Rio Tinto to Develop Argyle Underground Mine

Putting to rest fears that the Argyle diamond mine would be forced to cease operation after 2008, Rio Tinto today announced the decision to develop a $760 million block cave underground project at the Kimberley site in Australia.

To ensure the continuity of production between the cessation of open pit mining in 2008 and the ramp up of the underground mine, a further $150 million will be spent on a related open pit cutback. Development work associated with the present exploratory decline will continue; with construction of the underground mine to begin once government approvals have been finalized.

The average annual production over the life of the underground mine from 2007 to 2018 is expected be around 60 percent of Argyle's historical annual average of 34 million carats and of similar quality.

Rio Tinto chief executive Leigh Clifford said, "This investment springs from Rio Tinto's proven capacity to develop large scale underground mines and to compete successfully in the global diamond business.

"The Western Australian Government's agreement to provide royalty relief and waive some secondary processing obligations has been fundamental to the economics of the expansion and will ensure that Argyle continues to play an important regional role," Clifford said.

Keith Johnson, chief executive of Rio Tinto Diamonds said, "The Argyle brand and its signature stone, the pink diamond, will continue to play an important role in the world diamond market.

"This is a particularly good decision for the East Kimberley area, the Indian cutting and polishing industry and the affordable fashion jewelry industry, each with a degree of dependence on the Argyle business," he said.

Rio Tinto is the world's third largest diversified miner and operates the Diavik diamond mine in Canada.