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Glossary Up!
Posted by David
Hi Guys,
Just to let you know I finally found a plugin for Wordpress that allows me to run a glossary. Terms with an entry in the glossary will be highlighted blue with a dotted underline. Click on the term to get the definition. Only the first occurrence of a term in a post will be linked. You can also access the all the entries by going to the glossary page titled “Glossary of Geologic Terms”. The link is to the right of “Admin Bio”.
I try to give thorough definitions, so it will be a while until there is a suitable breadth. I will continue to add terms on a regular basis.
If you have any comments/corrections about the glossary, you can put in a comment on this post or email me at kimreport[at]gmail[dot]com.
Happy reading!
Diamond report from New Nadina needs some polish
Posted by David
Last Monday, New Nadina Explorations Ltd. (TSX.V-NNA), a diamond explorer, published results from a microdiamond assay of core from the optimistically named “Bling” kimberlite in the Lac De Gras region of the Northwest Territories. The Lac De Gras Region was the site of the first significant diamond discoveries in Canada, and is home to the Ekati (BHP Billiton) and Diavik (Rio Tinto and Harry Winston) diamond mines. The Bling kimberlite is located on the Monument Diamond Project in the Blue Pearl Cluster, and is the sixth such body to be discovered there. NNA owns 57.49% of the project. Chris Jennings, famous for his diamond finds in southern Africa and somewhat mixed results Canada, owns 22.11% along with his wife, Jeanne. Archon Minerals Ltd. (TSX.V-ACS), run by Stewart Blusson, co-discoverer of the Ekati Mine with Chuck Fipke, owns the remaining 20.4%.
Petrologically, the Bling kimberlite is pyroclastic (diatreme/crater) facies kimberlite, i.e. post-eruption/non-magmatic. The kimberlite was intersected during drilling of a 45º angled core hole from 171 m to 203 m. It contains abundant coarse olivine, pyrope, and chromium-rich diopside, minerals strongly associated with the mantle. But are they associated with diamonds in this case? The large size of many of crystals, up to 2 cm in diameter, indicates that they are possibly not fragments of diamondiferous peridotite xenoliths brought up by the kimberlite, but rather they are related to the kimberlite. Such grains are often termed megacrysts. Ergo, this information does not say much about potential for diamond abundance or lack thereof, although chemical analysis of said megacrysts could (but that is for another article).
However, upon later correspondence with Mr. Kivi, the P.Geo. in charge of the project, it was stated that these large crystals are likely not to be megacrysts as stated above, but rather that they are likely to be from deep mantle origins, ~200 km depth. If this is the cases, then Bling would have sampled a very large column of mantle in the diamond stability field, greatly increasing the chances of entraining diamonds upon the kimberlites ascent. It still remains, however, that chemical analysis of these grains is required to prove things either way.
What is interesting, are the 23 mantle xenoliths of lherzolite and harzburgite, incorrectly spelt in the report as “lhertzolite” and “hartzburgite”, respectively. Harzburgite (G10 garnet association), and to a lesser extent lherzolite (G9 garnet association), are the major parent rocks that diamond forms in, prior to ascent to the surface in a kimberlite (most cases) or lamproite (rare cases, e.g. Argyle in Australia). The presence of potential parent rocks for diamonds as xenoliths in a kimberlite is a good indicator for diamonds.
The best indicator for diamond in a kimberlite is diamond itself. The concentration of diamond is so low in kimberlite (0.2 g/t is considered a good mining grade as 0.2 g = 1 c) that microscopic (<1 mm) diamond counts are used to extrapolate the larger diamond content of a kimberlite when dealing with small sample sizes, such as drill core. The 120.25 kg sample of core assayed in the report held 67 diamonds greater than 0.106 mm in size. By plotting the microdiamond counts against the size classes, it is possible to extrapolate the distribution of diamonds towards higher sizes (see below; data from the 0.6, 1.18, 1.7, and 2.36 sieves have been omitted to correctly fit the trend line as they were zero values).
The power-type trend line here produced a fairly good fit with the data and has an R2 value of 0.9897 (1 is perfect). Extrapolating to the 1 mm size class gives ~1.56 diamonds of that size. It is possible to take this estimation a little further. The mass of a roughly spherical diamond 1 mm in diameter is 0.0000092 carats. Thus there are ~0.0000143 carats of diamond in this size class. With respect to diamonds of this size, the grade for the sample is 0.00012 c/t. A full grade estimate could be obtained by repeating this process for every significant (i.e. economic) size class and adding the grades together. Although the grades would become rapidly smaller with increasing diamond size due to the nature of the distribution. The problem with this particular sample is that not enough data exists to get a strong estimate of the diamond population. The sample is not large enough. Small samples are extremely vulnerable to the “nugget effect” were the presence or absence of one or two larger stones can totally skew the numbers away from the actual value. As things stand now, this sample is useful for showing that the Bling kimberlite is diamondiferous to some degree, but inconclusive beyond that. The next step for NNA and its JV partners is to try and obtain a mini-bulk sample in the 10’s of tonnes.
