Wednesday 16th October 2019

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Posts tagged ‘diamonds’

Paved with promises II

October 9th, 2019

The North’s infrastructure deficit impacts sovereignty, the economy and quality of life

by Greg Klein

The North’s infrastructure deficit impacts sovereignty, the economy and quality of life

The Chinese government’s majority-held Izok Corridor project
would benefit from Canadian infrastructure. (Photo: MMG Ltd)

 

This is the second of a two-part series. See Part 1.

Canada would gain a deep-water arctic port, Nunavut would get its first road out of the territory and mineral-rich regions would open up if two mega-proposals come to fruition. Recent funding announcements to study the Northwest Territories’ Slave Geological Province Corridor and Nunavut’s Grays Bay Road and Port projects could lead to a unified all-season route from a highway running northeast out of Yellowknife to stretch north through the Lac de Gras diamond fields, past the Slave and Izok base and precious metals regions, and on to Arctic Ocean shipping.

In mid-August, as federal and NWT elections neared, representatives from both levels of government announced a $40-million study into a possible 413-kilometre all-season route linking the NWT’s Highway #4 with a proposed Nunavut road. The project would also extend the NWT electrical grid to the Slave region, which straddles both sides of the NWT-Nunavut border.

The North’s infrastructure deficit impacts sovereignty, the economy and quality of life

Isolated Grays Bay could become an arctic shipping hub,
helping fulfill a dream that dates back to John Diefenbaker
and, not exactly a contemporary, Martin Frobisher.
(Photo: Grays Bay Road and Port Project)

That same month the federal and Nunavut governments, along with the Kitikmeot Inuit Association, announced $21.5 million to study a possible 230-kilometre Nunavut section. That proposal includes building a deep-sea port at Grays Bay, about midway along the Northwest Passage. Supporters hope to reach the “shovel-ready” stage in two to three years.

A “champion and proponent” of the project, KIA president Stanley Anablak said, “We know that this is only the first step, but if it is constructed, this infrastructure project will be a game-changer with respect to improved community re-supply, marine safety, arctic sovereignty, regional economic development and international investment.”

KIA perseverance helped revive the proposal after Ottawa refused to provide majority funding for the $527-million estimate in April of last year, 18 months before the federal election.

Another supporter is MMG Ltd, with two advanced base metals deposits in the region: Izok holds 15 million tonnes averaging 13% zinc and 2.3% copper, while High Lake shows 14 million tonnes averaging 3.8% zinc and 2.5% copper.

The North’s infrastructure deficit impacts sovereignty, the economy and quality of life

The Nunavut portion of a grand trans-territorial proposal.
(Map: Grays Bay Road and Port Project)

The Kitikmeot region “hosts some of the world´s more attractive undeveloped zinc and copper resources,” MMG stated. “However, located near the Arctic Circle and with no supporting infrastructure, these resources have remained undeveloped since their discoveries roughly 50 years ago.”

But could a supposed nation-building project become a nation-buster, compromising sovereignty for the sake of another country’s new silk roads? The proposal’s main beneficiary “will be the Chinese government, more so than the government of Nunavut or the government of Canada,” Michael Byers told the National Post in August.

About 26% of MMG stock trades on the ASX. China’s state-owned China Minmetals Corp owns the rest.

Byers, a political science prof and holder of the Canada Research Chair in Global Politics and International Law, “does not see a problem with a Chinese-controlled company operating mines in Canada,” the NP stated, “but he wonders if the company will be allowed to bring in Chinese workers to build the road and if Canadian taxpayers should foot the bill.”

The prospect of a Chinese company importing Chinese workers for a Canadian resource project has already been demonstrated by HD Mining International. In 2012 the company planned to staff underground operations at a proposed British Columbia coal mine exclusively with Mandarin-speaking Chinese. The mine was later put on hold, but not before an 18-month bulk sampling program conducted entirely by Chinese workers.

A new Grays Bay port and 350-kilometre all-season road formed part of the 2012 pre-feasibility study for MMG’s proposed mine. The company has since backed away from the estimated $6.5-billion price tag, calling for collaboration with others to build regional infrastructure.

We know that this is only the first step, but if it is constructed, this infrastructure project will be a game-changer with respect to improved community re-supply, marine safety, arctic sovereignty, regional economic development and international investment.—Stanley Anablak,
president of the
Kitikmeot Inuit Association

Certainly other companies would benefit too, as would the communities represented by the KIA. And as for sovereignty, neglecting infrastructure would cause the greater setback. That’s the perspective of a Senate report issued in June that called for several measures to expand the northern economy and enhance its culture. “The impact of federal under-investment hits hardest on the Arctic’s greatest asset, Indigenous youth,” the committee emphasized. “Opportunities for nation-building can no longer be missed.”

