Stornoway files Qilalugaq’s resource estimate

Stornoway Diamond’s (SWY-T) maiden resource for the Q1-4 kimberlite on its Qilalugaq diamond project in Nunavut did little to boost its lately sagging share price.

The 1,147-sq.-km project is located on the Rae Isthmus which connects the Melville Peninsula to mainland Nunavut. Qilalugaq hosts 19 kimberlites including the 12.5-hectare Q1-4 kimberlite, which Stornoway claims is “the largest known kimberlite in the eastern Arctic.” The Q1-4 kimberlite has also undergone a large-scale sampling program by previous owner BHP Billiton.

Stornoway optioned into the property in 2006, and four years later on July 2010 it increased its interest to 100% by providing BHP with a 3% gross production royalty on diamonds and a 3% net smelter return royalty on other minerals.

The Q1-4 kimberlite is roughly crescent shaped with lobate ends and has been defined to 305 metres depth.

That pipe hosts an inferred resource of 26.1 million carats from 48.8 million tonnes with an average diamond content of 53.6 carats per hundred tonnes (cpht), extending from surface to 205 metres depth.

Looking at resource upside, Stornoway says further exploration on the Q1-4 kimberlite pipe could potentially add between 7.9 and 9.3 million carats from 14.1 to 16.6 million tonnes averaging 56.1 cpht, extending from 205 metres to 305 metres depth.  

“The Qilalugaq project, along with the Aviat project on the Melville Peninsula of Nunavut, is one of our advanced exploration projects where previous work has delineated a large potential inventory of diamonds, but where we have only limited diamond valuation data,” said Matt Manson, president and CEO, in a statement.

The technical report recommends the junior to conduct a 1,500-tonne surface bulk sampling program to collect a 500-carat parcel of diamonds to assess diamond grade, size distribution and estimate diamond value, says BMO’s analyst Edward Sterck in a note to clients.

He adds: “The initial resource is preliminary in nature, but underlines the prospective nature of Stornoway’s extensive exploration holdings outside of the Renard development project.”

The company says the Renard project, which is set to be Quebec’s first diamond mine, is on track, with mine construction slated to begin in mid-2013 and first production expected in the second half of 2015.

Since June 7 the company’s shares have lost around 20% and closed June 12 at 69 cents.