Friday 9th December 2016

Resource Clips


Posts tagged ‘Kennady Diamonds Inc (KDI)’

Arctic Star/Margaret Lake Diamonds form JV, follow Kennady’s approach to NWT kimberlites

November 15th, 2016

by Greg Klein | November 15, 2016

A new joint venture brings together Arctic Star Exploration TSXV:ADD and Margaret Lake Diamonds TSXV:DIA in the Northwest Territories’ Lac de Gras region. Finding inspiration in Kennady Diamonds’ (TSXV:KDI) success at Kennady North, the partners plan a similar approach to their newly compiled property.

By posting an approximately $200,000 bond with the NWT government, Margaret Lake has earned a 60% interest in 23 claims totalling 18,699 hectares comprising the Diagras property, the JV announced November 15. Hosting 13 known diamondiferous kimberlites, the claims were formerly part of Arctic Star’s 54,000-hectare T-Rex property.

Arctic Star/Margaret Lake Diamonds form JV, follow Kennady’s approach to NWT kimberlites

The bond accompanies an application to extend the Diagras claims to August 2017.

“We identified the claims we wanted to joint venture based on our evaluation of historic data and we specifically focused on those claims that have known kimberlitic occurrences,” said Margaret Lake president/CEO Paul Brockington. His company will act as project operator.

The JV intends to follow Kennady’s modus operandi. The property’s Kelvin and Faraday kimberlites were dropped by De Beers and Mountain Province Diamonds TSX:MPV as they advanced Gahcho Kué, recently opened as the world’s largest new diamond mine in 13 years.

De Beers considered Kelvin and Faraday low grade, based on their lack of prominent magnetic anomalies, according to the Arctic/Margaret JV. Mountain Province then spun out Kennady to explore the pipes. That company “applied ground geophysics, gravity and Ohm mapper EM, which revealed extensions to these kimberlites that were not revealed in the magnetics,” the Diagras partners stated. “Subsequent drilling and bulk sampling has shown that these non-magnetic phases of the kimberlites have superior diamond grades to the magnetic phases and significantly increase the tonnage potential.”

Looking at some nearby deposits, the JV states that certain kimberlites at the Rio Tinto NYSE:RIO/Dominion Diamond TSX:DDC Diavik mine and the high-grade portions of Peregrine Diamonds’ (TSX:PGD) majority-held DO-27 kimberlite “are non-magnetic, proof that a magnetic-only approach in the Lac de Gras field could miss significant diamondiferous kimberlite bodies.”

The JV plans to follow Kennady’s surveying approach at Diagras. Most of the property’s kimberlites have had only one to three drill holes into their magnetic anomalies.

The partners also see potential in “two untested geophysical targets and several diamond indicator mineral anomalies that are not clearly sourced from the known pipes.” Ground geophysics are scheduled to begin next spring.

Read how Lac de Gras diamond mines transformed the NWT economy.

Why stop there?

September 20th, 2016

The world’s biggest new diamond mine hardly satisfies NWT appetites

by Greg Klein

Self-congratulation might have been irresistible as 150 visitors from across Canada and the world flocked to a spot 280 kilometres northeast of Yellowknife to attend Gahcho Kué’s official opening on September 20. But there’s no evidence the mining and exploration crowd will waste much time resting on their laurels. JV partners De Beers and Mountain Province Diamonds TSX:MPV continue their pursuit of additional resources. And within sight of the Northwest Territories’ new mine, Mountain Province spinout Kennady Diamonds TSXV:KDI hopes success will repeat itself right next door.

Twenty-one years in the making and the world’s largest new diamond mine in 13 years, Gahcho Kué’s expected to give up 54 million carats over a 12-year lifespan. Average price estimates for the three pipes come to $150 per carat. That would provide Canada with gross value added benefits of $6.7 billion, $5.7 billion of that going to the NWT, which would gain nearly 1,200 jobs annually, according to an EY study released earlier this month.

The world’s biggest new diamond mine hardly satisfies NWT appetites

Gahcho Kué partners hope to extend the
mine well past its 12-year projection.

That’s a strong rebound for the territory’s biggest private sector industry, following last year’s shutdown of the Cantung Tungsten mine and De Beers’ Snap Lake. The closures left the NWT with just two mines, both diamond operations in the Lac de Gras region that also hosts the newcomer.

