Digging for diamonds

A roundup of the latest news from Canadian-listed diamond explorers, developers and miners.

Afri-Can Marine Minerals

Afri-Can Marine Minerals (TSXV: AFA) reported in January the results of a positive prefeasibility study on Mining Lease 111, a 312-sq.-km marine concession off the coast of Namibia.

The study shows the project can sustain two years of production at 159,500 carats per year, based on probable reserves of 319,000 carats at an average grade of 0.24 carat per sq. metre, and a cutoff grade of 0.126 carats per sq. metre.

Afri-Can’s after-tax share of the project’s net present value is estimated at US$20.2 million, with the internal rate of return pegged at 31%. The diamond price is estimated at an average of US$484 per carat.

Afri-Can has an option to earn an 80% interest in the project from Diamond Fields International (TSXV: DFI), which mined the concessions intermittently from 2001 to 2008.

While the project would not require any capital spending, Afri-Can will have to charter a mining vessel, which will cost $3.7 million a month. After the first three months of mining, Afri-Can expects it can finance operating costs through diamond revenues. The company has a memorandum of understanding with International Mining and Dredging Holding to provide a mining vessel.

At the end of January, Afri-Can had negative working capital of $809,000.

Canterra Minerals

Canterra Minerals (TSXV: CTM) announced in April its return to diamond exploration in the Northwest Territories.

The company has staked 430-sq. km of land in the Southern Slave province, adding three new projects (Marlin, Prism and Gwen) and expanding the area of two existing projects (King and Hilltop).

Led by Randy Turner, whose Winspear Resources discovered the Snap Lake mine (now owned by De Beers), Canterra has a large proprietary dataset accumulated over a 15-year period.

“Analysis of this data with new advances in techniques and technology has reignited our interest in diamond exploration and will be the company’s focus going forward,” Turner said in a release.

Canterra was still working out its exploration plans for the projects at presstime.

Diamcor Mining

In its fourth quarter of fiscal 2014, Diamcor Mining (TSX: DMI) sold 4,395.51 carats of rough diamonds in two tenders, generating US$1.3 million or US$302.74 per carat.

At the end of the quarter on March 31, the company had 1,000 additional carats on hand.

To date, Diamcor has sold 19,807.25 carats from its Krone-Endora project, for revenue of US$4.5 million or US$229.43 per carat. Its first sale took place in late 2012. The production comes from ongoing commissioning and testing exercises at the former De Beers property, which lies next door to the diamond giant’s Venetia mine in South Africa. There is a small resource at the project, and no economic studies have been completed.

Diamcor recently expanded its quarrying and in-field screening operations at Krone-Endora, and is awaiting permits that will allow it to move to round-the-clock operations, seven days a week.

The junior owns 70% of the project, with black economic empowerment partner Nozala holding 30%.

At the end of December, Diamcor had negative working capital of $437,000. In March, the company closed a $3-million brokered private placement, as well as a $474,000 non-brokered financing.

Delrand Resources

Delrand Resources (TSX: DRN) in December issued an update on its exploration program in the Democratic Republic of Congo (DRC).

The company is following up on previous sampling programs at its Bomili project with a ground magnetic survey that will cover an area of 5 sq. km. The program was to be completed by the end of February. It also planned a micro-probe analysis of ilmenite grains recovered from the project.

Kennady Diamonds

With a mini-bulk sample being collected at the Kelvin kimberlite at its Kennady North exploration project in the Northwest Territories, Kennady Diamonds (TSXV: KDI) is aiming to have a maiden resource estimate completed by the end of the year.

The company is hoping the 25- to 30-tonne sample it is taking via large-diameter drilling will yield enough diamonds to also conduct scoping or prefeasibility-level revenue modelling for the project. In addition to a 10,000-metre winter drill program, Kennady plans to drill 5,000 metres this summer.

At the beginning of April, the company reported that it had collected 6.5 tonnes of kimberlite between delineation and large-diameter drilling.

The company is shooting for an initial resource of between 5 and 8 million tonnes grading at least 2 carats per tonne.

The project is located 280 km northeast of Yellowknife, adjacent to De Beers and Mountain Province Diamonds’ (TSX: MPV) Gahcho Kué development. Kennady is led by the same team as Mountain Province.

