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Posts tagged ‘Stornoway Diamond Corp (SWY)’

End of a year-long ‘eternity’?

February 4th, 2016

Early signs hint at diamond recovery; meanwhile Canada plans additional supply

by Greg Klein

Coming from the company that commissioned the slogan “a diamond is forever,” Philippe Mellier’s remark sounded ironic. “It’s often been said that a week is a long time in politics,” the De Beers chief executive told customers in Botswana last month. “Well if that’s the case, then I think a year must represent an eternity in the diamond industry.” To be sure, 2015 must have been an eternity he’d like to forget, marking as it did the year demand went south, taking with it the accuracy of some previously bullish near-term forecasts. And now De Beers faces challenges from competitors as it tries to right the wrongs it’s been accused of.

Critics like industry player and commentator Martin Rapaport said De Beers put too much rough on the market last year and priced it too high, creating a surplus that manufacturers couldn’t afford. The company responded by cutting production and lowering rough prices by an estimated 7% to 10%. Mellier says that’s stabilized polished prices and in some cases improved them.

Early signs hint at diamond recovery, meanwhile Canada plans additional supply

The Rio/Dominion Diavik mine gains a fourth pipe when
A21 begins production, scheduled for the end of 2018.

Having previously called for Mellier’s resignation, Rapaport now credits him with “moving forward in the right direction.” But Rapaport accused the company of “messing up the supply side with unsustainable manipulations of the price and quantity of rough diamonds sold.”

Once a one-company cartel, De Beers used to manipulate the market any way it pleased. Although it’s still formidable with over 30% of the industry, any efforts to limit global supply would face challenges by other producers. Those are among the conclusions drawn by analyst Paul Zimnisky in a report released February 1.

After De Beers’ late 2015 production cuts, its output dropped 7% to 29 million carats for the year, Zimnisky stated. This year’s target comes to 26 million to 28 million carats. But ALROSA, with a similar market share, boosted 2015 production by 6% to 38 million carats. The company stockpiled about 22% of that total. ALROSA sees its production averaging about 40 million carats a year for the next decade.

Obviously the company expects buyers. As Chris Berry has noted, ALROSA foresees demand reaching a 5% cumulative annual growth rate up to 2024 while supply lags behind with a 1% CAGR.

Other challenges to De Beers would include Canada’s Dominion Diamond TSX:DDC. Its share in two Northwest Territories mines makes Dominion the world’s third-largest rough producer by value.

Last year Diavik, a 40/60 joint venture with Rio Tinto NYE:RIO, turned out 6.4 million carats, down 11.5% from 2014 due to processing plant pauses and the absence of stockpiled ore, Zimnisky reported. But the 10-million-carat A21, the mine’s fourth pipe, has production scheduled for late 2018.

Dominion also holds 88.9% of Ekati, which produced an estimated three million carats last year, a 6.3% decrease from 2014, Zimnisky added. The Misery Main pipe, with a reserve of 14 million carats, has production expected in H1 and would produce about four million carats this year. That would raise Ekati’s production by 70% to about 5.1 million carats in 2016.

The company also holds a 65.3% stake in the adjacent Buffer zone, which includes the Jay pipe with its 84.6-million-carat reserve. On February 1 Dominion announced the Mackenzie Valley Environmental Impact Review Board recommended the NWT approve Jay, which the company says could potentially extend Ekati’s lifespan at least 10 years beyond 2020.

Although De Beers shut down the NWT’s technically challenging Snap Lake mine last December, construction has reached 85% completion at Gahcho Kué, also in the NWT’s Lac de Gras region. A 51%/49% De Beers/Mountain Province Diamonds TSX:MPV JV that’s slated for H2 production, “the world’s largest and richest new diamond mine” would average about 4.5 million carats annually for an initial 12 years.

In Ontario, De Beers’ Victor mine has about five years left of its 12-year life. But Tango, a proposed extension now undergoing environmental review, could provide another seven years of operation. Production could potentially begin in 2018, the company says. Zimnisky reported 550,000 carats estimated for Victor this year.

