That is 25 weeks ahead of schedule and under budget, as the mine pushes ahead with its A$1.86-billion expansion to take its open-pit output into an historic underground block caving mining operation.

Mine owners are also pushing to bring the underground mining timeframes back even further to a possible six-month jump start, to mid-2010.

The update on Argyle’s future—which will also include planning from 2011 to take Argyle through to at least 2025— was detailed in mid-October at the 2008 Paydirt World Diamond Conference in Perth by Argyle Diamonds’ Underground Project Director, Ed Tota.

“Construction overall is 24% complete and we have expended nearly $670 million of the anticipated $1.8 billion cost,” Tota said. “Work to date includes completion of 20 of the 34 km of tunnels, or about 60% of that total scope of work.”

Tota said that in preparation for the underground move, Argyle had commenced a major transition as “we are coming in with a huge highly automated underground mine which will totally replace all current open-pit throughput through the processing plant. But we are in a huge rush to get up and running as soon as possible to replace lower grade throughput from the Northern Bowl openpit.”

Argyle’s underground is being developed around a current 60-million-mt ore reserve, with anticipated annual production of 9.5 million mt/y via conveyor lift to surface.

This is expected to produce 20– to 25–million carats a year for at least seven years—levels equivalent to current openpit yields.

Argyle’s move below surface will result in one of the largest block caving operations in the world, a 280-m-high cave with a floor footprint measuring 500 m by 170 m. The first undercut blast was achieved in early October this year which is 13 weeks ahead of schedule and represents the official start of the extraction of the block cave.

“Our focus is very much on ensuring the transition creates a safe, low cost underground operation at Argyle including maximizing high grade underground ore throughput as early as possible,” Tota said. “In achieving that, we also want to set up an operating structure that will facilitate a viable Argyle mine beyond 2018. This will include the commencement from 2011 of a pre-feasibility study to push Argyle much deeper to mine the remaining 200 million carats in the current resource. Our objective is to take Argyle through to at least 2025.”

Argyle is the world’s largest supplier of diamonds, accounting for a quarter of global yearly outputs. It has historically produced 25– to 30–million carats over a range of colors each year from open-pit mining in the East Kimberly region of Western Australia

The mine has so far produced more than 600 million carats, of which 90% has been taken up by the gemstone market.

Argyle was the first mine in Australia to establish a fly-in fly-out schedule for a remote mine and has held the record for the longest employee commute in the country.

In other news from the conference, a prominent diamond analyst predicted that there may be an easing in global demand for diamonds to “slow growth” levels of around 2%–3% per year in a market where prices have risen at least 10% this year.

Johannesburg-based James Allan, managing director of boutique finance house Allan Hochreiter, said rough diamond prices had climbed anywhere between 5% and 25% through calendar 2008. This has been driven by supply shortfalls as output at Australia’s Argyle diamond mine had eased 6 million carats currently in 2008 compared with 2007. Canada’s production is down 2 million carats, and Russia and Botswana’s output have eased 1 million carats each, Allan said.

“The total supply of diamonds worldwide for calendar 2008 is expected to be around 138 million carats—and that has certainly come off the 148 million carat supply evident in 2007,” he said. “However, in terms of supply growth in dollar values, the application of an average 13% price increase is boosting diamond supply value from $12.6 billion to $14.3 billion in 2008. This is being supported by diamond jewelry sales—particularly in the United States which accounts for half the world’s diamond jewelry sales—but understandably, there is some nervousness about the key buying period coming up between Thanksgiving and Christmas,” he said. “However, there will be some gradual increases in supply over the next four years.”

This may see some price decline from next year ranging from 10% to 20% in 2009 as production levels rise and market demand remains low around current growth rates compared to 8.5% in recent years. About $76 billion worth of diamonds are sold at the retail level each year.

In South Africa, a trial mining program is about to commence on a diamond project owned by Melbourne, Australia-based Tawana Resources Ltd.

Tawana Resources’ Managing Director, Wolf Marx, said the company was only awaiting the installation of a final crusher before the schedule could commence. Tawana is planning for the trial mining ahead of an anticipated move to a full-scale 500,000-mt/y operation for its flagship Kareevlei Wes kimberlite project in South Africa. Marx said that, pending success with the trial program, first commercial diamond production is expected to commence in 2009 at a time of “healthy demand fundamentals” for the gemstone.

The company’s move to producer status comes on the back of a revaluation by market tender in August of Tawana’s diamond samples from Kareevlei. The revaluation rated the project’s carats, from the initial two kimberlite pipes targeted for maiden mining, at $169 a carat and grades of between 8.5 and 11 carats per hundred mt.

“Kareevlei Wes is our most advanced project, we have completed a lot of drilling and bulk sampling on the cluster of five kimberlites and now have a project unusual in a worldwide context as an estimated 80% of its stones are gem quality,” Marx said.

Tawana has an initial 12-year mining right at Kareevlei Wes and will take its trial mining extraction from the KV01 and KV02 pipes.The company’s economic modeling on the project has estimated a production cost at full-scale from Kareevlei Wes of $8 per mt.

”The trial mining will enable Tawana to evolve a JORC-standard resource for Kareevlei Wes as we need to mine at least 2,000 carats to undertake a revised valuation for the pipes,” Marx said. “In the trial, we will make two small open cuts into both pipes to extract a total of 20,000 mt of material which should be sufficient to give Tawana the grades and carats necessary to complete the JORC statement.”

Marx said Tawana was advantaged in generating its initial cash flow that diamonds as a commodity did not suffer the wide price swings as hits such metals as nickel and zinc, particularly at mine start-up.