Among the senators’ priorities were energy and communications, as well as transportation, for the benefit of communities and industry. The committee recognized that mining comprises “the largest private sector employer in the Arctic, contributing to 20% to 25% of the GDP of the northern territories and supporting about 9,000 jobs directly, or one in every six jobs.”

The report also noted “growing global interest in the Arctic and rising international rivalry outside of the Arctic. Several non-arctic states in Europe and Asia have developed arctic policies or strategies.” Canada’s sovereignty over the Northwest Passage and other arctic waters depends on the principle of use it or lose it, the committee suggested.

The Northwest Passage route to Asia had been an alternative considered by Baffinland Iron Mines, the Nunatsiaq News reported last month. With ambitious infrastructure proposals of its own, the Baffin Island company currently relies on  trans-Atlantic routes to Europe and has also used Russia’s Northern Sea Route to reach Asia.

As part of its Phase II plans to increase production, Baffinland has applied for permission to build the territories’ second railway, which would run north from the Mary River mine to the company’s Milne Inlet port, now reached by a 100-kilometre freight road. The new track would precede a 150-kilometre southern rail extension to a port the company would build at Steensby Inlet. The Steensby route and facilities received environmental approvals in 2014.

This is the second of a two-part series. See Part 1.

Related reading: Reaching arctic mines by sea.

New NWT assembly faces economic challenges with resource depletion and exploration cutbacks: Chamber of Mines

October 3rd, 2019

by Greg Klein | October 3, 2019

Even with three candidates winning by acclamation, Tuesday’s Northwest Territories election featured several closely fought contests that left two Yellowknife ridings up for recount. Current standings in the party-less legislative assembly show 12 newcomers out of 19 seats. Former premier Bob McLeod didn’t run and only one cabinet minister, Caroline Cochrane, won re-election.

Mining comprises the jurisdiction’s biggest private sector employer but the three current operations, all diamond mines, face depletion. With no comparable advanced projects to take their place and a drop in exploration spending, the territory faces “impending economic decline,” the NWT and Nunavut Chamber of Mines warned. The group called on the new assembly to strengthen mining and exploration as well as diversify the economy by working with Ottawa to improve road and power infrastructure.

“We are hopeful the 19th Assembly will accept this challenge with gusto,” said Chamber president Gary Vivian. “Our Chamber of Mines looks forward to helping the newly elected Assembly in taking steps quickly to rejuvenate investment and reverse the expected decline in mineral production and its significant benefits to the NWT.”

The Chamber polled candidates during the campaign for responses on mining-related questions. In another document distributed to candidates, the Chamber offered recommendations on seven mining-related issues:

New NWT legislative assembly faces economic challenges with resource depletion and exploration cutbacks

  • access to land

  • insufficient infrastructure

  • high Northern costs

  • regulatory costs and delays

  • Indigenous governments’ expectations and demands

  • public awareness of the industry

  • a strategy to improve investment confidence

Last year’s Fraser Institute survey of mining companies showed the territory climbing to 10th place from #21 on the Investment Attractiveness Index, which rates a region’s geological bounty as well as government policies. But the NWT languished at #42 on the Policy Perception Index, which focuses on government treatment of the industry.

Data quoted by the Chamber attributes over 40% of territorial GDP to mining and exploration, and 1,540 jobs in 2018 to diamond mining. As of January 1 the territory’s population came to 44,598 people, according to a Statistics Canada estimate.

In a system that recognizes no political parties, the MLAs will meet on October 25 to choose a premier and six-member Executive Council that acts as the government’s decision-making body.

Almod Diamonds opens a cutting and polishing facility in Yellowknife

September 25th, 2019

…Read more

Osisko Gold Royalties continues expansion with Barkerville Gold Mines takeover

September 23rd, 2019

by Greg Klein | September 23, 2019

Already holding around 32.6% of the target company, Osisko Gold Royalties TSX:OR intends to grab the rest of Barkerville Gold Mines TSXV:BGM. The definitive agreement follows a PEA released last month for Barkerville’s Cariboo gold project. Osisko also announced creation of the North Spirit Discovery Group, described as a resource development and finance company that will work with JV partners and/or private equity firms.

Osisko Gold Royalties continues expansion with Barkerville Gold Mines takeover

The takeover offers new expertise and
financing to help revive an historic mining region.

Noting benefits to the takeover target, Osisko said it would provide technical expertise and greater access to financing to develop the central British Columbia project.