But those two mines, the Rio Tinto NYSE:RIO/Dominion Diamond TSX:DDC 60/40 JV at Diavik and Dominion’s majority-held Ekati, maintained Canada’s place as the world’s third-largest producer by value.

Holding 51% and 49% respectively of Gahcho Kué, De Beers and Mountain Province hope to prolong its duration. Rather expansively maybe, the slightly junior partner outlines a multi-phase program.

Should all go to plan, Phase II would upgrade resources into reserves, maybe adding as much as five years to the operation. Phase III would deepen the Tuzo pipe, bringing another three years. Phase IV would do the same to the 5034 and Hearne kimberlites, as well as bring on the new Tesla pipe. If plans, projections and prayers come to fruition, Gahcho Kué might end up with more than 20 years of operation. With optimism drowning out any puns regarding pipe dreams, Phase V calls for “new targets.”

At least that’s the tale told by Mountain Province. De Beers acts as project operator.

Another company also holds high hopes, as well as about 71,000 hectares to the north, west and south of Gahcho Kué. Mountain Province spun out the Kennady North project into Kennady Diamonds, which has been advancing its own ambitious timeline.

The project’s Kelvin kimberlite has a maiden resource slated for this quarter and a PEA for Q4. Subject to those results, the company hopes to take Kelvin to feasibility next year, and to complete resource estimates for the Faraday 1, 2 and 3 kimberlites less than three kilometres northeast.

On the eve of the Gahcho Kué grand opening, Kennady pronounced itself pleased with this year’s 612-tonne bulk sample recovery, averaging 2.09 carats of commercial-sized stones per tonne from Kelvin’s north limb. With last year’s south limb grade coming to 2.02 carats per tonne, the results show “remarkable consistency in overall diamond grade across the full extent of the body,” said president/CEO Rory Moore. “This is a positive attribute from both an evaluation and a mining perspective.”

In a crucial step, a parcel goes to Antwerp next month for a price evaluation, with results expected about three weeks later.

The world’s biggest new diamond mine hardly satisfies NWT appetites

Kennady Diamonds hopes for a
glittering future just north of Gahcho Kué.

Two rigs currently have the Faraday kimberlites subject to an 8,000-metre summer program of both exploration and delineation drilling. Out of 15 holes reported so far, 14 revealed kimberlite.

The summer program follows a 10,712-metre winter campaign that discovered Faraday 3 as well as four diamonds in drill core, two each from Faradays 1 and 3.

Two mini-bulk samples released this year for Faraday 1 averaged 4.65 carats per tonne and three carats per tonne respectively. Faraday 2 minis averaged 2.69 carats, 3.04 carats and 4.48 carats per tonne.

Last month Kennady expanded its property by another 4,233 hectares directly south of Gahcho Kué. But the company’s focus remains on the Kelvin-Faraday corridor north of the new mine.

As for De Beers, its other Canadian focus since Snap Lake’s demise has been the Victor mine in Ontario’s James Bay region. With less than five years of operation left, it too faces doom. Another seven years could potentially come from the Tango kimberlite, seven kilometres away and now undergoing a federal environmental review.

Local relations, however, have taken an unexpected turn. Last week De Beers Canada chief executive Kim Truter told CBC the company would go beyond the duty to consult and seek the Attawapiskat community’s outright consent for Tango. “It’s pointless us actually operating in these first nations areas if we don’t have local support,” he said.

The network added, “Support has been shaky in the first nation since the signing of the original agreement with De Beers in 2005. Band officials boycotted and picketed the grand opening of the mine in 2008 and the road into the mine has been blockaded several times, including in 2013.”

But Truter’s remarks drew an angry response from newly elected chief Ignace Gull, the Timmins Press reported September 19. The paper quoted a social media post in which he stated, “Attawapiskat is in a midst of suicide crisis and we need to deal with this first and they have to back off instead of threatening us.”

In Quebec’s James Bay region, Stornoway Diamond TSX:SWY began ore processing at its Renard project in July, expecting to achieve commercial operation by year-end. The province’s first diamond mine expects to average 1.6 million carats annually for an initial 14 years.