Looking at this company as a potential investor with some background in the field, there are a number of troubling issues:
1. The insinuation that the presence of megacrysts is indicative of diamond potential. As mentioned above, this is not true. Research suggests that megacrysts are a product of crystallization of the “proto-kimberlite” at depth in the mantle prior to ascent, and not the product of disaggregation on mantle xenoliths, diamondiferous or otherwise. Even with Mr. Kivi’s argument that these are not megacrysts, but indeed deep xenocrysts/xenoliths, the company has yet to publish any evidence either way. If this was the case, then why was this explanation not included in the press release? The company would have likely been better off not mentioning these characteristics of the kimberlite at all until they had determined their exact relevance. These crystals may turn out to be indicative of bling at Bling, or be a red herring.
2. The incorrect spelling of geologic terms such as harzburgite and lherzolite. Also using the term “chrome diopside” when in fact chromium-rich or chromian diopside is the proper term. Chrome is what you get when you plate chromium or an alloy of it onto another metal, e.g. steel. Yes, it seems like a small thing, and it may be just the fault of the fellow they hire to run IR, but where is the P.Geo. who is supposed to look over and sign off on each report? If the trained, accredited professional is not catching these obvious mistakes in material released to the public, what about the stuff that is not made public?
3. The mediocre results on the monument property. Finding a diamondiferous kimberlite is not terribly news-breaking anymore. Please see an earlier article on Diamonds North regarding this. Many other juniors out there, Stornoway, Peregrine, and Shear Minerals to name a few, have far more established properties. Some of these have established grades and even diamond valuations.
Concerning items (1) and (2), it is tempting to regard these as oversights, as Mr. Blusson and Mr. Jennings have years of experience and have both found diamond mines in the past. They also are not part of NNA, but only JV partners on the project. With regards to (3) I do realize that this is a very small junior and is working diligently to find and expand upon potential diamond deposits. It is impressive to note that NNA did manage to get assays back in less than two months from the discovery of the Bling kimberlite. Given the current harsh market for diamond explorers and producers NNA cannot afford to even make small mistakes that would possibly dampen the interest of potential investors. It may be that further work on the Monument Project or one of their other properties will bear fruit, but NNA’s lack of oversight on minor things that are easy to catch could leave some investors eyeing the competency of the people in charge with some suspicion.
Further asset diversification by Marifil Mines
Posted by David
Marifil Mines reported today that exploration in their new Neuqen Basin property in Argentina has resulted in the discovery of two horizons of potash, one 11 m (upper) and the other 9 m (lower) thick. The grade of the upper horizon grades 5-15% K2O and the lower at 15-20% K2O. The lower horizon is believed to be of higher grade than that currently being mined nearby at Rio Colorado, owned by Rio Tinto.
For those who have been living under a rock for the past six months, potash has become the new darling of the commodities market. Not to be confused with pot ash, the residue often found after a Deep Purple concert, potash is a variable mix of evaporite minerals: sylvite (KCl), halite (NaCl), and various oxides, carbonates, nitrates, sulfates, and phosphates of alkali metals. Potash’s main use is as a fertilizer to provide better crop yields to plants by enriching soil in elements beneficial to plant growth and resulting in enhanced crop yields. Producers such as Agrium (TSX-AGU) and Potash Corp. (TSX-POT) have seen their shares prices rise substantially in the past few months due to increased demand for food staples such as corn, soybeans, wheat, and other grains. The increased demand has led to the producers being able to negotiate for higher sale prices of potash to major producers such as China. Even juniour potash explorers such as Raytech Metals (TSX.V-RAY) have benefited from the craze. Now Marifil is getting some of the investor love, seeing its share price settle up ~24% by the end to the day to $0.445.
Disclaimer: The author holds 1000 shares of Marifil Mnes. This article is based on the personal opinions and experience of the author. Please do your own due diligence when investing.
9th International Kimberlite Conference
Posted by David
For those interested in the more scientific side of the diamond industry, the 9th International Kimberlite Conference is being held this August (10-15) in Frankfurt, Germany. This conference happens once every four years, making it sort of an Olympics for diamond, mantle, and kimberlite research. Only instead of prime specimens of peak athleticism representing their country, you have a range of people attending: from coporate geologists to absent-minded PhDs with questionable fashion sense.
The full link is here: http://www.9ikc.com/ although the 700.00 euro registration fee may put off the casual attendee. Thank heavens for research grants!
The Stornoway without a Dion
Posted by David
To use an overused comparison in these current market climes, the diamond sector is the Rodney Dangerfield of mining stocks as it “don’t get no respect”. In this way, the diamond juniours are much like the official opposition (for the non-Canadian readers, Stornoway is also the name for the official residence of the leader of the opposition, currently Stephane Dion). To give a more focused discussion of the issue than did a previous article, presented is the case of Stornoway Diamonds (TSX-SWY).
