- 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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Promising Diamond Find by Metalex in Northern Ontario, Plus Grades from Chidliak and Movement at Renard
Posted by David
High Counts from the James Bay Lowlands
Metalex Ventures Ltd. reported recovery of 800+ relatively coarse (0.425-0.85 mm) diamonds in part of a RC drill sample from the T1 kimberlite in the James Bay lowlands. The kimberlite is part of the Kyle Lake project and is 94.2% owned by MTX and 5.8% owned by Arctic Star Diamond Corp.: TSX-ADD.
The Kyle Lake project is near the ” Ring of Fire” chromium and PGE metals region of northern Ontario. This region has been the focus of exploration by companies such as Cliffs Natural Recources (NYSE-CLF), Noront Resources Ltd (TSX.V-NOT), and KWG Resources Inc (TSX.V-KWG). Although the region has been the focus for diamond exploration since the 1990′s and is home to De Beers’ Victor (Attawapiskat) diamond mine.
What is interesting aside from the high number of coarse diamonds is that it came from a small section of the T1 kimberlite: 138-153 m depth. The company is awaiting detailed results, particularly on analysis of the coarser (>0.85mm) portions of the sample. Complete diamond counts will be released when all samples from the hole have been processed.
As a bit of speculation, that this hole is RC could mean that the true diamond distribution of this zone in the kimberlite could be coarser than what is seen in this sample. This is due to the fact that diamond breakage is rather high in RC drill-hole samples. The mechanics of the process is such that the drill bit: usually tri-cone or drag-bit, and the circulation process is quite rough on the hard, yet brittle diamonds. This is compared to traditional diamond drill core sampling followed by caustic fusion that typically has better preservation of large stones. The advantages to RC drilling is that it is far cheaper and often faster.
Investors should keep in mind that it is really the two factors of diamond valuation and diamond grade, and not diamond counts, that determine the economics of a diamond mine. In addition to working on the final results from the T1 kimberlite, MTX is also having a bulk sample from the nearby U2 pipe assessed.
Diamond Grade News Out of Chidliak
Yesterday morning, Peregrine Diamonds Ltd. released that they had determined a grade of 1.04 c/t from their mini-bulk sample of the CH-7 kimberlite from the Chidliak property. The 47.2 t (dry) sample returned 49.07 c of stones larger than 0.85 mm. The largest three diamond crystals were 6.53, 2.18, and 1.24 c. The sample was collected by trenching the kimberlite outcrop to a depth of 2 m.
Eric Friedland, CEO, is quoted in the press release: “We are pleased to see a grade of one carat per tonne and a population of gem quality diamonds in this mini-bulk sample from CH-7, results that certainly justify a large bulk sample of this pipe and are another illustration of the excellent potential forChidliak to host a diamond mine. We now have five kimberlites with economic potential in Arctic settings at Chidliak, and four of those are clustered within an area that has only an eight kilometre radius: CH-1, CH-6, CH-7 and CH-31. We hope to add to this growing list of potentially economic kimberlites as more microdiamond results from the 34 kimberlites discovered this year are received. As we await all the results from the 2010 exploration programme, including a 14 tonne sample collected from CH-6, we are completing our 2011 exploration strategy which will entail the further evaluation of known kimberlites with economic potential, including the planning for larger bulk samples, as well as the discovery of more diamondiferous pipes starting next March with the drilling of a number of compelling lake-based targets.”
Firm Contracted for Environmental and Social Impact Assessment of Renard
Also yesterday, Stornoway Diamond Corp. awarded a contract to Roche ltd. Groupe-conseil to investigate the environmental and social impact of the future Renard diamond mine in central Quebec. The Renard mine will be Quebec’s first diamond mine and has a current NPV of $885 million (CAN). The engineering and environmental consulting firm will investigate the corporate social responsibility (CSR) factors that surround the project. Attention to CSR by communities, governments, and companies has increased over the past ten years to the point where having a social license to operate is almost as important as having an economic deposit. Understanding the CSR issues surrounding a project has become a necessity for companies with assets in the first world. Signing on an experienced group such as Roche is an important step in the processes to obtaining all of the necessary permits for the Renard mine.
Disclaimer: The author holds shares of SWY. Relevant comments are welcome and encouraged. Spam comments will be deleted. 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
Sorry, for the lack of recent posts, it’s paper-writing season again.
Mining and exploration investors may be interested in attending this year’s Toronto Resource Investment Conference at the Metro Toronto Convention Centre this weekend (Sept. 25-26). Register now with Cambridge House International Inc., the organizers, to get in for free and avoid paying about $20 at the door.
Publicly-traded mining and exploration companies will have booths on the floor. Commodities present at the show are varied and range from silver (e.g. Great Panther, Soltoro), to diamonds (e.g. Stornoway, Shear), to REEs (Avalon, Quest). There are also fairly well-known speakers in the sector that are giving talks: Kevin O’Leary, John Kaiser, the Coffins, Mickey Fulp, etc.
While not as grand as the PDAC and with less plentiful freebies, the Toronto Resource Investment Conference is a nice way to spend the weekend for the individual investor.
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