Pending approvals, the deal would exchange each Barkerville share for 0.0357 of an Osisko share, representing a 44% premium, the companies stated. The implied price comes to $338 million fully diluted, including the Barkerville shares already held by Osisko. The transaction would leave current Osisko and Barkerville shareholders with about 91% and 9% of Osisko shares respectively.

The companies anticipate closing in November.

Cariboo’s PEA forecast an after-tax IRR of 28% and NPV of $402 million for 11 years of underground mining producing an average 185,000 gold ounces a year. Initial capex would require $305.5 million. Processing would take place at Barkerville’s QR mill, about 140 kilometres by road.

The updated resource gives three main zones and a satellite zone a total of 2.27 million ounces indicated and 1.91 million ounces inferred. Two additional zones bring the totals to 2.44 million ounces measured and indicated, along with 1.92 million ounces inferred.

Drilling continues, with more funding to come through a $7-million bridge loan from Osisko.

Sean Roosen, CEO of Osisko and chairperson of both companies, said Osisko “expects to fund planned work through available liquidity, future revenue from royalties and streams, project debt, as well as outside private equity and joint venture capital through the creation of the North Spirit Discovery Group.”

Earlier this month Osisko signed an LOI to take over Quebec’s Renard diamond mine. The deal would keep the mine operating as Stornoway Diamond TSX:SWY entered creditor protection.

Osisko’s participation also helped finance Victoria Gold’s (TSXV:VIT) Eagle mine into production, following an unexpectedly higher capex for the Yukon project.

Osisko holds over 135 royalties, streams and offtakes including a 5% NSR on the Agnico Eagle TSX:AEM/Yamana Gold TSX:YRI Canadian Malartic, Canada’s largest gold mine, 19.9% of Falco Resources TSXV:FPC and 16.4% of Osisko Mining TSX:OSK. Osisko Mining currently holds 16% of Barkerville.

Renard continues operations as Stornoway Diamond gets creditor protection

September 9th, 2019

by Greg Klein | September 9, 2019

After less than three years of operation, Quebec’s only diamond miner asked a court to ward off creditors while the company sorts out its finances. Although the Renard mine remains in operation, Stornoway Diamond TSX:SWY stopped trading pending a delisting. “There is and will be no recoverable or residual value in either Stornoway’s common shares or convertible debentures,” the company stated.

Renard continues operations as Stornoway Diamond gets creditor protection

Renard began operations as an open pit
in October 2016 but faced difficulties
during the transition to underground mining.

Stornoway warned of such an outcome in its Q2 report released last month.

Blaming disappointing prices and “a variety of other factors and circumstances,” the miner failed to provide working capital and meet debt payments during 2019. The disastrous year showed in the company’s stock, which closed September 6 on two cents, one-twentieth of its 52-week high a year ago.

But the price had been falling almost steadily after reaching an apex of $1.32 in October 2016, days after Renard’s grand opening celebration.

Under an LOI signed last weekend, creditors headed by Osisko Gold Royalties TSX:OR would take over assets of the company and its subsidiaries, as well as their debts and liabilities, according to terms announced in June and July. Creditors have agreed to provide an initial $20 million in working capital, with the possibility of more money to follow, allowing Renard to continue operating and demonstrating their “strong support” for the mine during the restructuring process, Stornoway added.

Osisko holds a 9.6% stream on Renard’s production.

Osisko’s more than 135 royalties, streams and offtakes include a 5% NSR on Canadian Malartic, the Agnico Eagle TSX:AEM and Yamana Gold TSX:YRI partnership on Canada’s largest gold mine. Other Osisko assets include a 32.6% stake in Barkerville Gold Mines TSXV:BGM, 16.4% of Osisko Mining TSX:OSK and 19.9% of Falco Resources TSXV:FPC.

Diamond beneficiation returns to NWT as Yellowknife plant revived

August 14th, 2019

by Greg Klein | August 14, 2019

Delays and missteps notwithstanding, Yellowknife once again has a diamond cutting and polishing facility in operation. On August 13 Almod Diamonds announced its Crown of Light factory had transformed a first batch of rough stones into jewelry. The parent company of Diamonds International specializes in its proprietary 90-facet Crown of Light cut, marketed largely through tax- and duty-free retailers in the Caribbean and other cruise ship destinations.

Diamond beneficiation returns to NWT as Yellowknife facility revived

Almod reintroduces cutting and polishing to one of the
world’s most important diamond-mining jurisdictions.
(Photo: Almod Diamonds)

The YK operation takes place under the Northwest Territories’ amended Diamond Policy Framework, which seeks to expand benefits from diamond mining, by far the territory’s largest private sector employer. The policy seeks to have 10% of NWT-mined diamonds cut and polished within the territory, with experienced staff training local workers.

