- The Quiet Summer of 2011, and Honest Work
- Respectable Showing For the Diamond Sector at PDAC 2011
- PDAC 2011 – this March
- Promising Diamond Find by Metalex in Northern Ontario, Plus Grades from Chidliak and Movement at Renard
- Peregrine Finds 1.15 Carat Diamond at Chidliak
- Stornoway Diamond Corp. Works to Expand Resources at Renard Project
- 2010 Toronto Resource Investment Conference
- Newsworthy Week For Canadian Diamond Companies
- Different Types of Diamonds at Fort à la Corne
- Kimberlites and Diamonds of Western Canada
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Posted by David
After years of exploration and deposit evaluation. True North Gems Inc. has announced that they will sell a limited inventory of gem-quality sapphire from their Beluga property on Baffin Island, Nunavut. This inventory comprises polished gems (1.17 c example pictured below with an example of the ore material) accumulated from numerous sampling and processing programs.
The gems will be exclusively sold through a small Canadian company: Alpine Gems (http://alpinegems.ca/) and will be available for sale to the general public soon.
True North Gems -while a unique and promising Canadian junior, has been previously characterized by slow progress and an undedicated management team. Hopefully, the recent changes in leadership (see an earlier KIM Report article) have catalyzed progress of the company in obtaining some cash influx in the form of gemstone sales.
If TGX can pull off the same with stockpiles of rough and polished gems (corundum and beryl) from their Fiskenaesset (ruby) and Tsa Da Glisza (emerald) properties, then shareholders will be reassured that management is dedicated to the advancement of the company and its projects. The most important of these is the Greenland ruby project at Fiskenaesset.
From the information available TGX management has made the right decision in choosing only to sell gems from the Beluga property at this time as Tsa Da Glisza -although the company’s first gem project, has been on the back burner for some time and the Greenland project, although having much more potential than the other two projects, has encountered problems with a native group and delays in obtaining permits from the government that would allow them to sell their considerable stockpiles of pink sapphire and ruby from there.
Disclaimer: The author holds shares of TGX. This article is based on the opinions and experience of the author. Please conduct due diligence when investing. ©KIM Report 2010 www.kimreport.com
Posted by David
It would seem that there is some good news out there for shareholders of precious gem exploration company True North Gems with the company announcing changes in its management Feb. 3rd, 2010.
Nicholas Houghton, a director of the company, and an insider to the jewellery industry, has been promoted to company president, replacing Andrew Lee Smith, who will continue on the board of directors. Jeff Giesbrecht, lawyer and geophysical engineer has be appointed VP corporate development.
While these new executives have no significant track record with TGX, the bar for performance has not been set very high by Andrew Lee Smith who has been dithering with a company that possesses rich and unique gem deposits. The past five years of TGX have been characterized by its management being distracted with their positions in other companies and projects, letting properties like the Beluga sapphire (Baffin Is.) and Fiskenaesset ruby (Greenland) wither on the vine.
Though the board of directors contains many others who have alternate obligations with to outside companies (e.g. First Nickel, Dianor, etc.) hopefully a few more dedicated people in management will actually move the company closer to selling rubies and the like.
Disclaimer: The author holds 1000 shares of TGX and 500 shares of FNI. This article is in based on the opinions and experience of the author. Please do your own due diligence when investing. ©KIM Report 2010 www.kimreport.com
Posted by David
New Government in Greenland
The Greenlandic people recently applied the results of a 2008 referendum where they voted to gain further autonomy from Denmark that has held sovereignty over the world’s largest island for about 300 years. Greenland now has an increased share of future oil revenues, decreased Danish subsidies, made Greenlandic the sole official language, and has control over areas concerning police, coastguard, and the courts.
Greenland has recently elected a new government as well. The new government is dominated by the Inuit Ataqatugiit (Community of the People) party that has a decidedly socialist and pro-independence platform. However, it has yet to show to the world how it will deal with outside companies in the exploitation of the island’s natural resources: gems, gold, base metals, and petroleum to name a few. Will it take the approach of Alberta (at least until a year ago) with low royalties and taxes to attract foreign investment? Will they go to the other extreme such as the case with Mongolia (see Ivanhoe Mines) where government protectionism and incompetence has paralysed mining in the country? Or will they seek a middle ground as given by the case of Norway, which has exacted generous royalties, but at the same time sustaining corporate interest in exploiting the offshore oil fields there.
Only ~15% of the land area is not covered by glacier, but that number is increasing due to a current global warming cycle. With the lowest population density in the world of 0.03 persons/km2 (Canada is 3); the world’s largest island has to balance its need for funds to better the life of its residents with the desires of some conservative residents to limit exploitation of the land and foreign influence.
Natural Resources are the only realistic draw for investment in Greenland. Population and infrastructure levels are too low for things to be otherwise. Although mines have operated on the island in the past (including the famous cryolite mine that allowed for relative fiscal autonomy after Denmark was occupied during World War 2), no mineral production is presently occurring.
