policies and standards, benefits, and by reducing adverse effects • set objectives and targets for continuous exceeding them where appropriate that may result from our undertakings. improvement that include northern • responsibly operate and close our The way we work reflects our strong sense benefits, occupational health and safety, mine, leaving a positive community and of corporate social responsibility to, and prevention of pollution, progressive environmental legacy active involvement with, co-workers, host rehabilitation, and waste and water use • continuously review our progress communities, regulators, and customers. minimization towards meeting this policy and report • actively contribute to capacity building publicly regarding our performance to enhance communities’ ability to participate in the opportunities provided by Diavik and beyond

Diavik is mining two diamond-bearing kimberlite pipes from its A154 circular open pit, centre. Left is the winter road access, used to ship supplies annually.

 Diavik Sustainable Development Report 2006 Introduction

Waste Rock Research

Process Plant

Fuel Power Plant Heating Arctic Corridors Tanks Plant

Sewage Treatment Plant Administration/ Maintenance Complex

Construction Camp Accommodations P hoto by Jiri Hermann

The Diavik plant site on East island, Lac de Gras. In preparation for underground mining, expected in 2008, Diavik has added a fourth 18 million litre fuel tank.

Mine Operations All of the physical plant is confined to As part of its ongoing life-of-mine plan, in Diavik’s current ore reserve comprises three East Island and includes a process plant 2005 Diavik began construction of the diamond ore bodies, called kimberlite to separate and recover diamonds, a A418 dike, launched an underground pipes, designated as A154 North, shop to maintain and repair equipment, feasibility study requiring construction of A154 South, and A418. Underground a power house to generate Diavik’s decline tunnels to the A154 and A418 investigations are underway on a fourth off-grid power needs, warehousing for kimberlite pipes, and began construction pipe, A21, in hopes of adding it to storage, a boiler house for peak demand of an exploration decline to allow bulk reserves. periods, a sewage treatment plant, diesel sampling of the A21 pipe. All of this fuel storage tanks, and a permanent capital work is expected to be significantly All four pipes are located just offshore of accommodation complex. Diesel fuel completed by 2008. By year-end 2006, East Island beneath the waters of the 60 provides the mine’s energy needs and A418 dike construction and A418 pool kilometre long lake called Lac de Gras. is used for power generation, mobile dewatering were complete allowing Innovative dikes allow the overlying waters equipment, and heating. With limited prestripping of the A418 open pit to to be removed temporarily for mining. access to the site over the seasonal winter commence. Underground feasibility Diavik completed construction of the first road from Yellowknife, fuel storage must be studies were advancing as planned with dike around the A154 North and A154 of sufficient capacity to supply one year’s work crews reaching the A418 and A21 South pipes, and virtually all of the physical operations. kimberlites. plant, in 2002.

iNTRODUCTION  Key Performance Indicators

2007 2006 2006 2005 2005 2004 2004 Target Actual Target Actual Target Actual Target

Lost Time Injuries* – 8 – 13 – 4 Target was LTIFR

Lost Time Injury 0.42 0.47 0.61 0.78 – 0.38 0.30 Frequency Rate*

All Incident Frequency 0.93 1.05 1.22 1.55 0.96 1.15 Target was LTIFR Rate*

Medical Treatments* – 10 – 13 – 8 –

Health and Safety 0 0 0 0 0 0 0 Non-compliances

Category III or IV Health 0 0 0 1** 0 0 0 and Safety Incidents

Environmental Regulatory 0 0 0 0 0 0 0 Non-compliances

Significant Environmental 0 0 0 0 0 0 0 Incidents

Category III 0 0 0 0 0 0 0 Environmental Incidents (Spills to the Environment)

Environmental ISO 14001 Maintenance Complete Independent Complete Independent Supplementation Management System recertification check for maintenance auditor recertification auditor by the end of recertification check for recommends recommends 2004 complete recertification ISO ISO recertification recertification

Operations Workforce 66% Northern 68% Northern 66% Northern 71% Northern 66% Northern 70% Northern 66% Northern 40% Aboriginal 33% Aboriginal 40% Aboriginal 35% Aboriginal 40% Aboriginal 38% Aboriginal 40% Aboriginal

Construction Workforce – 21% Northern – 20% Northern – – – – 8% Aboriginal – 9% Aboriginal – – –