Now five months ahead of schedule and $35.6 million under budget, Stornoway Diamond TSX:SWY expects its Renard project in Quebec to begin ore delivery by the end of September and commercial production by year-end. Output had previously been estimated at 1.6 million carats annually for 11 years. But revised guidance, mine life, reserves and other data should be released in Q2, the company announced on February 3.

If 2015 seemed tough to De Beers’ Mellier, his company showed signs of bouncing back this year. January rough sales surprised analysts by hitting about $540 million, Bloomberg reported February 2. As for De Beers’ Russian rival, “ALROSA extended its January diamond offering and is set to sell about double the amount originally planned,” the news agency stated, citing unconfirmed sources. They told Bloomberg ALROSA’s first sale of the year will likely bring in $450 million to $500 million without lowering prices as De Beers did. credits De Beers, ALROSA, Rio and Dominion with well over 75% of world rough supply. “Polished, in contrast, is an extremely fragmented market.”

Read Paul Zimnisky’s report on global diamond mining.

Read Chris Berry’s analysis of longer-term supply and demand.

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.

High-grade glitter

November 13th, 2015

Dunnedin Ventures surpasses historic results at its Nunavut diamonds project


Just the first bulk sample released by Dunnedin Ventures TSXV:DVI, it shows “some of the best diamond results reported in Canada,” declared CEO Chris Taylor. The November 12 announcement distinguished the Kahuna project in Nunavut as “having kimberlites with both high grades and large diamonds.” That would seem especially auspicious following the company’s first field season. But this is a project with a history, in a region that saw roughly $25 million of past exploration. And it’s getting some help from the dean of Canadian diamond exploration, Chuck Fipke.

“This is not grassroots,” Taylor emphasizes. “We know the diamonds are there. We just have to add to those we’ve found.”

Dunnedin Ventures surpasses historic results at its Nunavut diamonds project

Dunnedin CEO Chris Taylor ventures
into the Notch kimberlite last summer.

Dunnedin signed a four-year, 100% option on the property in November last year “after a lot of tire-kicking,” Taylor says. A former Imperial Metals TSX:III geologist who moved into the juniors about six years ago, he was attracted to diamonds as “the only real bright spot I could see in resources over the last couple of years.”

There was a family connection too. His Flemish great-grandfather imported diamonds into Belgium, where he had “about 100 guys cutting stones for him.” Taylor has family business heirlooms decorating his office, some from his grandfather, who worked with gems in this country.

A “contact of a contact” knew people at De Beers, where a geologist pointed Dunnedin to Kahuna.

The project, about 25 kilometres from the hamlet of Rankin Inlet on Hudson Bay’s northwestern shore, had previously been part of a regional program that included radar, airborne magnetics and electromagnetics, and ground-based EM surveys. Over 10,000 till samples revealed approximately 20,000 indicator minerals.

But the Kahuna claims lapsed after the last operators left, Stornoway Diamond TSX:SWY to focus on Renard and Shear Diamonds to tackle the ill-fated Jericho project, Taylor says. Vendors re-staked the claims and signed the option with Dunnedin late last year.

Besides finding kimberlite pipes, past explorers “found this series of kimberlite dykes, which is what our project is based around, and realized these were the sources of the indicator minerals. When they popped holes in them, they realized they had good diamond grades,” relates Taylor.

“When we looked at the bulk sample data, there seemed to be enough work done to do an initial resource, which is what we ended up publishing earlier this year.”

Announced in January, the inferred resource for the Kahuna and Notch dykes, 12 kilometres apart, provided figures for two sieve sizes over 0.85 millimetres, considered commercial sizes.

  • 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

The two kimberlites are exposed at surface and remain open along strike and at depth. The project holds six other diamondiferous kimberlites, four of them between Notch and the PST dyke, location of the November 12 results.

PST’s 820-kilogram sample gave up 526 diamonds, 96 of them above 0.85 millimetres and totalling 5.34 carats. The sample grade hit 6.5 carats per tonne, nearly tripling the historic 2.18 carats per tonne. And for that, Dunnedin thanks Chuck Fipke.

