Friday 30th September 2016

Resource Clips


Looking to Lac de Gras

World diamond production drops but Canadians compete to make up the shortfall

by Greg Klein

An almost 4% increase in global diamond production by value last year coincided with an almost 4% drop in volume. Numbers released August 25 by the Kimberley Process Certification Scheme indicate higher prices kept revenue growing despite lower output. But, should December’s optimistic forecasts hold, demand will call for new sources. Among the most promising locations is Canada, which the Kimberley Process says held its third place spot for global production by value even as Russia pushed Botswana into second place. In fact Canada owes its status to just one region of the Northwest Territories, Lac de Gras, which hosts three current mines, a soon-to-be fourth and an encouraging exploration play.

The region’s most recent entry is Zimtu Capital TSXV:ZC, which on August 25 announced exploration had begun on the Munn Lake project held by the company and a staking partner. Despite about $5.7 million of work between 1996 and 2007 that found two diamondiferous kimberlites, the 14,000-hectare property has yet to undergo modern exploration.

World diamond production drops but Canadians compete to make up the shortfall

Of four kimberlites under its focus, Kennady Diamonds plans a
2015 maiden resource for Kelvin, further infill drilling for Faraday
1 and 2, and exploration at MZ.

Yet a previous 581-kilogram sample from the project’s Yuryi kimberlite showed 226 diamonds, among them 62 macro-diamonds above 0.5 millimetres in diameter. A 42-kilo sample from the Munn Lake kimberlite yielded two macros and 12 micro-diamonds. Over 2,500 samples revealed at least five distinct kimberlite indicator mineral (KIM) trains lining the property.

Zimtu now has a crew sampling KIMs to validate historic sampling and “provide additional insight into the diamondiferous potential of each area.”

Earlier this month Arctic Star Exploration TSXV:ADD announced plans to explore its 54,000-hectare T-Rex property in Lac de Gras. Historic work found over a dozen kimberlites, most of them diamondiferous, the company stated. Historic, non-43-101 results of a 436-kilo bulk sample from the Jack Pine kimberlite reported 572 micro-diamonds.

Another 299 micro-diamonds turned up in 360 kilos of Jack Pine kimberlite drilled in 2005, according to 43-101-compliant results.

Last June Arctic Star reported an update from North Arrow Minerals TSXV:NAR on Redemption, their Lac de Gras joint venture. Initial interpretation of ground geophysics indicates a number of targets for a potential 2016 winter drill program, Arctic Star stated. Its partner also has the property’s surficial geology under analysis to better define and interpret the region’s South Coppermine KIM train.

With about 97,220 hectares of Lac de Gras turf, Canterra Minerals TSXV:CTM said in June it’s identified several areas “that warrant further detailed exploration, including drilling,” along with other areas that could undergo till sampling and geophysics.

Last month Margaret Lake Diamonds TSXV:DIA announced an agreement, subject to TSXV approval, to acquire the remaining 40% interest in the Margaret Lake property, giving the company sole ownership. The company anticipates a winter drill program to test targets identified by last year’s airborne gravity survey. The 19,716-hectare property lies contiguous to the north and west of Kennady Diamonds’ (TSXV:KDI) Kennady North project, the region’s most advanced project other than the Gahcho Kué mine-to-be, which Kennady surrounds on three sides.

With four kimberlites under assessment at the 61,000-hectare property, Kennady reported results of a 443-tonne bulk sample from the Kelvin pipe on August 26. Of 16,247 diamonds recovered from four zones of Kelvin’s “more diluted” southeast lobe, 35 weighed over one carat. The zones averaged 2.02 carats per tonne for diamonds larger than 0.85 millimetres.

The lab described the five largest as follows:

  • 4.22-carat white/colourless, transparent macle with no inclusions

  • 3.95-carat brown, transparent aggregate with inclusions

  • 2.79-carat light brown, transparent aggregate with minor inclusions

  • 2.63-carat white/colourless, transparent octahedral with inclusions

  • 2.59-carat white/colourless, transparent dodecahedron with no inclusions

The project’s winter agenda calls for another bulk sample from Kelvin’s north lobe, where a 19-tonne mini-bulk sample last year averaged 2.59 carats per tonne. Kennady has Kelvin slated for a maiden resource by year-end. The company also has exploration drilling underway at the project’s MZ kimberlite and further infill drilling planned for the Faraday 1 and 2 pipes.

Kennady closed a $4-million private placement earlier this month.

 

In operation or under development: Canada’s diamond mines

Canada’s in the forefront of countries trying to make up the diamond supply shortfall, with new mines coming online as others face depletion. Besides the NWT’s three operations and De Beers’ Victor mine in Ontario, two others are in development.

Of the three Lac de Gras mines, Dominion Diamond’s (TSX:DDC) majority-held Ekati has about five years left to its life expectancy, although development of the Jay deposit could potentially add another 11 years.

Diavik, a Rio Tinto NYE:RIO/Dominion 60/40 JV, would last to 2023 with the addition of a fourth pipe.

De Beers’ Snap Lake could last to 2028, although with declining output. In March the global giant said an amended water licence might be necessary to avert a much earlier shutdown. In June the Mackenzie Valley Land and Water Board recommended the NWT government approve the application.

Ontario’s only diamond mine, De Beers’ Victor, faces depletion in 2018. The company hopes to postpone its doom by developing the Tango kimberlite, a smaller, lower-grade deposit seven kilometres northwest.

World diamond production drops but Canadians compete to make up the shortfall

On schedule for H2 2016 production, Gahcho Kué would
become “the world’s largest and richest new diamond mine,”
according to Mountain Province.

Now building Quebec’s first diamond mine, Stornoway Diamond TSX:SWY has operations scheduled to begin at Renard late next year and commercial production slated for Q2 2017. Although potential resource expansion continues, the company estimates Renard would supply 1.6 million carats annually for 11 years, providing about 2% of global supply.

A fourth Lac de Gras operation, destined to become “the world’s largest and richest new diamond mine,” remains on track for H2 2016 production. Mountain Province Diamonds TSX:MPV and joint venture partner De Beers expect Gahcho Kué to produce an annual average 4.5 million carats over a dozen years.

In Saskatchewan’s Fort à la Corne region, Shore Gold’s (TSX:SGF) majority-held Star-Orion South underwent a spring drill program to update the Orion South kimberlite’s resource. Although the project reached feasibility in 2011 and passed a federal environmental review in December, Shore now plans a revised feasibility to reduce capex.

In addition to regions around existing and future mines, Nunavut and Saskatchewan’s Pikoo region also draw significant diamond exploration.

Disclaimer: Zimtu Capital Corp is a client of OnPage Media Corp, the publisher of ResourceClips.com. The principals of OnPage Media may hold shares in Zimtu Capital.


Comments are closed.

Share | rss feed

View All: Feature Articles