Northern Spending 70% 77% 70% 75% 70% 70% 70% (Operations)***

Northern Spending – – – 75% – 56% – (Construction)***

Greenhouse Gas 161,413 159,423 160,000 152,048 Collection 127,555 104,800

Emissions (t CO2 of baseline Equivalent)**** information continuing

Closure Security $129.4 million $104.4 million $78.5 million

* 2007 safety targets are based on the lost time injury frequency rate (injuries × 200,000 hours ÷ total hours worked) and the all incident frequency rate (lost time injuries + medical treatments x 200,000 hours ÷ by hours worked) ** Shovel fire, category III, no injury, but equipment loss *** 2006 Actual combines operations and construction due to complexities with splitting certain cost categories **** Calculated on the volume of diesel fuel used in 2006

10 Diavik Sustainable Development Report 2006 Winter Road Program Due to the remote location, year- round access to the Diavik Diamond Mine is by air only. During winter, essential mine resupply is by seasonal . Seventy-five per cent of the road to Diavik is over frozen water. Travel time on the ice road to the mine site can be as long as 19 hours for heavy loads, with speeds and frequency of trucks carefully controlled to protect ice. Materials and equipment needed after the close of the winter road are transported to the mine by more The winter road, constructed and maintained by Inuit company expensive transport aircraft. Nuna Logistics, is approximately 600 kilometres long.

• Jericho Diamond Mine

• Lupin Gold Mine

Ekati Diamond Mine •

• Snap Lake Diamond Project • Secondary Gahcho Kue Route Behchoko Diamond Project

Introduction iNTRODUCTION 11 2006 Resupply goes from Ice to Air In 2006, record warm weather resulted in a late start and forced an early closure of the winter road. As a result, many loads were stranded in Yellowknife. Despite this setback, Diavik maintained operations and construction projects as planned through its successful ice road recovery program, which included a fuel conservation program and a three-phase airlift.

Pictured from top are: the Antonov AN12, used to fly in cement and bentonite for A418 dike construction; the Antonov 124, which delivered the shovel carbody to Yellowknife; the Canadian North Boeing 737, which Transported dike supplies and construction materials for operations; the First Air Hercules, used to transport fuel; and the Russian Mi-26 helicopter, used to transport the Terex shovel components.

12 Diavik Sustainable Development Report 2006 On fuel conservation, Diavik’s workforce To keep the new A418 dike construction 2007 Winter Road Program generated numerous fuel saving ideas and on schedule, a Canadian North Boeing Opens on Schedule several projects, among them a mobile 737 and an Antonov AN12 assisted by In late 2006, colder temperatures would equipment fuel savings program. Other flying in materials, including cement and return and with them better ice making projects, like the south camp renovation, bentonite. conditions. As a result, the 2007 winter are amid study. Diavik’s energy saving road would open well within historic For the third phase, northern companies initiative has the potential to reduce fuel opening dates. First Air and Canadian North transported consumption by up to two million litres per fuel and other operations supplies. For On January 28, the season’s first light loads year. fuel, First Air would utilize its own Hercules were transported to the Diavik and Ekati By early 2007, Diavik had successfully transport aircraft as well as one from diamond mines. completed its three-phase airlift program. Alaska and one from Ireland. In early Some 10,838 truck loads of fuel, January, airlift of the last load of fuel was To airlift Terex production shovel explosives, equipment, and assorted freight completed, bringing to a close Diavik’s components a Russian Mi-26 helicopter were transported up the 2007 winter road. successful ice road recovery program. was used. The shovel’s carbody, cut in The Tibbitt to Contwoyto Winter Road is half by the manufacturer, was flown to managed by a joint venture management Yellowknife aboard an Antonov 124. committee currently comprising Diavik Diamond Mines Inc. and BHP Billiton Diamonds Inc. The joint venture is committed to constructing, operating, and maintaining the winter road in a safe and environmentally responsible manner. Terex shovel components, some of which were cut in half to lower weight, had to be airlifted to the mine by helicopter. By June 2006, work crews welded pieces back together, assembled components, and had the 520-tonne shovel working in the A154 pit.