The resources Greenland has to offer the mining industry is varied and a number of companies have exploration programs in the region. Hudson Resources Inc. (TSX.V-HUD) is looking at diamonds in its Garnet Lake property and rare earth metals, uranium, tantalum, and niobium in the Sarfartoq carbonatite nearby. Quadra Mining Ltd. (TSX-QUA) hopes to produce molybdenum concentrate from the Malmbjerg project (although with the collapse of Mo prices, we will have to see how that goes). Even the Greenlandic government is looking to directly profit from mineral exploration through its 37.1% share in Nunaminerals A/S (OMX Copehagen-NUNA) a company with nickel, tungsten, platinum, copper, gold, and iron exploration projects scattered throughout the island.
The Natives are Restless
The mineral exploration project that has attracted the most media attention as of recent is True North Gems’ (TSX.V-TGX) Fiskenaesset Ruby play in southwest Greenland. The company is arranging a private placement to pay for some of the final costs in obtaining a long-awaited mining permit by spring 2010 in order to start selling the large amount of rough gem corundum (ruby and pink sapphire) they have accumulated. In terms of the economic geology, deposit is exceptional in both grade and value of the gems present, rivalling the famed Burmese deposits while existing in a country that does not have the habit of imprisoning duly elected politicians or murdering peaceful protestors. The main focus TGX has now is on whether it can get one of the final permits it needs in order to begin selling the rubies and sapphires it has mined during its evaluation of its property and hopes to mine in the future. TGX has encountered a problem familiar to many companies operating in Canada with resistance from some local aboriginals to the project. This group claims right to traditional mining rights over all of Greenland including TGX’s staked claims. A fairly recent confrontation two summers ago between TGX employees and a group of locals who were collecting gems on a TGX claim resulted in police intervention and catalyzed the formation of the group of locals who accuse the Greenland Bureau of Minerals and Petroleum (BMP) of unfairly siding with TGX and denying their right to conduct traditional activities. A number of articles supporting the local group of aboriginals, calling themselves the August 16th Union can be found HERE.
Playing Hot Potato
For TGX’s part, they appear to (wisely) want to distance themselves from any conflict with locals. They state that the August 16th Union’s complaint lies with the BMP and that the incident just happened to occur on a TGX clam. Andrew Lee Smith, CEO of TGX, when directly questioned on the matter by the KIM Report replied:
“As a foreign company investing in Greenland, we feel this is an issue for the people of Greenland and their government to deal with. We have respected the laws of Greenland in acquiring our mineral rights and conducting exploration and will continue to do so. The company would be happy to support any process that would improve the Greenland mining act if requested to do so.”
A transcript of an interview with Mr. Smith can be found HERE and gives a similar, but more detailed message.
A Great Canadian Pastime, Now a Greenlandic One
Given that one bias of opinion on this issue was given by the blog articles linked above, I will play devil’s advocate. Though I am a geologist by training and admittedly know little about Greenlandic law, I think this issue is a major concern for any company looking to do exploration in Greenland. The election of a socialist, pro-Inuit government does not bode well for companies involved in land-use disputes with aboriginal groups. However, the desire for more financial independence from Denmark and thus the need for more foreign investment may temper the government’s approach to this matter.
As a TGX shareholder, I am of course concerned by any possible interruption of development at Fiskanaesset, but as a Canadian, I am all too aware of the ability for corporations and government to push aside aboriginal groups in the name of “progress”. However, I also know that often the best way to find “traditional aboriginal lands” is to stake a development claim (e.g. Caledonia, Ontario). This unfortunate stereotype is can be encountered when utilizing land in Canada and sometimes is all too accurate in the most cynical sense.
This dispute raises a number of questions by outsiders unfamiliar with Greenlandic law and custom. It can be argued that what has to be established here is: (1) Is gem corundum collecting a traditional Inuit activity and does solid historic evidence exist for it? (2) If the former holds true, what degree of mining is considered traditional? (3) If aboriginal mining is legitimate, is there evidence for past mining in the region claimed by TGX? (4) Is it reasonable to allow traditional miners to benefit from the exploration activity conducted by TGX (ore discovery, exposure at surface, etc.)? (5) Is selling gemstones collected by aboriginal collectors to the world market also a traditional pastime? (6) If the former is all or partly true, did TGX know of this and did the government inform them when they applied for their exploration permit?
Final Cynical Thoughts
While I understand the desire first nations have to preserve their traditional, pre-colonial practices, to demand special status can in certain cases be construed as hypocrisy. Much like the Inuit hunter using rifle and snowmobile to achieve their specially-sanctioned hunting quota in the Canadian Arctic, or the Atlantic Mik’mak Indian lobster fisherman using powered boats, radio, and sonar to bring in their catch, sometimes these “traditional methods” are none too traditional. Likewise, is mining – even on a small scale, of deposits found and exposed at surface using modern technology and knowledge really “traditional”? Going further, is selling those gemstones to offshore consumers “traditional” as well?