Back at Gahcho Kué, visitors celebrated the grand opening as a possible strike loomed. Last week CBC reported that mediation had broken down between a contractor and a Teamsters local representing around 60 camp kitchen and cleaning staff.

Appointments, consultation advance Dunnedin Ventures’ diamond deposit

July 12th, 2016

by Greg Klein | July 12, 2016

With the goal of unearthing more Nunavut diamonds, Dunnedin Ventures TSXV:DVI announced new directors and positive community engagement on July 12. Claudia Tornquist joins the board after having been a technical adviser to the company since 2015. She’s also served as a Rio Tinto NYSE:RIO general manager, working on diamond projects in Canada and Australia. As executive VP for business development with Sandstorm Gold TSX:SSL, she helped finance juniors with streaming, equity and debt. Tornquist also sits on the board of Kennady Diamonds TSXV:KDI.

Appointments, consultation advance Dunnedin Ventures’ diamond deposit

Dunnedin expects to release last year’s sampling results soon.

Also joining Dunnedin’s board is geologist Chad Ulansky, whose experience in 15 countries includes participation in Ekati, Canada’s first big diamond discovery. He’s currently president/CEO of Metalex Ventures TSXV:MTX and Cantex Mine Development TSXV:CD, as well as a director for several public and private explorers. Along with Dunnedin adviser Chuck Fipke, Ulansky guided the company’s 2015 till sampling program on the Kahuna project, about 25 kilometres from the hamlet of Rankin Inlet on Hudson Bay’s northwestern shore. Those results are expected soon.

Dunnedin also reported the Chesterfield Inlet Community Lands and Resource Committee endorsed the company’s future exploration plan with two provisions. Under the agreement, Dunnedin would integrate community knowledge into its work to minimize effects on wildlife and help the Kivalliq Inuit Association clean up an exploration site abandoned by Shear Minerals. “While not on the Kahuna project claims, the camp is a concern for many local residents and Dunnedin has formally offered assistance with the KIA’s upcoming clean-up efforts,” the company stated.

The KIA granted Dunnedin a staking and prospecting permit valid through 2018, the company added. Dunnedin’s permit from Indigenous and Northern Affairs Canada remains valid until 2017. Following community input, the company will submit an amended application for bulk sampling and drilling beyond 2017 and 2018 to the Nunavut Impact Review Board.

The project hosts a January 2015 inferred resource for the Kahuna and Notch dykes, 12 kilometres apart:

  • Kahuna (+0.85 mm cutoff): 3.06 million tonnes averaging 1.04 carats per tonne for 3.19 million carats
  • (+1.18 mm cutoff): 0.8 ct/t for 2.45 million carats

  • Notch (+0.85 mm cutoff): 921,000 tonnes averaging 0.9 ct/t for 829,000 carats
  • (+1.18 mm cutoff): 0.83 ct/t for 765,000 carats

  • Total (+0.85 mm cutoff): 3.99 million tonnes averaging 1.01 ct/t for 4.02 million carats
  • (+1.18 mm cutoff): 0.81 ct/t for 3.22 million carats

Both kimberlites remain open along strike and at depth. The property holds six other diamond-bearing kimberlites.

In March the company announced recovery of 36 commercial-sized diamonds from a 2.4-tonne Notch sample that was about 40% complete. Late last year an 820-kilogram sample from the project’s PST kimberlite revealed 96 commercial-sized stones.

Read more about Dunnedin Ventures.

Read more about Canadian diamond projects.

See Chris Berry’s research report on long-term diamond demand.

Casualty in Lac de Gras

December 4th, 2015

The NWT looks to Gahcho Kué diamonds as Snap Lake goes on care and maintenance

by Greg Klein

Bad news can have a way of sounding sudden, even when it’s not surprising. De Beers had publicly discussed Snap Lake’s possible closure last March and again just one day before the December 4 official announcement. It comes as the global giant revamps operations in response to faltering rough diamond prices.

The company’s first mine outside Africa and this country’s only fully underground diamond mine, Snap Lake is unique in Canada. The kimberlite “is a dyke that averages about 2.5 metres thick and slopes down beneath Snap Lake at an average of 12 degrees, making it challenging and complex to mine,” according to the company. It’s a fly-in/fly-out operation for all but six to eight weeks a year, when heavy equipment and supplies arrive via ice road.

