Diadem looks beyond diamonds

The market can be hard on a junior exploration company with an eye on two commodities.

“When you’re a large company it’s called diversification,” says Rodney Thomas, president and chief executive of Diadem Resources (DIR-V). “And when you’re a small company it’s called a lack of focus.”

Thomas is challenging such market biases by widening Diadem’s concentration on prospective diamond properties to include gold properties — a stretch made all the longer by its reach across the Atlantic into western Africa.

“Gold is the place to be, and Mali is a great place to explore,” Thomas says of Diadem’s recently announced deal with La Societe African Minerals Exploration SARL (AMEX) to take a 100% interest in the Tinkeleni gold property.

“Quite frankly, gold and diamonds are two great things to look for and they are not mutually exclusive within one corporate vehicle,” Thomas says.

Tinkeleni is a 95-sq.-km property located 25 km southwest of Anglogold Ashanti‘s (AU-N, AGG-A) Morila gold mine in southern Mali. In 2004 Morila produced roughly 200,000 oz. gold at a cash cost of US$184 per oz.

Tinkeleni contains a 2,600 metre by 300-metre, northeast-trending, gold-in-soil anomaly with gold values greater than 20 parts per billion of gold and ranging up to 544 parts per billion, as defined by Anglogold Ashanti in 2002.

North Atlantic Resources (NAC-T) also did work on the property. Its drilling returned gold values ranging up to 1.98 grams gold per tonne over 6 metres.

Thomas will be in Mali next week to further crunch the compiled data. A condition of the deal with AMEX is that Diadem has 150 days to verify previous results.

The move into gold and Mali is part of Thomas’, as he says, “cleanup” of Diadem. Thomas, an experienced geologist, was promoted from vice-president of exploration to president of Diadem in October of last year.

But despite his new emphasis on finding “real” properties, and consolidating company shares, the market has been slow to warm to Diadem.

In Toronto on Monday, shares were off roughly 11%, or 0.5 to 4, on 526,000 shares.

“It’s like shovelling sand,” Thomas says of Diadem’s stunted market capital. “Even though we’re doing things and trying to add value, it’s not reflected in the share price.”

In a press release issued on Monday, the company reiterated its intention to consolidate shares in 2006 by issuing new shares, one of which will be the equivalent of 16 former shares.

“Liquidity is a double-edged sword,” Thomas says of the effort to cut back on share dilution. “And in this case, it’s not working in our favour.”

Monday’s press release also provided preliminary results on Diadem’s main diamond property, the Franklin project, in the Northwest Territories. The release says two of the 44 samples contain highly anomalous concentrations of kimberlite indicator minerals.

Thomas says the Franklin project continues to be one of the company’s most prospective properties, and hopes to begin drilling at some of its six targets some time in 2006. While he concedes results are still partial, he says the targets are “very compelling.”

As for the company’s Attawapiskat diamond property in Northern Ontario — where Diadem must commit $500,000 by Dec. 1 to retain the property — Thomas is circumspect. He says airborne tests did indicate some targets of interest but that Diadem has not yet made a decision on whether or not it will retain the property.