Last year, 4.3 tonnes of kimberlite collected from Kelvin in an 8,500-metre drill program returned 474 commercial-sized diamonds for a grade of 5.38 carats per tonne. The three largest diamonds recovered were a 2.48-carat transparent octahedral, a 1.06-carat off-white broken aggregate, and a 0.9-carat off-white transparent irregular stone. The company reported that 60% of the diamonds were white and transparent, with most of these having no inclusions or only minor inclusions.

A smaller, 116-kg sample from the Faraday kimberlite returned a sample grade of 11.23 carats per tonne.

Both Kelvin and Faraday, which lie 3 km apart, are steeply dipping kimberlite dykes of variable width, each with a strike length of more than 1 km. There is a small pipe at the north end of Kelvin, which the company believes to be the higher-tonnage kimberlite.

Kennady raised $2.3-million in December via a private placement, following financings of $5 million and $9 million in October.

Metalex Ventures

In February, Metalex Ventures (TSXV: MTX) announced that the planned 10,000-ton bulk sample at its U2 diamond project in northern Ontario would be delayed as it awaits permits.

As part of the environmental assessment process for the bulk-sample program, the company submitted a project description to the province that was open for comment until Feb. 10. In response, an environmental group submitted a request that the government conduct a regional environmental assessment that would include the U2 area. The government is considering the merit of the request, but in the meantime, the winter road season has come to an end. Metalex needs the winter road to truck in drilling and plant equipment for the bulk sample.

The junior is in talks with the Attawapiskat and Marten Falls First Nations regarding an exploration agreement for the program.

Last March, Metalex signed a JV agreement with Dundee Corp. (TSX: DC.A) that will give it up to $51 million to take the project to feasibility in return for a 51% interest in the U2 and nearby T1 kimberlites. U2 is a 9.3-hectare pipe that sits about 62 km west of De Beers’ Victor mine.

In Quebec, Metalex has also applied for a drill permit to test anomalies on its claims, near Wemindji.

North Arrow Minerals

North Arrow Minerals (TSXV: NAR) is conducting a $3.7-million bulk-sample program at the Qilalugaq project, near Repulse Bay in Nunavut. The 1,500-tonne sample will be collected using a small excavator from an area of the Q1-4 kimberlite with shallow overburden cover. The company is hoping to collect 500 carats of diamonds for an initial valuation.

The Q1-4 kimberlite already has an inferred resource of 26.1 million carats contained in 48.8 million tonnes grading 53.6 carats per hundred tonnes.

Ken Armstrong, North Arrow’s president and CEO, noted in a release that a positive valuation for Q1-4 diamonds has the potential to establish the Qilalugaq project as an important development-track project, considering Q1-4’s large size, its diamond grade and location on tide water.

North Arrow can earn up to 80% of Qilalugaq from Stornoway Diamond (TSX: SWY), subject to a 20% back-in right.

The junior closed a $5-million private-placement financing in February to add to the $5.5 million in its treasury at the end of January.

North Arrow has already earned an 80% interest at another Stornoway joint-venture project, Pikoo in Saskatchewan. The company discovered a new kimberlite field at Pikoo last summer, with a 2,000-metre, 10-hole drill program. Processing of a 209.7-kg sample from the PK150 kimberlite (the program’s most significant discovery) returned 23 commercial-sized diamonds (larger than the 0.85-mm sieve size) weighing 0.28 carats, and 745 larger than the 0.106-mm sieve size.

In November, Armstrong remarked that to recover such relatively high counts of commercial-sized diamonds from the first kimberlite discovered at Pikoo was an exceptional result.

Recovered diamonds in all size categories displayed high-quality characteristics. Over 95% of the diamonds are intact white octahedrons and agreggates, with lesser macles.

PK150 is interpreted as a 10- to 15-metre-wide, near-vertical body. It has been intersected over a 75-metre strike length and is open at depth and along strike.

This year’s exploration program at Pikoo was still being worked out at presstime, but it will include till sampling to better define KIM trains found on the property, which lies close to highway and power infrastructure.

In April, North Arrow also started a month-long ground geophysics program at the Redemption project in the Lac de Gras region of the Northwest Territories, close to Ekati and Diavik. The survey over roughly 40 targets located near the up-ice termination of the South Coppermine KIM field, was designed to select targets for further exploration, including drilling.