IntroductioniNTRODUCTION 13 using resources wisely

14 Diavik Sustainable Development Report 2006 Diavik Diamonds – the Brilliant Light of CanadaTM Economic Prosperity

Since operations began in January 2003, the Diavik Diamond Mine has produced 29.5 million carats of rough diamonds. In 2006, Diavik’s fourth year of production, 9.8 million carats were produced. Reserves remain strong and total mine life remains within 16 to 22 years, as projected during mine feasibility studies. Diavik diamonds, the vast majority of which are white goods of gem and near gem quality, continue to attract a high level of interest. Production from Diavik, Canada’s largest diamond mine, elevated Canada to third place in world production.

Investing in Diavik’s Future Although Diavik will continue open-pit mining for several more years, much work has been completed to prepare for the longer term. This includes new construction projects like the newly completed A418 dike and underground declines, or tunnels, to study the A154, A418, and A21 kimberlite pipes. This $363 million investment, started in 2005, is the foundation for Diavik’s future, which includes A418 open-pit mining and underground mining of the A154S, A154N, and A418 pipes. Results of study of a bulk sample from a fourth pipe, A21, will determine its economics.

ECONOMIC PROSPERITY 15 Diavik Will Become an Underground Mine When Diavik was originally designed nine years ago, a combination of open pit and underground was envisioned with a total mine life of 16 to 22 years.

After over four years of mining, Diavik’s ore reserves are strong and estimated to support another 12 to 18 years of mining. However, mining methods will change.

Currently, Diavik is an open-pit mine, but underground mining is expected to begin in 2008.

By 2012, open-pit mining is expected to be completed and Diavik mining will become totally underground. With underground feasibility studies advancing as planned, a picture of Diavik’s future is emerging. The illustration below gives a general overview of the mine life and transition from open pit to underground.

2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018 2019 2020 2021 2022 2023 A154 Open Pit A418 Open Pit A154/A418 Underground

Mine schedule subject to undergound feasibility studies, market conditions, further resource evaluation, A21 pipe evaluation, continued mine planning, etc.

Underground Feasibility Underground mining is part of the original mine plan that was the basis for Diavik’s feasibility study, environmental assessment, and permitting.

In preparation to seek an investor decision to begin underground mining, expected in 2007, Diavik is constructing an underground tunnel to reach the A154 South, A154 North, and A418 pipes.

Underground access will provide Diavik with key geotechnical and hydrological data to determine the best underground mining method. Mining experience to date indicates groundwater will be a key challenge.

At year-end, approximately 1,900 metres of main decline development had been completed with approximately 500 metres more required. In the A418 branch of the main decline, work crews had completed approximately 1,000 metres of development.

In fourth quarter, crews began underground test mining the A418 ore body with approximately 6,200 tonnes of ore collected. For this test, a continuous miner was used. This mechanical mining machine strips the ore from the heading face and can reduce diamond breakage caused by conventional blasting. Feasibility studies are scheduled for completion in 2007. Economic Prosperity

16 Diavik Sustainable Development Report 2006 A21 Bulk Sampling In a separate 1,400 metre exploration decline, work crews reached the A21 pipe in late 2006. Preparations are underway to remove a 6,000 tonne bulk sample for diamond valuation.

A feasibility study will ultimately assess the viability of mining the A21 pipe.

In 2004, the A21 kimberlite pipe, located just south of the existing mining operations, was removed from reserves due to a better understanding of the development costs P hoto by Jiri Hermann required. However, diamond sampling in Crystal Richardson and Peter Kiahingnaq, are among trainees with Diavik’s the 1990s was limited. underground contractor Kitikmeot Cementation.

Reserves At 31 December 2006, Diavik’s in situ ore reserves were 24.5 million tonnes at 3.3 carats per tonne for a total of 81.7 million carats (see table).

Deposit grade, at over three carats per tonne, is well above the world average of less than one carat per tonne, making Diavik’s kimberlite ore bodies some of the highest grade pipes in the world. The reserves comprise A154 South, A154 North, and A418 pipes. The A21 pipe currently not in reserves, potentially represents more mineable ore and Diavik has completed a decline tunnel to A21 for bulk sampling to better define A21. In the main underground feasibility study development, where the A154 South, A154 The Diavik Diamond Mine is currently North, and A418 pipes will be test mined, a scoop operator removes mined projected to produce approximately rock. 110 million carats of diamonds during mine life.

Proven and Probable Reserves

Pipe Tonnes Carats/ Carats (millions) tonne (millions)

A154 South 7.4 4.8 35.4

A154 North 9.0 2.0 17.9

A418 8.2 3.5 28.5

Total* 24.5 3.3 81.7

December 31, 2006 * Some figures may not add due to rounding

To test mine the A418 pipe, underground crews used this continuous miner.