“He’s an old school friend of one of our directors, Pat McAndless, and the first person I went to when we started on diamonds,” Taylor says. “Chuck’s a very open, genuine guy. He showed me some of the methods they used to make the discovery at Ekati, the characteristics of diamond deposits. It provided guidance for me to find a project that our company could work with.” An adviser to the company since July, Fipke’s “guiding us on the ongoing sample processing and exploration methods, and we’re using his lab.”

Fipke’s CF Mineral Research has developed unique methods of diamond recovery, Taylor says, accounting for dramatic improvement. Also, Fipke “can recover all the indicator minerals at the same time, which is a helluva bonus. Usually, if you do caustic fusion, which is how most companies get their diamonds out of the rocks, you destroy all the minerals that came up in that kimberlite. But we can use them to hone in on our exploration.”

Chad Ulansky, Fipke’s “right-hand man in diamond exploration,” accompanied Dunnedin’s first field season last summer. The company has its own expertise too in McAndless, recently retired as VP of exploration for Imperial Metals, and his near-namesake Tom McCandless, Dunnedin’s technical adviser. With diamond experience in Africa, Europe and the Americas, McCandless took part in the discovery and assessment of Stornoway’s Renard kimberlites and in earlier work at the Kahuna project.

Still to come are sample results for over three tonnes taken from the Notch and Kahuna dykes as well as other targets. Another 180 concentrated till samples from last summer also remain to be processed, which Taylor hopes will point to additional targets.

There’s a real efficiency in getting those diamonds because of the high grade and the location near town. It’s not going to cost us anything near what it costs other companies to do bulk samples.—Chris Taylor,
CEO of Dunnedin Ventures

But the big question remains: What are the diamonds worth? For that, Taylor would have to send a 1,000-carat package to his family’s former city of Antwerp for evaluation. The resource estimate noted a 2008 description of Kahuna diamonds “as having encouraging value characteristics, with a high abundance of colourless and near-colourless varieties with octahedral shapes being the dominant morphology.”

The PST sample reported November 12 included “an octahedral crystal weighing 0.77 carats and a polycrystalline diamond weighing 2.22 carats. A preliminary examination of the diamonds suggests approximately 50% to 60% are clear and colourless.”

In his previous work McCandless reassembled a 13.42-carat Kahuna diamond that “blew up in a jaw crusher,” Taylor says, leaving fragments as big as 5.43 carats.

Aiding the economics of the 13,000-hectare project is Meliadine, where Agnico Eagle TSX:AEM has underground development underway. An all-weather road linking the site to Rankin Inlet covers about half the 25 kilometres from the hamlet to Kahuna.

“There’s a real efficiency in getting those diamonds because of the high grade and the location near town,” Taylor maintains. “It’s not going to cost us anything near what it costs other companies to do bulk samples.”

Dunnedin has just closed a $158,000 first tranche of a $1.1-million private placement offered in August. Fipke stated his intention to participate.

The company has also held its first consultations with the Kivalliq Inuit Association. “It’s really nice to work with a community that’s knowledgeable,” Taylor says, pointing out that Rankin Inlet began as a nickel mining town and now has Meliadine 25 kilometres away. “They know how to work with mining companies, what the KIA can bring to the table and what the company can bring to the table.”

Diamond prices down but 2016 could bring improvement, says Zimnisky

November 6th, 2015

by Greg Klein | November 6, 2015

While weak sales, high inventories and lagging prices hit the diamond industry this year, production cutbacks and the possibility of a strong holiday season might reverse the decline next year, according to Paul Zimnisky. The independent consultant and diamond authority’s latest report notes relatively healthy demand growth in the U.S., still the world’s largest diamond market. But growth in China and elsewhere fell short of anticipation.

Diamond prices down but 2016 could bring improvement, says Zimnisky

Despite this year’s price slump, ALROSA increased rough inventory
20% YTD as of September. (Photo: ALROSA website)

Miners responded in different ways, Zimnisky reported. While De Beers and Rio Tinto NYE:RIO cut production, ALROSA expects a 5% increase in carats over last year. Like De Beers, the Russian company lowered prices but ALROSA has been building inventory too.