Currently the sole company taking part, Almod stated that increasing demand for its patented cut “created the need for this factory to invest in building a skilled team to cut the Crown of Light. The goal is to continue skills transfer and career development.”

The company hopes expanded operations will lead to a grand opening tentatively scheduled for next year.

Almod has planned a YK operation since buying the Laurelton factory in 2016 but failed to meet its 2017 opening target. Despite government incentives, previous attempts to encourage NWT diamond beneficiation have failed. Laurelton Diamonds and Arslanian Cutting Works shut down their local operations in 2009. In 2013 Deepak International vowed to revive the industry. But by 2017 RCMP were looking for president Deepak Kumar, alleging he fraudulently used storage containers full of junk as collateral for a loan of more than $1 million.

As a De Beers sightholder, Almod gets its NWT rough from Gahcho Kué, a 51%/49% JV that the global giant shares with Mountain Province Diamonds TSX:MPVD. The territory’s other two diamond producers are Ekati (majority-held by Dominion Diamond Mines) and Diavik (Rio Tinto NYSE:RIO/Dominion).

Almod also runs cutting and polishing facilities in New York, Namibia and Ukraine.

Nunavut art, Nunavut gold celebrate Nunavut anniversary numismatically

June 26th, 2019

by Greg Klein | June 26, 2019

A bit late for the April 1 birthday but an impressive work just the same, the Royal Canadian Mint has unveiled its latest collector coin commemorating Nunavut’s creation. The gold comes from two territorial mines and the design from a Nunavummiuq artist.

Nunavut art, Nunavut gold celebrate Nunavut anniversary

The most recent coin displays
Germaine Arnaktauyok’s work.

“The Mint is passionate about honouring Canadian talent and celebrating our exceptional cultural diversity through beautifully crafted coins,” said president/CEO Marie Lemay. “We are proud to honour Germaine Arnaktauyok’s artistic legacy, in pure Nunavut gold, to wish the people of this important territory a happy 20th anniversary.”

With one-tenth of an ounce of 99.99% yellow metal from Agnico Eagle Mines’ (TSX:AEM) Meadowbank and TMAC Resources’ (TSX:TMR) Hope Bay mines, the coin has a face value of $20 but sells for $359.95 in a limited edition of 1,500. The piece depicts an Inuit drummer that Arnaktauyok created for a circulating toonie struck in 1999 on the new territory’s birth. The flip side portrays the Queen.

Nunavut art, Nunavut gold celebrate Nunavut anniversary

A 2018 coin featured Andrew Qappik’s images.
(Photos: Royal Canadian Mint)

It’s the second coin in a year featuring Nunavut gold and artistry. In June 2018 the Mint released a $20 piece using Meadowbank and Hope Bay gold as the canvas for Andrew Qappik’s images of a walrus, ptarmigan, polar bear, bowhead whale and narwhal.

By far Nunavut’s largest private sector employer, the industry now has four territorial mines in operation, including Baffinland Iron Mines’ Mary River and Agnico Eagle’s Meliadine, which achieved commercial gold production just last month. Agnico Eagle also has Amaruq, a satellite project 50 kilometres northwest of Meadowbank, slated for commercial production in Q3.

At Hope Bay, TMAC hopes to begin production on its Madrid and Boston gold deposits in 2020 and 2022 respectively, adding to current output from the Doris operation.

Baffinland currently has community consultations underway as part of a Nunavut Impact Review Board process for two railways that the company proposes building to expand Mary River output.

Among Nunavut’s other promising projects are Sabina Gold and Silver’s (TSX:SBB) Back River gold project, which has received all major permits since reaching feasibility in 2015, and De Beers’ Chidliak project, subject of the giant’s buyout of Peregrine Diamonds last year.

Read more about the Royal Canadian Mint.

Lucara Diamond CEO Eira Thomas comments after unearthing another big, although possibly low-value, rock in Botswana

May 28th, 2019

…Read more

Margaret Lake Diamonds/Arctic Star Exploration move Lac de Gras project to drill-ready status

May 6th, 2019

by Greg Klein | May 6, 2019

Three seasons of state-of-the-art techniques have a Northwest Territories diamond project ready for the rig. The Diagras joint venture of Margaret Lake Diamonds TSXV:DIA and Arctic Star Exploration TSXV:ADD has now undergone geophysical strategies that weren’t used by previous operators but proved successful at Kennady Diamonds’ (TSXV:KDI) Kennady North, another project in the prolific Lac de Gras diamond field. With a permit already in hand, the JV has drilling planned for spring 2020.

