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TORONTO (miningweekly.com) ? UK-based WWW Diamond consultants have valued diamonds from Mountain Province?s Gahcho Ku? project in Canada at an average $122/carat, with one 25,13-carat stone getting a $502 600 valuation, the diamond junior said on Thursday.

This was 41% higher than the average prices WWW calculated last year.

TSX- and Amex-listed Mountain Province, which owns the project in joint-venture with diamond giant De Beers, said that Gahcho Ku?s prospects would only improve as diamond prices continued to climb.

?Based on the analysis of leading diamond producers and analysts, the global diamond industry will experience peak diamond supply during 2011, with burgeoning demand - particularly from the robust Chinese and Indian markets - outstripping mine supply,? CEO Patrick Evans said in a statement.

?There is a strong probability that rough diamond prices will continue to experience strong double digit increases as production from aging mines decrease and new mine supply falls short of growing demand.?

A September feasibility study on Gahcho Ku?, in which Mountain Province owns 49% and De Beers the rest, found the project could produce an average of 4,5-million carats a year for about 11 years.

According to WWW?s analysis, the stone with the highest value per carat was a 9,90 carats, clocking in at a hefty $24 000/carat, giving a total value of $237 600.

?The 41% increase in the modeled price over the past year would result in an approximate 12% increase in the project?s internal rate of return,? Evans commented.

Mountain Province in September estimated the initial capital cost of the operation, located in the North West Territories, to be between C$550-million and C$650-million.

Permitting is currently under way at Gahcho Ku?.

The project, set to start producing around 2013, will be fourth diamond mine to come into production in the Northwest Territories, after Rio Tinto?s Diavik operation, De Beer?s Snap Lake, and BHP Billiton?s Ekati.


Edited by: Liezel Hill