Although Rio plans to suspend operations at its Argyle mine in Western Australia in Q4, its Diavik joint venture in the Northwest Territories has seen this year’s guidance increased from 6.7 million carats to 6.8 million.

In the same Lac de Gras region, Rio’s JV partner Dominion Diamond TSX:DDC also holds the Ekati mine, making Dominion the world’s fourth-largest diamond seller. De Beers, ALROSA, Rio and Dominion produce well over 75% of the world’s rough diamonds, according to

As for the fifth-largest producer, Petra Diamonds continues ramping up output despite this year’s disappointing sales, Zimnisky pointed out. The company plans to produce three million carats in 2015, up from two million in 2012, and expects five million by 2019.

Badly battered as the major miners’ stocks have been, Quebec producer-to-be Stornoway Diamond TSX:SWY stood out with a 26% YTD improvement.

In the short term, the industry looks hopefully to Diwali in November, then Christmas and, in February, the Chinese New Year. “A stronger than expected holiday season could clear out lighter than usual inventories, making for more aggressive buying in spring/summer of 2016 which, coinciding with less rough coming to market via De Beers, ALROSA and Rio, could mark a trajectory shift in prices,” Zimnisky stated.

Stornoway Diamond president/CEO Matt Manson sees deeper potential for Quebec’s first diamond development project

October 26th, 2015

…Read more

Unrestrained Renard

September 25th, 2015

Stornoway expands resources while building Quebec’s first diamond mine

by Greg Klein

Stornoway expands resources while building Quebec’s first diamond mine

Financed through to completion, Renard’s
construction continues on schedule.

With Renard on schedule for H2 2016 commissioning and Q2 2017 production, Quebec’s first such mine will make Stornoway Diamond TSX:SWY the world’s sixth-largest company producing the gems. Yet Stornoway’s ambitions continue to grow along with its resources, which got an estimate upgrade on September 24. Now the company’s emboldened to schedule a mine plan update for Q2 next year, even though mine construction has already reached the mid-way point.

Among the resource highlights is a 15.6% boost to the indicated category for Renard 2, despite a 16.4% drop in grade. One of the project’s seven resource-rich kimberlites, Renard 2’s inferred category now extends to 850 metres in depth. Overall, the project’s indicated category grows 11.4%, while the upgrades subtract 20.8% from inferred resources.

Indicated totals for Renard kimberlites 2, 3, 4 and 65 show:

  • 42.63 million tonnes averaging 71 carats per hundred tonnes for 30.17 million carats

The indicated resource includes a probable reserve showing:

  • 23.78 million tonnes averaging 75.5 cpht for 17.95 million carats

Of that, the company considers 1.91 million carats open-pittable, with the other 16.03 million requiring underground extraction.

The inferred category for those four kimberlites plus Renard 9, Hibou and Lynx totals:

  • 24.49 million tonnes averaging 54 cpht for 13.35 million carats

Stornoway sees “substantial new exploration potential” for the adjacent Renard 2 and 3 pipes down to 1,250 metres in depth.

“Renard 2 at 600 metres’ depth is moderately smaller in cross-section than we had previously estimated,” conceded president/CEO Matt Manson. But “it is continuing downwards to a depth and on a scale that makes it unique amongst Canadian kimberlites. In a development that is particularly exciting, we now see the potential to mine the high-grade Renard 3 kimberlite deeper than we had previously thought possible, following its re-discovery during the drilling at 1,000 metres’ depth, 500 metres below the previous drill intersection.”

[Renard 2] is continuing downwards to a depth and on a scale that makes it unique amongst Canadian kimberlites.—Matt Manson, president/CEO
of Stornoway Diamond

From Renard 2’s first 200 metres, meanwhile, the indicated category gains 900,000 carats. Contained in 4.28 million tonnes of country rock breccia, that accounts for the category’s 16.4% grade reduction. Even so, it has Stornoway wondering about additional potential for the open pit as well as the underground operations.

