Diamond issues are active but market indices decline

Companies with ground positions in the Lac de Gras region of the Northwest Territories or active in diamond exploration elsewhere took top spots on western markets during the report period ended noon, Sept. 2.

Investor interest in diamond exploration continues to gather steam, although it will probably be some time before companies other than Dia Met Minerals and BHP Minerals Canada have solid news to report from drill programs.

The diamond-rumor machine has been working overtime of late, but the positive reports are being countered by a growing perception that it is a lot tougher than it looks to find kimberlite pipes, especially diamondiferous ones. And geologists with expertise in diamond exploration are few and far between, as are labs able to process geochemical samples from exploration prospects. In any event, diamonds retained their sparkle on the Vancouver Stock Exchange (VSE), where trading in issues active in this exploration venture provided some relief from the summer doldrums. But it wasn’t enough to turn the tide: the VSE resource index lost 5.81 points at 550.64, 26 points lower than one week ago. The composite index shed 2.78 points to 573.79, off a modest 3 points from last week.

Trading in Yellow Point Mining remained halted at presstime pending an announcement to clarify alleged trading irregularities. The company is involved in a gold joint venture in Czechoslovakia.

Diamond issues were also active on the Alberta Stock Exchange, which is aiming for a new milestone: a $1-billion year. The value of shares traded on this exchange so far this year is already more that the total for all of 1991. Bert Applegath’s Kalahari Resources was among the more active issues on the VSE, up 19 cents to 52 cents. The company has a sizable ground position in the Lac de Gras region, and a joint venture with Kennecott. Applegath’s juniors are always quick to pick up ground wherever new discoveries are made, and the law of averages suggests this strategy may pay off some day soon. Dryden Resources was also active, posting an increase of 23 cents to reach 40 cents. President John Toffan recently announced plans to acquire an interest in the Leicester diamond mine near Kimberley, South Africa. Dryden and associated company Stow Resources will each have a 30% interest in the project, while Chris Jennings’ SouthernEra Resources will own 20%, and underlying South African interests will retain 20%.

Trading interest in Commonwealth Gold is believed related to widespread speculation the junior may be among the first to start drilling an exploration target in the Lac de Gras region. This project is a 25% joint venture with Kennecott, Aber and SouthernEra holding the remaining interests. The issue gained 1 cents to 49 cents.

A number of issues with more traditional mineral projects managed to post modest gains during our report period. Prime Resources Group was up 14 cents to $2.50. Homestake Mining is now Prime’s largest shareholder and keen to develop the Eskay Creek gold deposit north of Stewart, B.C. Prime owns 50% of this high-grade property, and speculation is growing that the company may eventually be bought out fully by Homestake.

Silverspar Minerals came under more downward pressure and lost another dollar to settle at $5, despite a prefeasibility report which confirmed a 30% increase in the company’s fluorite reserves at its Silver District property in Arizona. The company is looking to acquire another fluorite property in New Mexico, and is at a loss to explain the drop in its share price other than “limited trading volume and an insufficient buying demand.” Pacific Sentinel Gold gained a nickel to $2.65 after announcing plans to merge with a junior active on a copper-gold project in the Yukon. The junior is managed by Bob Dickinson and Bob Hunter, who have two other copper-gold projects on the block in British Columbia. A hurdle is that the market to vend large capital-intensive projects to majors has become much tougher than when the pair sold the Mt. Milligan gold-copper project to Placer Dome several years ago.