The company has an option to earn a 55% interest in Redemption from Arctic Star Exploration (TSXV: ADD) in return for spending $5 million on exploration before July 2017, including a firm commitment to spend $1 million before July 1, 2014.

Pangolin Diamonds

Pangolin Diamonds (TSXV: PAN) has been advancing several of its projects in Botswana through drilling and sampling.

The junior, which listed in March 2013, reported its first sniff of diamonds this April, when it recovered a microdiamond at its Mmadinare project. The soil-sampling program, conducted on a 13-sq.-km block of the concessions, consisted of 137 samples. Aside from the microdiamond, 44 ilmenite grains were recovered.

The company is also planning to follow up on mantle-derived indicator minerals found in samples at the SWS21 volcanic body at Mmadinare with pitting and trenching.

At Tsabong North, airborne magnetic data has revealed two large circular features (300 by 300 metres and 400 by 400 metres) at the Magi target, which is a magnetic high, and has a surface area of 270 hectares. Each will each be tested with a drill hole.

Two holes drilled at Magi early this year returned 36-metre and 46-metre intervals of kimberlitic sandy tuff. Samples from one of those holes were being processed at presstime. A ground magnetic survey in April was expected to further refine the target.

At Jwaneng South, the company drilled one target early this year, intersecting an unusual brecciated volcanic rock with pervasive and intense alteration. Twelve priority targets will be tested.

Pangolin named a new CEO in January: Rick Bonner has replaced William Smuts, who resigned.

The company also announced it has amended an agreement with company founder and chairman Leon Daniels dating from 2011. The agreement had required a payment of $1.2 million within 24 months of finding five kimberlites on the company’s prospects as consideration for acquiring the licences. Before payment is made under the restated agreement, 10 diamondiferous kimberlites that contain at least one macrodiamond must be discovered.

Peregrine Diamonds

Peregrine Diamonds (TSXV: PGD) in February announced the results of a valuation of diamonds from the CH-6 kimberlite at its Chidliak project in Nunavut.

The 1,013.5-carat parcel of commercial-size diamonds was valued at an average price of US$213 per carat.

The largest diamond, at 8.87 carats, was valued at US$36,158 or US$4,076 per carat.

“Both the grade and the diamond value results from the CH-6 bulk sample suggest that CH-6 could have some of the highest rock value for a kimberlite anywhere in the world,” said Peregrine president Brooke Clements in an email.

The company collected the parcel last year through a bulk sample of CH-6. Processing was completed early this year, revealing a grade of 2.58 carats per tonne.

Now that Peregrine has grade and valuation information for CH-6, a resource estimate will follow in April or May.

Meanwhile, the junior is conducting a $7-million work program this year to prepare for the next bulk-sampling program in 2015. Work will include at least 2,500 metres of core drilling on key kimberlites, including CH-6, CH-7, and CH-44, starting in early July; reverse-circulation (RC) drilling on the same kimberlites to map overburden depth and prepare for future trenching programs; and mobilization of equipment for the bulk-sample. Peregrine will also generate and test new targets, which will see at least 1,500 metres of drilling.

The program, which was not quite fully funded at presstime, began in March and will end in September. (The company ended 2013 with working capital of $7.1 million and said in March that it was reviewing its financing options.)

Next year, Peregrine plans to take bulk samples from three to six kimberlites (including CH-6) by large-diameter RC drilling with the aim of adding enough resources to complete a prefeasibility study.

The valuation and grade information came out well after the company received news from De Beers last fall that it would not exercise an option to enter into a joint venture at Chidliak.

“The great results from the bulk sample have helped to remove significant risk from the project and we are happy to have 100% of it,” Clements said in March.

Rockwell Diamonds

South Africa-focused Rockwell Diamonds (TSX: RDI, JSE: RDI) in November recovered a 287-carat diamond from its Saxendrift Extension property in the Middle Orange River (MOR) region. Rockwell had previously announced the recovery of four diamonds each weighing over 100 carats in September.

The alluvial diamond miner continued the positive news in March, with the release of production and sales numbers from its fiscal fourth quarter ended Feb. 28.