ECONOMIC PROSPERITY 17 A418 Dike Construction After two years of construction, the A418 dike, Diavik’s second, was virtually complete by the end of 2006. This 1.3 kilometre dike required 1.1 million tonnes of rockfill and was built in water up to 32 metres deep. It spans from the existing A154 dike to East Island, and will allow open-pit mining of the A418 ore body. By early 2007, prestripping of the lakebed sediments and glacial overburden had begun.

The A418 dike encircles the A418 P hoto by Jiri Hermann kimberlite pipe, located just south of the During A418 pool dewatering, clean water was returned to the lake. As the two A154 pipes. pool level lowered, silty water was pumped to on-land storage for settling and silt removal.

Work on the A418 dike began in spring 2005, and crews closed the rockfill portion of the dike in October 2005. To protect the waters of Lac de Gras, as with the original A154 dike, a silt curtain was deployed in the lake around the work area. This plastic barrier successfully redirected silt to the lakebed to keep total suspended solids levels within regulatory limits.

In 2006, the central cut-off-wall and grouting in glacial till and bedrock to make the dike watertight was complete. After thermosyphon installation and instrumentation, dewatering exposed the lakebed, allowing prestripping of lakebed A 0.9 metre thick concrete cut-off-wall within the rockfill dikes andjet grouting, which sediments. Open-pit mining of the A418 anchors the concrete wall to glacial till and bedrock, makes the structure watertight. Jet pipe is expected to begin around year-end. grouting produces contiguous, overlapping cement columns and connects the base of dike’s Diavik used the same techniques and central concrete wall to bedrock. contractors as were used to build the award-winning A154 dike. Contractors included Lac de Gras Constructors, a joint venture of the Kitikmeot Inuit and Kiewit, and Nishi Khon SNC Lavalin, a Tlicho joint venture company.

For curtain grouting, self-propelled grout buggies are positioned over top of pre-drilled holes, allowing grouting fluid to be pumped into fractures in the underlying bedrock.

18 Diavik Sustainable Development Report 2006 Exploration Geophysical surveys included magnetic, In fall 2006, a new computer server was Using numerous exploration methods, Diavik electromagnetic, magnetotelluric, and installed for the purpose of establishing an continues to explore its large claim block in ground penetrating radar. integrated GIS. search of new potential targets for further In other exploration work, 1,813 metres of Newly acquired detailed satellite data was study. diamond drilling was completed with 11 collected for the entire Diavik land holdings The 2006 exploration program included targets tested. to assist in an integrated GIS compilation geophysical surveys, diamond drilling, of bedrock geology, surficial geology, One new kimberlite was discovered, implementation of an integrated Geographic geophysical surveying, and geochemical bringing the total number of kimberlites on Information System (GIS), satellite imagery, sampling. the Diavik claim block to 68. and geochemical sampling.

Haul Trucks Adapted to Arctic Environment

Good equipment maintenance makes good business sense. At Diavik, work crews have adapted the mine’s equipment to handle a year which includes eight months of winter and for handling Canadian Shield granite.

For example, Diavik’s fleet of 218-tonne Komatsu 830E haul trucks are outfitted with the following: • arctic seals. These seals, with a special composition, are more flexible and, as such, better able to cope with cold. • Haul truck box liners. These rubber liners have a much longer life than conventional steel boxes. At Diavik, the Duratrays last 13,000 to 16,000 hours, or about five times longer than Bill Morrison, a technician with Diavik contractor Fountain Tire, has 25 years steel. Replacing the liner takes about experience repairing tires. It is a rare skill and involves cutting out the rock, removing four days. the damaged tread and packing it with rubber, installing the patch, and finishing the • as part of the Diavik’s fuel repair by ‘cooking’ the raw rubber into the tire. conservation program, which followed the abbreviated 2006 ice • 830E hydraulic shocks are filled with All of these adaptations help to improve road season, Espar heaters were a combination of nitrogen and fluid. fleet optimization. installed on all 830s. These heaters Installing arctic seals reduces but does Another key aspect of keeping keep the engine and cab warm not eliminate the loss of nitrogen (when equipment operating smoothly is tire without idling the engine. This reduces the seal shrinks, nitrogen escapes). A maintenance – this includes good fuel consumption and resulting CO soft shock means unwanted force is 2 road maintenance. This has become emissions. Espars burn about six litres transferred to the frame. Diavik is trying especially significant with the global of fuel per hour compared to idling, a suspension modifier in the shock oil to tire shortage. Economicwhich burns about 55 litres of fuel try and reduce nitrogen loss further. per hour. Espars are flash heaters with • engines are shrouded with steel plates Average tire life is about 7,500 hours, circulating pumps mounted on the and a belly pan to trap heat. but Diavik has successfully and safely truck frame next to the engine. They • Shutters mounted on radiators. extended tire life on average to about circulate coolant for the engine and ProsperityTemperature controlled hydraulics open 9,000 hours. Diavik’s record is just for the cab. and close the shutters as required. over 14,000 hours.

