EDITORIAL PAGE — Disclosure on diamonds

In the past three months, the market value of Dia Met Minerals has increased to $17 from $7; that of Aber Resources has gone from 25 cents to $2.25 and SouthernEra Resources has soared to over $2 from 8 cents.

Together, they account for a market capitalization increase of about $130 million.

The reason is, of course, the diamond discovery at Lac de Gras north of Yellowknife, N.W.T. Most of the increased value has come since BHP-Utah Mines announced test results from a 160-ton sample taken from a kimberlite pipe on Dia Met’s property.

A total of 101 carats of diamonds was recovered from the tiny sample, one-quarter of them of gem quality. The discovery caused a flood of claim staking — the largest ever in North America — and sparked trading activity that roused sleepy stock markets in Toronto and Vancouver.

Now investors want to know just what proportion of those gem stones, if any, are “fancies,” the high-quality stones that can determine the profitability of a diamond mining operation.

Given a gold or copper discovery, investors know what value the commodity discovered will fetch, then judge for themselves whether the grade is good enough. When it comes to diamonds, however, experts’ subjective analyses of color and clarity determine the value of the stones contained in a sample. If that information is available to the companies involved, it should be available to their shareholders. Then investors can judge for themselves how good a deposit is.

The increase in value of Dia Met, Aber and SouthernEra — not to mention the multitude of other companies that have jumped into the area play — represents a very significant infusion of capital. Investors, having put up that money, have a right to know exactly what is going on.

To a large extent it is up to the companies involved to judge whether information is ready for public consumption.

In some cases it may be reasonable to allow operators the time to compile data in order to make meaningful disclosures to the public. Some big companies, like Inco Ltd., simply won’t be rushed into announcing details of exploration results. But Inco is not likely to enjoy any significant change in market capitalization as the result of any single drill hole. For small, junior companies where a good drill hole — or a small bulk sample — can have a dramatic impact on share price, it is a different story. If the company has information that is likely to affect the share price, it should make it known, even if its partner happens to be one of those big companies that is not likely to be affected.

The Dia Met situation is different from other, more conventional mineral discoveries simply because it involves diamonds. In Canada — indeed, in most of the world — there is a great lack of knowledge about diamonds among investors, management, consultants and regulators. Everyone in the business is on a steep learning curve.

But that shouldn’t be an excuse for diamond exploration companies to keep information from the investing public.

The Lac de Gras discovery sent stocks soaring and the results of the bulk sample prompted further investment. Now investors have the right to know what the analysis is of the diamonds — particularly the 25% of gemstone quality. If that information is available, BHP and Dia Met should be compelled to release it.