During the quarter, the average size of the stones recovered from its operations increased by 139% to 4.6 carats from 2 carats in year-earlier period. Carat sales from its MOR operations rose by 76% and carat production grew by 39%, while the price per carat from MOR operations rose by 14% to US$1,978.

Revenues from diamond sales increased by 69% to $12.1 million. While total carat sales were up 81% to 9,596 carats, the average sales price declined by 7% to US$1,264 per carat. (Total carats include diamonds recovered at the company’s Tirisano project by independent royalty mining contractors. Tirisano was put on care and maintenance at the end of 2012.)

Rockwell’s MOR operations consist of the Saxendrift mine, the Saxendrift Hill Complex, and Niewejaarskaal.

The company’s third-quarter results, announced in January for the three months ending in November, marked its sixth consecutive quarter of revenue growth. Rockwell recorded an operating profit of $2.8 million and revenue of $11.9 million. For the quarter, it recorded a net loss of $400,000 compared with a $4.7-million loss in the year-earlier period.

Shore Gold

In March, Shore Gold (TSX: SGF) announced a “target for further exploration” for its Fort à la Corne (FalC) diamond projects in Saskatchewan.

The target has been identified in five partially evaluated kimberlites and portions of the Star and Orion South kimberlites for which resources have not yet been outlined. Shore estimates that the kimberlites could contain between 52 and 90 million carats in 983 million to 1.2 billion tonnes at a grade of 4.3 to 7.22 carats per hundred tonnes (cpht).

The target is conceptual and does not represent a mineral resource.

The kimberlites are located on Shore’s 100%-owned Star project and on the adjacent FalC joint venture, which is 32% owned by Newmont Mining (TSX: NMC; NYSE: NEW) and hosts the Orion South kimberlite.

The exploration target was calculated using macrodiamond data from existing large-diameter drill holes.

In addition, the company has prepared geological models for another six diamondiferous kimberlites estimated to contain 405 to 485 million tonnes of kimberlite.

The company is continuing its search for development capital. A 2011 feasibility study estimated preproduction capital costs for the Star-Orion project at $1.9 billion. The study also outlined an after-tax net present value of $2.1 billion and an internal rate of return of 14% at a discount rate of 7%.

The project contains reserves of 34.4 million carats contained in 279 million tonnes grading 12.3 cpht. It also has inferred resources of 9.1 million carats contained in 80.3 million tonnes grading 11.3 cpht.

At the end of 2013, Shore had working capital of $4.2 million.

Talmora Diamond

Talmora Diamond (CSE: TAI) closed a $100,000 private placement financing in March after raising $30,000 in September, when it also announced results of kimberlite indicator mineral analyses from its Horton River project in the Northwest Territories. The analyses showed that some samples contain manganese-rich diamond inclusion-type ilmenites.

Talmora needs to raise money to conduct a drill program at the project, but the timing of a financing will depend on a recovery in the junior market.

True North Gems

In March, True North Gems (TSXV: TGX) received a 30-year mining licence for its Aappaluttoq ruby and pink sapphire project in Greenland.

The junior is still negotiating impact benefit agreements, and finalizing environmental monitoring, mine closure and advanced process engineering plans.

The good news prompted a selloff of shares by major shareholder Lenomi Holdings, a private investment company.

True North announced in March 2013 that it had agreed to sell up to 45% of the company to Lenomi for $15.75 million in three tranches.

However, the company only raised $3 million from Lenomi through the sale of roughly 32.7 million shares.

Lenomi sold 6.9 million shares over a few days in March, dragging the share price down from a high of 17¢ on March 5 to 7.5¢ in early April.

A 2011 prefeasibility study pegged capital costs at Aappaluttoq at $40.7 million for an open-pit mine with a nine-year life. The project’s after-tax net present value was pegged at $17.5 million and its internal rate of return at 16.5%.

True North plans to advance Aappaluttoq with partner Greenland Mining Services (GMS), a mining and oil and gas service supplier owned by Leonhard Nilsen & Sonner. GMS has agreed to contribute around US$23 million to develop the project in return for a 20% interest.

In January, True North closed a $1.5-million financing with existing shareholder Halman-Aldubi Provident and Pension Funds, leaving it with 14% of the company’s outstanding shares.