ECONOMIC PROSPERITY 19 Geochemical surveying included till sampling and the soil gas hydrocarbon (SGH) technique. A total of 409 till samples were collected on Diavik claims. A total of 658 SGH samples were collected to test this technique. Results for both geochemical sampling types are pending or require further interpretation.

The kimberlite pipes forming the current Diavik reserve are part of mining leases totalling less than two per cent of Diavik’s total mineral holdings, which comprise nearly 240,000 hectares (2,400 square kilometres). The ongoing collection of geophysical and geochemical data will delineate new drill targets for the purpose of adding to Diavik’s kimberlite inventory. Surveyor Kyle Ollerhead, with Diavik contractor Ollerhead & Associates Ltd., prepares a very precise angular/distance measurement instrument located on the A154 dike. This Employment includes observing an elaborate network of reflectors (survey prisms) for monitoring A154 Diavik is committed to employing pit highwall stability. To ensure accuracy, meteorological observations are factored in northern and Aboriginal residents, and its correcting the measurements for the current temperature and pressure. commitment is formalized in the Socio- Economic Monitoring Agreement signed Aboriginal employment averaged 245 with the Government of the Northwest people, or 33 per cent. Approximately 68% Northern Territories and ratified by the five 20 per cent of Diavik’s workforce is female. Aboriginal groups. An additional construction workforce was Diavik has committed to employ brought in for short-term construction projects. 66 per cent northern and 40 per cent For 2006, Diavik’s construction workforce Aboriginal workers for operations. averaged 347 people, with an average of For 2006, Diavik’s operations workforce 72 northerners, or 21 per cent. Aboriginal averaged 735 people, with an average employment averaged 29 people, or eight 32% Southern of 497 northerners, or 68 per cent. per cent.

Jimmy Larkin has been with Diavik since the operation’s earliest days. In fact, he was on site when exploration drilling occurred in the mid-1990s. During construction, he trained and operated all the specialized equipment used to build the A154 dike. Currently, in his role as mine pit supervisor, he supervises a crew tasked with mining Diavik’s world-class diamonds. Economic

20 Diavik Su stainable Development RepoProsperityrt 2006 Northern Business Participation opportunities, this approach has the • light vehicle maintenance – Kingland Diavik recognizes its significant role in potential to create additional new career Ford creating new and long-term business opportunities for northerners. • medical services – Exploration Medical opportunities that can lead to increased Services Diavik works with these contractors to capacity for the North’s business • mine survey – Ollerhead & Associates ensure that their policies, procedures, and community. • bulk explosives supply – Denesoline benefits are aligned with those of Diavik Western Explosives To assist in raising northern business Diamond Mines Inc. • expediting – G&G Expediting capacity, Diavik has outsourced much Diavik has entered into several long-term • passenger air and cargo services – of its workforce requirements to northern operations labour contracts with Aboriginal Canadian North, First Air, Air Tindi, businesses. Approximately half of Diavik’s and northern businesses, including (but not Tli Cho Air, Northwestern Air Lease, workforce is supplied by these northern limited to) the following: Arctic Sunwest Charters, Great Slave firms, with the remainder employed directly • Catering and housekeeping – Ekati Helicopters by Diavik Diamond Mines Inc. Services • Winter road freighting – RTL Robinson Through outsourcing contracts, northern • Site services – Tli Cho Logistics Enterprises, Tli Cho Landtran Transport firms will become better positioned to • mining equipment operators – I&D Ltd., North Slave Logistics grow their business beyond total reliance Management Services • Fuel – Imperial Oil on Diavik. In terms of employment • Camp security – SecureCheck