The stock has been on a fairly steady decline since this time last year going from ~$1.20/share to about $0.37/share at current. Even the news that acclaimed diamond consultants – WWW International Diamond Consultants Ltd., had upped the estimated valuations for diamonds from the Renard kimberlites (Renard, together with the Lynx dykes, comprises the Foxtrot Property in Central Quebec, and is a 50/50 joint venture with SOQUEM Inc.) only caused a mere blip up from 0.35 to 0.43 that evaporated in the last two weeks.
In detail, the report displayed increased values for diamonds from Renard 2 and 3 (from U.S. $109/c to $121/c) and The North Complex Zone of Renard 4 ($69/c to $79/c), increases of 11% and 14% respectively. Since the pullback after the news, the stock has bounced around the mid thirty cent level. So what gives? The predominant idea here is that since last summer, most investors are still very wary of juniours, even ones with established and advance projects such as Foxtrot and, to a lesser extent, Churchill (joint venture with Shear Minerals). For Renard, the pre-feasibility study (NI 43-101 compliant) is due out sometime during this quarter and many investors may be waiting on that. The cost of a road to the potential mine site is one of the most speculated values.
Aside from Renard, the other properties in the Foxtrot property hold promise as well. The Lynx series of dykes produced a grade of 1.07 c/t from a 494 t bulk sample. Not enough sampling has been done to allow for a diamond valuation, but the sample did include a gem-quality octahedron weighing in at a whopping 21.53 c (pictured). 
A minibulk sample from the Hibou dyke, 1.3 km from the Renard bodies (see map), gave a grade of 1.26 c/t from 30.4 t of kimberlite. The largest stone from this sample was a 1.01 c octahedron.
After Renard, the next most advanced property is the Churchill project (JV with Shear Minerals), a series of kimberlite dykes located in the Churchill craton in Nunavut. This property was discussed the earlier Arctic Diamonds and Churchill articles.
SWY also holds a number of other advanced-level diamond prospects. The most promising of these is the group of eleven kimberlite bodies at Aviat on the Melville Peninsula, North of the aforementioned Churchill project. What really is really interesting about this project lately is the dense media separation results from January 2008 that reported a grade of 1.63 c/t from 20.6 t taken from the AV267 body, and included a 3.64 c stone. AV267 is a sheet-shaped body of macrocrystic hypabyssal kimberlite. Thus far, drilling has delineated AV267 to have an average thickness of 3 m and to extend at least 2000m along strike and 500 m down dip (dip angle is 8-20 degrees). This is similar to the body at Snap Lake. Kahuna at Churchill is also similar in deposit shape, but it is a vertical sheet instead of the subhorizontal one at Aviat. The project began as a JV with SWY, BHP Billiton, and Hunter Exploration Group (a private firm). Last month SWY acquired BHP’s share of the project, making the split now 90% SWY and 10% Hunter. SWY also have 100% of the marketing rights for any Aviat stones.
SWY made news a couple of years back due to its aggressive takeover of Ashton Mining Canada. The main gain in this for SWY was the acquisition of Ashton’s share in the Foxtrot Project. SWY also gets a lot of press coverage because of its CEO, Eira Thomas, a celebrity in the diamond exploration industry due to her part in the discovery of the Diavik mine working for the then-juniour exploration company Aber Diamonds (now Harry Winston Diamonds). Her background and media appeal have made her popular with the press in an industry where companies are usually run by stolid old white guys. The acquisition of Ashton did not only add just properties to the company, but talent as well. Tom McCandless, a renowned and well-published specialist on North American diamonds (read Barren Lands by Kevin Krajick), stayed on with SWY as a consultant after the takeover and is now their chief mineralogist. Matt Manson, formerly VP marketing/technical services & control for Aber (now Harry Winston), came into SWY through the acquisition of Contact Diamond Corporation and is now company president.
In spite of these promising results and experienced management, SWY, like most diamond juniours, has been beaten into the ground. With the price at a severe low, investors will either shy away or look at the situation as a buying opportunity. SWY previously has been the focus of a lot of vitriol on investor bulletin boards such as www.stockhouse.com due to its aggressive takeover of Ashton, but shareholder crankiness aside, this is not the cause of the perceived downside.
SWY’s number one project is Foxtrot, specifically Renard. As a mine becomes more of a distinct possibility, the need for financing becomes impossible to ignore. Road and electricity access must be established, buildings erected, and equipment purchased. This will likely cost into the hundreds of millions of dollars. As of January 31st, SWY had just under $18 million in cash and equivalents. Financing by dilution at current prices is unlikely, as management is a significant stockholder and do not want to see their equity devastated. That leaves turning to banks and the like for funds to construct the mine. The “subprime slime” that still sticks to financial institutions makes getting a loan far more difficult now than this time last year. However, considering the experience of the management and the premium nature of the properties, the choices made are likely to be in the best interests of the shareholders.
Disclaimer: The author holds 500 shares of SWY that he bought at $0.73/share and has only mildly freaked out about the price dropping to $0.37/share. This article is based on the personal opinions and experiences of the author. Please do your own due diligence when investing.