Disclaimer: The author holds 1000 shares of TGX. This article is based on the opinions and experience of the author. Please conduct due diligence when investing. ©KIM Report 2009 www.kimreport.com
Posted by David
For those keeping abreast of recent world events, you might have come across the news of protests in Myanmar (Burma) against the military dictatorship there. These protests resulted in a forceful crackdown by the ruling junta. With increasing international attention focused on the Burmese situation, it should be pointed out that most of the world’s rubies and sapphires (both gem types of the mineral corundum: Al2O3) are produced there. Most of the profits of the sales go towards supporting this brutal regime, making these gemstones “blood” sapphires and rubies. The proceeds of these gem stones are used to finance oppression, murder, and torture. This is a strong parallel to the cases in western and southern Africa, where “blood” diamonds we used to finance groups committing terrible atrocities. The Leonardo DiCaprio vehicle Blood Diamond popularized this issue in film.
A Canadian company looking to provide conflict-free coloured gemstones is True North Gems (TSX.V-TGX; Frankfurt-TNF). Currently they have 3 gemstone projects. The Tsa Da Glisza Emerald property, Yukon Territory; the Beluga Sapphire property, Baffin Island; and the Fiskenaesset Ruby project; Greenland. They also possess a nickel property in the Yukon as well. Although the Yukon emerald property was their first major project, the potential of the Greenland project is such that most of the company’s resources are currently focused there.
Located on the southwest coast of Greenland approximately 160 km south of the capital of Nuuk, the Fiskenaesset project consists of 8 claim blocks covering 823 square km and is 100% owned by TGX. Since the project started in 2004, over 65 000 g of gem and over 129 700 g (1 g = 5 c) of near gem ruby and pink sapphire have been recovered from 48 t of material processed. Using those values (keep in mind though this is a combined sample of different areas) this translates into grades of 6 770.8 c/t of gem quality, and 648 548 c/t near gem quality. Like the case in diamonds, all gemstone deposits are difficult to valuate. Independent valuations of a 0.69 c ruby and a 0.96 c pink sapphire from the Aappaluttoq area of the project gave values of (USD) $3 220/c and $460/c, respectively. As with diamond, rubies and sapphires are priced individually on the basis of cut, clarity, colour, and size. Rubies are more valuable than pink sapphires. Geologically speaking, rubies are rarer than diamonds, and produced in only a handful of regions world wide. The world ruby market is not as controlled as the diamond market, but even so rubies are more valuable than diamonds of comparable size and quality.
The gem occurrences on the property comprise 17 metasomatic, 2 regional metamorphic, 2 contact metamorphic, 1 pegmatitic, and 7 hydrothermal types. All of these deposits had fluids of some sort involved with their formation. Fluids travel along faults and joints in the host rocks that act as pathways, and thus many of these deposits are structurally controlled. This means that these deposits can often be predicted if the geometries of these pathways are known. Most of these occurrences are located at the upper contact of the Fiskenaesset layered anorthosite complex with Archean greenstone rocks (e.g. amphibolites). This contact extends for more than 200 km. The deposits predominate when altered chromium (Cr) bearing ultramafic rocks are nearby. It is likely that these Cr-rich rocks were the source for the Cr (substituting for aluminum) in the corundum that gives the gems their blood-red colour. The ratio of ruby to pink sapphire varies from 0 to 2.12, depending on the occurrence. The grades of the occurrences also vary, from 705 c/t to 59 390 c/t. A fully comprehensive 43-101 report on the project with all of the details can be found here.
TGX is currently involved in a pre-feasibility study on the property, beginning this year. After speaking with representative at their booth (which had a stunning array of examples of both rough and cut gems) this March at the Prospector’s and Developer’s Association of Canada convention, they stated that they are in the processes of applying for a mining permit from the Greenland government (Greenland has a large degree of autonomy from Denmark). This will allow them to begin selling the gems they have recovered so far, something their current exploration permit does not allow TGX to do. If obtained, this is good news for TGX as it will allow them to get a positive cash flow. The representative at the booth did not believe that they will have a problem selling their gems for fair values. They even had to regretfully turn down purchase requests for the finished jewelry on display at the convention while I was there. In anticipation of selling their Greenland gems on the market, TGX has opened an office in Bangkok, Thailand, which is to the coloured gem industry what Antwerp is to the diamond industry.
The anticipations of the company; however, rest of the approval of the local government to grant them that permit. Although the representatives were optimistic about getting it when interviewed at the convention. Another issue is the market for the gemstones. In addressing this TGX had contracted MVI Marketing to evaluate their worldwide market for ruby and sapphire. One of the highlights from their report was that the global ruby market is approximately USD $2.1 billion wholesale with slightly declining production and increasing demand for both ruby and associated pink sapphire. Considering the success of certified conflict-free (e.g. Canadian) diamonds in a market rife with ethically questionable competitors, TGX is optimistic about their retail prospects.
Disclaimer: The author holds 1500 shares of TGX. This article is based on personal opinion. Investors are responsible for their own due diligence.