Silent Auction Raises Funds for Charities

Diavik’s seventh annual Charity Silent To raise the funds, workers organized donating 37 boxes of food and gifts Auction raised approximately $23,000 various raffles and draws at the mine. As to four families. As well, a bake sale, for local charities. well, a percentage of proceeds from the hockey ticket raffle, and a northern art mine’s commissary were included. raffle raised just over $1,000 for the The Yellowknife Association for Christmas Hamper program. Community Living – Abe Miller Centre Diavik staff also participated in the and the Yellowknife YWCA shared the Salvation Army’s Adopt-A-Family program, proceeds. The auction, held at Diavik’s corporate office and Visitors Centre in downtown Yellowknife, concluded Friday, June 23, coinciding with summer solstice celebrations. Some 100 companies donated nearly 150 items to the auction. Among the items was a 0.75-carat diamond donated by Diavik, which raised just over $3,000.

Through several other fundraising initiatives organized by Diavik Diamond Mine workers, Diavik has donated just over $16,000 to the Salvation Army, the Side Door Youth Centre, and the Yellowknife Women’s Society, which operates the women’s shelter and the centre for northern families. Diavik Vice-President Community Affairs Darryl Bohnet presents Lyda Fuller of the Yellowknife YWCA and Wayne Balanoff with the Yellowknife Association for Community Living with funds gerenated through the annual silent auction.

ECONOMIC PROSPERITY 21 Expenditures In late 2006, dedicated business A portion of rough Diavik diamonds are Diavik is committed to fostering long- improvement resources were put into place sold to cutting and polishing firms in term sustainable business relationships to grow the program and help managers northern and southern Canada. Diavik in the North to ensure local communities ensure value creation through successful remains committed to supplying product to participate and benefit from all phases of project completion. these plants, adding value locally. the Diavik Diamond Mine. Since 2004 Diavik has trained 30 Green Product Stewardship In 2006, Diavik’s combined operations Belts and nine Black Belts, with 18 more Under the Diavik joint venture agreement, and capital spending totalled Green Belts scheduled to be trained in each partner retains the right to receive $492.4 million, of which $379.4 million, 2007. Six Sigma projects are being and market its share of all diamonds or 77 per cent, was northern. Of the completed in several areas, including: produced. Diavik Diamond Mines Inc.’s $379.4 million, some $223.0 million, or • Resource planning (overtime reduction) 60 per cent share of diamonds are 45 per cent, was with northern Aboriginal • equipment downtime reduction marketed through sister company Rio Tinto businesses and their joint ventures. • blasting efficiency Diamonds in Antwerp, Belgium. Aber • ammonium nitrate loss mechanism (part markets a substantial portion of its 40 77% Northern of ammonia monitoring program) per cent share of diamonds to the global • Fuel reduction rough diamond market through subsidiaries • energy loss prevention located internationally. • equipment performance optimization Diavik Diamond Mines Inc.’s effective Business improvement at Diavik focuses control over the diamond product starts at on delivery of continuous improvement exploration and ends when their initiatives across the elements of sustainable 60 per cent share of the rough product is development. Through Six Sigma, project sold in Antwerp by sister company and 23% Southern leaders recognize and promote the link sales agent Rio Tinto Diamonds N.V. between sustainable development and Six Sigma Programs Continue shareholder value. Rio Tinto’s Diavik introduced the Six Sigma Statement of Business Practice methodology in 2004 as an important Marketing and Diamond Sales As a member of the Rio Tinto Group, strategic tool for realizing continuous Diavik diamonds offer a commercially Diavik Diamond Mines Inc. subscribes to improvement in business efficiencies. In late desirable range of good colour, gem The Way We Work, Rio Tinto’s statement 2005 and in 2006, Diavik re-aligned its quality rough diamonds. Most of the value of business practice. The Way We Work Six Sigma program with sister company of the production lies in white stones of summarizes principles and policies for all Kennecott Utah Copper’s, to utilize the one carat and larger, of good commercial group operations. It is designed to ensure extensive skills and experience of the clarity and shape. The breadth of Diavik’s that all employees reflect in their daily work Kennecott Utah Copper group, another Rio product profile means that most of the shared high standards and values, key Tinto company. world’s established diamond polishing among which are accountability, fairness, centres are interested in receiving a share integrity, and openness. of Diavik diamonds. Rio Tinto expects business partners and principal contractors, suppliers, and others with whom there is a substantial Aboriginal Business Surpasses $1 Billion involvement, to also maintain high Diavik’s total spending with local Diavik is one of only three Canadian standards. companies to have achieved this northern Aboriginal business has Within The Way We Work, these milestone. reached a milestone. business practices are broadly outlined Early in 2006, after just six years Total cumulative spending with all into good business sense, openness and including the mine’s three year northern businesses is over $1.9 billion, accountability, and corporate policy. construction phase (2000 to 2002) or over 70 per cent of the and operations from 2003 to 2006, $2.6 billion Diavik has Aboriginal business spending surpassed spend on construction $1 billion. and operations since 2000.