The NWT looks to Gahcho Kué as Snap Lake goes on care and maintenance

“Even the gains made this year are not enough to overcome
the market conditions and put us in a profitable position,”
lamented De Beers Canada chief executive Kim Truter.
Photo: De Beers

De Beers said it “will evaluate market conditions over the next year to determine the potential of the ore body as a viable mine.” Its capacity was 1.4 million carats annually.

The company, owned 85% by Anglo American and 15% by Botswana, recently announced a number of restructuring moves. The same day as the Snap Lake announcement, Bloomberg cited anonymous insiders who said Anglo might cut this year’s dividend. While the company has been selling assets to raise money, Anglo might get as much as $10 billion if it sold its stake in De Beers, according to an HSBC note quoted by Bloomberg last month.

Also last month Dominion Diamond TSX:DDC reported an approximately 8% drop in rough prices this year. RoughPrices.com pegs the year-on-year decline at 18%. Rapaport Group chairperson Martin Rapaport has called on De Beers to slash rough prices another 30% to 50% and replace CEO/diamond newbie Philippe Mellier with an experienced diamantaire.

Rapaport’s news service predicted De Beers’ revenue will fall approximately 44% this year. The company that once ran the global diamond industry has missed out on the sector’s more sensational recent news, such as Lucara Diamond’s (TSX:LUC) announcement of the world’s second-largest diamond find. President/CEO William Lamb has said it might fetch more than $60 million. The stone came from Botswana’s Karowe project, in which De Beers sold its 70% stake to Lucara in 2009 for US$49 million.

The NWT looks to Gahcho Kué as Snap Lake goes on care and maintenance

The NWT’s Lac de Gras region hosts Snap Lake,
two remaining mines and mine-to-be Gahcho Kué.
Map: De Beers

Putting 434 people out of work immediately, Snap Lake’s closure deals a heavy blow to the Northwest Territories, now down to two mines with the October shutdown of the Cantung mine as operator North American Tungsten TSXV:NTC sought creditor protection.

Last year the three diamond mines provided 3,234 jobs, 47% of them going to northerners, and spent $979 million in purchasing, with $653 million on northern companies, according to figures from the NWT and Nunavut Chamber of Mines. Direct and indirect benefits contribute nearly 40% of the territory’s GDP, making diamonds the largest private sector contributor to the economy, the chamber added.

But Snap Lake contributed less than the other mines, with a total of 747 jobs and $182 million in purchasing. By comparison the Rio Tinto NYE:RIO/Dominion Diavik JV created 948 jobs and spent $332 million, while Dominion’s majority-held Ekati operation created 1,539 jobs and spent $465 million.

Still, chamber of mines executive director Tom Hoefer said, “We’re hoping that this kind of devastating action on our economy is something that will make governments take notice.” That would depend on the response from people elected federally in October and territorially in November. Among the NWT’s specific problems are the lack of infrastructure and high cost of living.

“The new federal government has spoken about investing directly in infrastructure, but that was a Canada-wide statement, so we need to see how that affects the North,” Hoefer said. “On the territorial government side, it’s pretty early to tell.” Of 19 MLAs elected, 11 are new to the legislature. Not formally aligned by party, the MLAs have yet to choose a premier or form a cabinet.

An optimistic development for both De Beers and the NWT would be Gahcho Kué, a JV with Mountain Province Diamonds TSX:MPV that’s scheduled for H2 2016 production. Heralded as “the world’s largest and richest new diamond mine,” it would more than make up for Snap Lake’s loss.

“Certainly having Gahcho Kué in the wings is a positive thing for us,” Hoefer acknowledged. But he’s waiting to see if guidance will be adjusted. “The other two mines are more resilient operations than Snap Lake, but they’re still facing the challenges of declining revenues, so what do you do about costs?”

Yet Canada might be the jurisdiction most likely to withstand the diamond downturn, according to analyst Paul Zimnisky. Speaking to Mining Weekly Online last month, he said Ekati and Diavik “are still quite profitable projects, even in a weaker price environment.” He suggested Dominion might pull in “$250 million in free cash flow next year and almost double that the following year, using what I would consider a conservative diamond price.”