Margaret Lake Diamonds Arctic Star Exploration move Lac de Gras project to drill-ready status

Margaret Lake holds the majority share of the 60/40 JV and acts as project operator.

Analysis of ground gravity, magnetic and electromagnetic surveys found compelling targets among 23 known kimberlites on the 22,595-hectare property. Among the examples are Black Spruce, where three distinct signatures from magnetic, gravity and EM data might represent different phases of the same kimberlite complex that could host different diamond grades and populations.

Jack Pine, one of Lac de Gras’ largest kimberlite complexes, revealed “a new kimberlite-like geophysical expression believed to have not yet been evaluated by drilling according to available public domain records,” the companies stated. Previous drilling at Jack Pine showed it’s “significantly diamond-bearing.”

The Suzanne kimberlite shows gravity and EM anomalies that likely weren’t adequately tested by a previous operator’s drill hole, therefore warranting further drilling.

Surveys over the HL02 kimberlite suggest “an untested gravity and EM target that breaks a diabase dyke,” the JV explained. “This is a classic compelling kimberlite drill target.”

EM anomalies at the Kong and Penelope kimberlites could represent untested kimberlites or kimberlite phases. Several other known kimberlites have yet to undergo modern geophysics, but remain open for surveys while next year’s drilling takes place.

Margaret Lake also has drilling planned for its recently optioned Kiyuk Lake gold property in Nunavut, just north of the Manitoba border. With analysis of detailed ground geophysics underway, the company plans a 5,000-metre program focusing largely on the property’s Rusty zone. Some historic, non-43-101 results from 2017 showed 26.48 g/t gold over 8 metres, 1.16 g/t over 38 metres, and 1.82 g/t over 122 metres. Margaret Lake may earn up to 80% of the 59,000-hectare property.

The company also holds a 100% interest in the eponymous Margaret Lake property, another Lac de Gras diamond project.

This diamond’s huge, but is it worth much?

April 25th, 2019

by Greg Klein | April 25, 2019

Thanks partly to new processing gear that’s less likely to break up the stones, Lucara Diamond TSX:LUC keeps pulling record-setting rocks out of its Karowe mine in Botswana. Now the company might have beat its previous record with a 1,758-carat diamond that would be the second-largest of gem quality ever found—if it’s of gem quality.

This diamond’s huge, but is it gem quality?

“Domains of high-quality white gem” may lurk within
Karowe’s largest recovered rock. (Photo: Lucara Diamond)

It’s “been characterized as near gem of variable quality, including domains of high-quality white gem,” Lucara explains. “Further detailed analysis is ongoing.”

The all-time record for gem-quality rough remains the 3,106-carat Cullinan, a 1905 discovery in South Africa that was cut and polished into the 530.2-carat Great Star of Africa in Queen Elizabeth II’s sceptre and produced eight other gems for Britain’s Crown Jewels. Tentatively holding second place is Lucara’s 1,109-carat Lesedi La Rona, which earlier this month hit the market as a 302.37-carat jewel with 66 smaller stones.

The company expects further fantastic finds, thanks to an x-ray transmission (XRT) recovery circuit commissioned in 2015 that strives to keep large stones intact. Since then Lucara produced 12 diamonds surpassing 300 carats, with the new find and the Lesedi La Rona exceeding 1,000 carats, out of total production approximating 1.4 million carats. Half of the 12 300-plus-carat rocks were gem quality, Lucara stated.

XRT notwithstanding, recovery might have separated Lesedi La Rona from a stone originally weighing in at 2,774 carats. That possibility was reported by the Gemological Institute of America last year after analysis of the 1,109-carat piece, a 373.72-carat fragment that Lucara sold separately, the 812-carat Constellation and three others weighing 374, 296 and 183 carats. The GIA’s analysis found “compelling evidence” that all five “likely originated from the same rough, with a combined weight of at least 2,774 carats.” Geological as well as recovery processes could be blamed for the break-up, Lucara responded at the time.

But the source of those recoveries should improve too “as we mine deeper in the ore body and gain access to the geologically favourable EM/PK(S) unit, the source of both of our record-breaking, plus-1,000-carat diamonds,” said CEO Eira Thomas.

See an infographic: Six of the world’s most famous diamonds.

Read about Koh-i-Noor: The History of the World’s Most Infamous Diamond.

Read Resource Clips visits the diamond industry in Belgium and the Netherlands.