Canadian contingent shines at world diamond conference

The World Diamond Conference, held earlier this year at Toronto’s Four Seasons Hotel, attracted delegates from a broad cross-section of the global diamond industry, including a large Canadian contingent. Without a doubt, the social highlight of the event was the dinner at the Royal Ontario Museum and the after-dinner tour of its fabulous mineral collection, which is world-class to say the least.

Sponsored by International Investment Conferences and Australian-based Louthean Publishing, the conference was the venue where De Beers Consolidated Mines (DBRSY-Q) made its takeover intentions known to Winspear Diamonds. The major subsequently acquired Winspear after raising its initial bid to $5 from $4.25 per share.

Aber Diamond (ABZ-T) and Dia Met Minerals (DMM-T), frequently mentioned as takeover targets, made presentations at the conference, as did a number of other companies with less-advanced projects. Since the conference, Aber has proved to be a high-flyer on the market, rising to a high of $13.20 from just under $9 per share.

The spark that ignited the stock was probably not only De Beers’ takeover offer for Winspear but its subsequent attempt to acquire Ashton Mining of Australia, 40%-owner of the Argyle diamond mine. That offer has since been countered by London-based Rio Tinto (RTP-N), which owns 60% of Argyle and has a similar interest in the Diavik project in the Northwest Territories. Its partner, Aber, holds the remainder.

Not surprisingly, Canada’s emerging diamond industry garnered plenty of attention at the conference, partly because of the “conflict diamonds” controversy. Indeed, the issue spawned as many opinions as there are classifications of diamonds, which is probably saying a lot. There was, nonetheless, an almost universal consensus that the authenticity of Canadian diamonds would be much easier to prove than anything from Africa, where rough diamond sales have funded horrific wars in places such as Angola, Sierra Leone and the Democratic Republic of the Congo.

With the conflict diamonds issue attracting so much attention, the government of the Northwest Territories has started work on a program designed to certify selected diamonds that are mined, cut and polished in the Territories.

According to Martin Irving, the government’s director of diamond projects, “the monitoring system will follow diamonds from the producer through to the factory.” The government of the Northwestern Territories and two diamond-cutting firms, Deton’Cho Diamonds and Arslanian Cutting Works, hope to have the certification program in place by late fall. De Beers has also made a public commitment on the part of its suppliers to avoid purchases from conflict areas.

The conference featured a large Australian contingent, including Rimfire Pacific Mining and Astro Mining. Astro, one of the Gutnick group of companies. has land holdings in Western Australia, China and India, though its traditional focus has been Western Australia.

In early August, Edensor Nominees, a trustee for the Joseph Gutnick family trust, agreed to put up to $20 million into Tahera Corp, which has extensive diamond exploration holdings in the Northwest Territories. Tahera’s Jericho diamond project, near Echo Bay Mines‘ (ECO-T) Lupin gold mine in the Canadian territory of Nunavut, hosts at least four diamondiferous kimberlites in two separate clusters. No word yet as to whether the conference triggered Gutnick’s interest in Tahera, whose history in Canada has been checkered, to say the least.

Somewhat of a legend in Australia, Gutnick has been closely associated with several of that country’s major gold discoveries, among them the Bronzewing mine, east of Wiluna in Western Australia. Gold mining giant Normandy Mining (NDY-T) now owns Bronzewing, following its takeover of Gutnick’s Great Central Mines.

Rimfire, on the other hand, is staying close to home, focusing its exploration efforts on tenements in New South Wales. Its hybrid geological model takes into account the fact that the diamond occurrences within its holdings are associated with Jurassic mafic (basaltic) volcanics; they also have a set of associated minerals or inclusions that are distinctly different from those of conventional kimberlitic and lamproite-related diamonds. No source has ever been found for any of the alluvial diamonds in the region.

No conference would be complete without at least one exhibitor pushing its presence on the Internet. Capitalizing on the dot-com mania that has diverted so much funding out of the minerals sector into Internet stocks was Rex Diamond Mining. which explores, produces, cuts, polishes and does some on-line retailing of diamonds.

Diamond producers have several advantages over mainstream mining companies (gold and base metal producers) in that they have a high-value product that can be marketed directly to the consumer in various ways. Nonetheless, security problems associated with Internet purchases of any type have discouraged many consumers from purchasing diamonds and other products on-line.

The Australians, in particular, were impressed with the number of quality exploration projects in Canada and the high percentage of kimberlites in the Northwest Territories and elsewhere that are diamondiferous. Nonetheless, there appeared to be a consensus at the conference that the N.W.T. is very much a mature play and that other areas, including the James Bay Lowlands in Ontario and Quebec (where exploration logistics are more favourable), would draw most of the funds allocated to Canadian diamond exploration.

Quebec’s attractive flow-through share program for mineral exploration and the possibility that Ontario might initiate a competitive one are proving to be difficult to resist for many companies. In today’s tough exploration market, even a modest variation on on the 1980s flow-through program would be a welcome relief.