Zimnisky also pointed out that financing’s fully in place for Gahcho Kué and Stornoway Diamond’s (TSX:SWY) Renard project in Quebec, slated to begin production late next year. With its Kennady North project surrounding Gahcho Kué on three sides, Kennady Diamonds TSXV:KDI expects its successful $48-million infusion to carry the company through 2017.

De Beers also runs the Victor mine in Ontario’s James Bay region. In February 2013 the company warned the mine could close if natives continued to block the ice road during the approximately 45-day period that trucks can reach the site.

Canada undeterred by diamond downturn: Paul Zimnisky

November 24th, 2015

by Greg Klein | November 24, 2015

The world’s third-largest diamond producer by value, Canada has two new mines under development and a busy exploration scene despite the gems’ price slump. Speaking to Mining Weekly Online, diamond authority Paul Zimnisky said this country appears to be the jurisdiction best-positioned to navigate the turbulence.

Canada undeterred by diamond downturn: Paul Zimnisky

Dominion Diamond’s majority-held Ekati mine endured
lower value per carat this year but is anticipated to increase
volume as the Misery main pipe comes online.

“Looking at the Northwest Territories’ Ekati and Diavik mines, for instance, they are still quite profitable projects, even in a weaker price environment,” he told deputy editor Henry Lazenby. “I think Dominion Diamond [TSX:DDC], which owns 89% of Ekati and 40% of Diavik, could generate almost $250 million in free cash flow next year and almost double that the following year, using what I would consider a conservative diamond price. The company’s market cap is only $750 million.”

On November 19, Dominion reported fiscal Q3 2016 sales of $145 million, down from $222.3 million the same period last year. The company attributed the drop to a “cautious market,” lower-value production from Ekati and an approximately 8% decline in rough prices this year. Still, Ekati’s Misery main pipe remains on schedule for fiscal Q1 2017 production.

Zimnisky also noted Canada’s two mines-to-be, the De Beers/Mountain Province Diamonds TSX:MPV Gahcho Kué joint venture in the NWT and Stornoway Diamond’s (TSX:SWY) Renard project in Quebec, stand fully financed despite the investment climate. Additionally, Kennady Diamonds TSXV:KDI closed a $48.12-million private placement last month, funding its Kennady North project to the end of 2017—“which, Zimnisky noted, was impressive relative to the company’s $130-million market capitalization.”

He added that Canada’s share of global output by value could increase from about 15% now to 25% by 2018, thanks to new mines in development and exploration activity on a number of fronts.

Despite the slump, diamonds continue to out-perform other minerals, Zimnisky pointed out. “If they aren’t already, I would expect the Rios and BHPs of the world to start actively looking at diamonds again as a way to diversify their portfolios,” he told Mining Weekly.

See an overview of Canadian diamond mines in operation or under development.

$48 million to fund Kennady Diamonds to feasibility, Dermot Desmond in for $12 million

October 9th, 2015

by Greg Klein | October 9, 2015

Big money continues to pour into the Northwest Territories’ Lac de Gras region. A day after Kennady Diamonds TSXV:KDI closed the second tranche of a private placement totalling $48.12 million, Irish billionaire Dermot Desmond announced his contribution of $12.37 million. Between him and a company he owns, Bottin (International) Investments, Desmond’s stake now comes to 24.6% of Kennady’s 46.9 million issued and outstanding shares.

$48-million to fund Kennady Diamonds to feasibility, Dermot Desmond in for another $12 million

With a maiden resource imminent, Kennady Diamonds
talks confidently of taking its project to feasibility.

Bottin also owns 23.27% of Mountain Province Diamonds TSX:MPV, which holds 49% of the Gahcho Kué joint venture, “the world’s largest and richest new diamond mine.” Operator and 51% owner De Beers has the project on schedule for Q3 2016 production, making it the fourth diamond mine in Lac de Gras, a region that already ranks third globally for diamond production by value. Kennady’s Kennady North project surrounds Gahcho Kué on three sides.

Patrick Evans serves as Kennady’s CEO and Mountain Province’s president/CEO.