But until a reserve update comes along, the lifespan remains 11 years. A March 2014 assessment forecast 1.6 million carats per year fetching an average $190 a carat. Last year’s global production, by comparison, was 142 million carats according to De Beers. The Kimberley Process Certification Scheme says last year’s global price averaged $116.17.

Conclusive confidence in the project came with last year’s $946-million financing from Orion Mine Finance, la Caisse de dépôt et placement du Québec and Ressources Québec, an investment and financing agency that’s a subsidiary of the province’s Investissement Québec.

Quebec’s participation in Renard goes back to 1996 when SOQUEM Inc, now a branch of Ressources Québec, helped back early exploration that led to the first kimberlite discovery in 2001. Investissement Québec remains Stornoway’s largest shareholder with a 22.7% stake on a diluted basis, above Orion (17.5%) and la Caisse (6.2%). The province likes to consider itself an investor, not a subsidizer, of mining.

Canada’s other diamond development project, however, surpasses Renard with an expected average of 4.5 million carats annually for 12 years. A De Beers/Mountain Province Diamonds TSX:MPV joint venture, Gahcho Kué has production scheduled for Q3 2016 in the Northwest Territories. Other large-scale diamond development projects include ALROSA’s Verkhne Munskoe mine, scheduled for 2018 production in Siberia, and Rio Tinto’s (NYE:RIO) Bunder project, slated for 2017 production in India.

De Beers touts diamonds’ “undeniable” fundamentals, reports on 40,000 Indian women

September 21st, 2015

by Greg Klein | September 21, 2015

As the world’s largest seller of rough diamonds, the De Beers Group obviously likes to see positive forecasts for the gems. The company came through with its own optimistic outlook in this year’s Diamond Insight Report, released September 21. The global giant concedes that 2014’s weaker diamond demand pushed oversupply into 2015, which remains a challenging year. Even so, it’s “undeniable that the fundamentals of the sector remain attractive,” insists CEO Philippe Mellier.

De Beers touts diamonds’ “undeniable” fundamentals

Indian men “display their love with gifts
of diamonds on different occasions.”

Despite demand dropping off in the latter months, diamonds had quite a year in 2014. Rough sales increased 12% to more than $20 billion. Diamond jewelry sales grew 3%, surpassing $80 billion for the first time. Global rough production by carat dropped 3% but output by value rose almost 6% to more than $19 billion.

While still optimistic about long-term demand, De Beers sees little new supply. Three new mines came online last year with Lukoil’s Grib and ALROSA’s Karpinskogo-1, both in western Russia, and Gem Diamonds’ Ghaghoo in Botswana. Earlier this year ALROSA began commissioning a fourth new mine, Botuobinsky in Siberia.

“The greenfield diamond project pipeline remains sparse, however.” Suppliers have just two large-scale projects under construction: the De Beers/Mountain Province Diamonds TSX:MPV Gahcho Kué joint venture in the Northwest Territories and Stornoway Diamond’s (TSX:SWY) Renard project in Quebec. Other projects cited by De Beers include ALROSA’s Verkhne Munskoe pipe, scheduled for 2018 production, and Rio Tinto’s (NYE:RIO) Bunder project, slated for 2017, while expansions and extensions are planned for other brownfield sites. But for some reason De Beers bases its statements on info that’s at least 16 months old.

New mines and brownfield expansion are “expected to lift total carat production to levels similar to the mid-2000s but, owing to the mix of new diamonds mined, value growth is expected to be less pronounced.” Towards the end of the decade, “overall supply is likely to plateau.”

Meanwhile, De Beers portrays India as a market of exceptional potential and a society where diamonds have “always had an intrinsic appeal” to women. Unlike Westerners, very few Indian men proffer a diamond along with a marriage proposal. Instead, they “display their love with gifts of diamonds on different occasions during the marriage.”

To offer suppliers more insight into this market, De Beers researched 40,000 Indian women. The results, which Indian men just might be interested to read, take up more than half of this year’s report.

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 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

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