22 Diavik Sustainable Development Report 2006 Cutting and Polishing In addition to Canadian cutting and polishing factories, Diavik diamonds are cut and polished in centres worldwide.

RTD ensures its direct customers have a thorough understanding of its social and environmental position. RTD has expectations that its customers operate ethically and responsibly, and requires confirmation from its customers that their work practices are in line with a set of principles. Practices such as child labour are not acceptable and RTD supports all Though large, an eight carat diamond crystal called an octahedron, left, weighs in at less endeavours – in India in particular – to than one tenth that of the much larger 90 carat ‘makeable’ – both prized gem quality eliminate child labour, and ensure the rough diamonds from the Diavik Diamond Mine. human rights of children and their families Code of Conduct Diavik Diamond Mines Inc. has actively are respected. There is growing interest in the participated with the Canadian Department Rio Tinto’s customers are expected to development of diamond brands that of Foreign Affairs and International Trade operate in accordance with: offer a country of origin guarantee. Diavik in the consultation process that defined • all appropriate international laws and Diamond Mines Inc., Rio Tinto Diamonds, the Kimberley Process. Diavik Diamond standards of commerce and Aber Diamond Corporation are Mines Inc. participated in the domestic • the highest of ethical standards registered participants in the voluntary implementation of the Kimberley Process • all applicable local laws and regulatory Canadian Diamond Code of Conduct by working closely with Natural Resources controls established by Canadian diamond Canada. The company also campaigned • high standards for working environments industry stakeholders and endorsed by parliamentarians to enact legislation in a • industry wage standards the Canadian Government’s Competition timely fashion. Canada enacted legislation • high quality product standards Bureau and the World Jewellery Federation in record time and met implementation to ensure diamonds labelled Canadian can date. Responsible Jewellery Council be authenticated. Diavik Diamond Mines Companies from across the diamond and Diavik Diamond Mines Inc.’s sister Inc. is a code signatory and Canadian jewellery sector to form the Council for company and marketing arm, Rio Tinto Responsible Jewellery Practices. Rio Tinto Diamond Code Committee member. Diamonds (RTD), participates in the is among the 14 founding members of this Kimberley Process Kimberley Process on behalf of Rio Tinto. not-for-profit organization. Diavik supports the Kimberley Process that Towards Sustainable Mining Council members support a coordinated seeks to stem the flow of conflict diamonds. As an active member of the Mining worldwide approach to addressing ethical, Conflict diamonds, as defined by the Association of Canada, Diavik is currently social, and environmental challenges United Nations, are diamonds that involved in the association’s Towards which drive continuous improvement to the originate from areas controlled by forces Sustainable Mining (TSM) Initiative. Part benefit of industry and promote consumer or factions opposed to legitimate and of the work to be undertaken by the TSM confidence in the industry. internationally recognized governments, Initiative leaders, on behalf of the TSM This initiative aims to cover ethical, social, and are used to fund military action in governance team, is the development of and environmental issues across every opposition to those governments, or in industry-wide sustainable development step of the diamond and gold jewellery contravention of the decisions of the United performance measures. The TSM Initiative supply chain by developing a responsible Nations Security Council. To address establishes and now requires all members practices framework and by having the issue of conflict diamonds, Canada to endorse the TSM guiding principles, members encourage business partners to has played a key role through the United and to report annually on several key adopt the responsible practices framework. Nations,Economic the G8 and the Kimberley performance areas. As well, each council member is required Process. to apply the framework through an process which includes self assessments and Prosperityindependent third party monitoring.

ECONOMIC PROSPERITY 23