Just days before closing the private placement, Kennady announced a 2.4-tonne bulk sample from the Kelvin North Lobe graded an average 2.6 carats per tonne. Previous samples from the kimberlite graded 2.74 c/t in June and 2.57 c/t last January.

Four kimberlites on the project have summer/fall drill programs of about 8,000 metres on Kelvin, 12,000 on Faraday, 2,500 on MZ and another 2,500 on Doyle.

Kennady says its latest cash infusion will fund all aspects of the project to the end of 2017, including a preliminary economic assessment, a feasibility study and permitting. The project’s maiden resource should debut this quarter.

Read more about Canadian diamond mining and exploration.

Looking to Lac de Gras

August 27th, 2015

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.

The drama of discovery

July 17th, 2015

Not without excitement, the quest continues for Canadian diamonds

by Greg Klein

Calling it an “exceptionally rare” occurrence, Kennady Diamonds TSXV:KDI geologists spotted a macro diamond while logging drill core from the Faraday 2 kimberlite on July 15. It was the second such find in a year for the Kennady North project and probably rendered less than momentous by foreknowledge that the pipe did in fact contain diamonds. Even so, the event brings to mind a dramatic moment in Canadian diamond history.

The scene also took place in the Northwest Territories’ Lac de Gras region, but during late winter 1994. As recounted in Matthew Hart’s Diamond: The History of a Cold-Blooded Love Affair, 24-year-old Eira Thomas ran the project for Aber Resources while her father, Gren Thomas, conducted merger negotiations down south. Eira feared the deal would close at a disadvantage to Aber despite lab recovery of micro diamonds from the property’s A-21 kimberlite.

Not without excitement, the quest continues for Canadian diamonds

Standing up to disagreement from a partner as big as Rio Tinto NYE:RIO, the young geo thought she was on the brink of a more substantial discovery with the A-154 target. Even as lake ice began thawing, Thomas not only persuaded the crew to continue barge-based drilling but cajoled them into working a heavier, larger-diameter rig. Just as weakening ice finally forced the drillers to quit, Aber geologist Robin Hopkins found kimberlite studded with indicator minerals. Summoned by phone calls, Aber and Rio staff descended on the camp.

As they gathered in the core tent, Hopkins spotted something protruding from a piece of core. Hart writes:

Hopkins tried to scratch the crystal with his thumbnail, and couldn’t. When he looked up, he saw that Thomas was raptly watching him. “No way,” he breathed. He passed the core with the crystal embedded in it to Buddy Doyle of Rio Tinto. Doyle stared at it. “No fucking way,” he said, and handed it on to Thomas. She took the core in her hands and gazed at it, a two-carat diamond bouncing light from its crystal face.

That dramatic moment presaged Diavik, Canada’s second diamond mine and successor to Ekati, itself the result of Chuck Fipke’s adventurous spirit as well as geological acumen. Now, with three Lac de Gras mines in operation, the NWT ranks third globally for diamond production by value.

Yet the lifespan of Ekati, majority-owned by Dominion Diamond TSX:DDC, ends in 2020. The mine’s Jay deposit could potentially extend the expiry date to 2031, according to the company. Diavik, held 60/40 by Rio and Dominion, would last to 2023, even with the addition of a fourth pipe, the A-21 that Thomas discovered before A-154.

Snap Lake, De Beers’ first mine outside Africa, could continue operating until 2028, albeit with declining output. Earlier this year the company warned a much earlier shutdown might occur if an amended water licence wasn’t approved. Last month the Mackenzie Valley Land and Water Board recommended the territorial government grant approval for a plan to flush a higher proportion of dissolved solids into water that’s discharged into the lake.

De Beers also produces Canadian diamonds at its Victor mine in Ontario’s James Bay lowlands. The discovery actually dates back to 1987, about five years before Fipke’s historic find. But the Ontario mine didn’t open until 2008.

As those four mines mature, Stornoway Diamond TSX:SWY plans to pick up some of the slack with its Renard project in Quebec’s James Bay region. With commercial production slated for Q2 2017, Renard would give up 1.6 million carats annually for 11 years, about 2% of global supply, the company estimates.

Back at Lac de Gras, the world’s richest diamond development project continues to progress. Last week Mountain Province Diamonds TSX:MPV announced construction at Gahcho Kué was 62% complete and on schedule for H2 2016 operation. Also headed by Kennady president/CEO Patrick Evans, Mountain Province holds a 49% stake in the project, which is operated by JV partner De Beers. It’s expected to produce an average 4.5 million carats a year over a 12-year life.

Not surprisingly, Lac de Gras hosts a busy exploration play. Gahcho Kué’s next-door neighbour Kennady North remains the most advanced. On July 15, the same day the Faraday 2 stone lit up Kennady’s core shack, the company reported lab recovery results from Faraday 2’s spring drill program. About 930 kilograms of kimberlite returned a sample grade of 1.93 carats per tonne for diamonds of commercial size.

Of 247 individual diamonds described by the lab, 37% were transparent and white/colourless, while 56% were off-white. With 97% of the sample showing transparent white or off-white gems, the results could “have a positive impact on diamond values,” Evans stated.

The company expects recovery results from Kelvin’s 436-tonne bulk sample by the end of Q3. Results from a 2.6-tonne sample of Kelvin South Lobe kimberlite should arrive in early September.

Saskatchewan, meanwhile, hosts a more advanced diamond project in Shore Gold’s (TSX:SGF) majority-held Star-Orion South. Although it passed a federal environmental review in December, the company now seeks to cut pre-production capex through a revised mine plan and feasibility study.

Kennady finds macro diamond while logging Faraday 2 kimberlite core

July 16th, 2015

This story has been moved here.

De Beers diamonds dazzle Anglo American’s portfolio

February 13th, 2015

by Greg Klein | February 13, 2015

A diversified miner battered by commodity prices, Anglo American sees increasing value in its diamond division. De Beers, as a February 13 Reuters story put it, is rapidly rising to become the jewel in the giant’s crown.

De Beers’ “profit leapt by more than a third in 2014 at the same time as its parent company Anglo saw earnings drop by about a quarter, hammered by a dive in prices of metals such as iron, copper and coal,” the news agency reported. “It overtook copper last year to become the second-largest contributor to group profit, fast closing the gap with the flagship iron ore business.”

De Beers diamonds dazzle Anglo American’s portfolio

Diamonds outshone almost every other commodity
mined by global giant Anglo American.

Anglo holds 85% of the vertically integrated diamond company, with Botswana holding the rest.

Calling its rise dramatic, Reuters added, “In 2013 De Beers accounted for 15% of group underlying earnings before interest and tax (EBIT) and the iron ore business 47%. But last year the diamond division’s share rose to 28% of the group’s $5-billion EBIT, while iron ore fell to 40%.

Earlier this month the Sunday Times stated Anglo “risks a downgrade to ‘junk’ status as it faces billions of dollars of write-downs and plunging profits as commodity prices tumble.”

De Beers estimates a 4% increase in global polished diamond sales last year, rising to about $26 billion, and forecasts another 3% to 4% rise in 2015, according to Reuters.

De Beers, which sells rough and polished diamonds as well as finished jewelry, once controlled about 80% of global rough sales according to diamond analyst Paul Zimnisky. He now attributes about 35% of global rough sales, nearly 15% more than De Beers’ own share of production, to the company’s diamond trading subsidiary.

The company’s Canadian operations consist of the Victor mine in Ontario and Snap Lake in the Northwest Territories’ Lac de Gras region. Another Lac de Gras holding is Gahcho Kué, in which De Beers has a 51% stake with 49% joint venture partner Mountain Province Diamonds TSX:MPV. Considered the world’s most promising new diamond development project, it’s scheduled for H2 2016 production.

While the global veteran took on Gahcho Kué’s majority stake and role of operator, Mountain Province spun out a Lac de Gras advanced exploration project to Kennady Diamonds TSXV:KDI. Earlier this week the Irish Times reported the latter company no longer wants a senior partner. If its Kennady North project “is confirmed [as an economic diamond project], then, subject to regulatory approvals, we would look to open a mine within about five years,” said Patrick Evans, president/CEO of Kennady and Mountain Province. “Our intention is to develop the asset without a senior partner.”

Read about diamond supply and demand.

Read about diamond mining in Canada.