Five themes from the 2018 Diamonds Symposium

The first annual Diamonds Symposium, organized by The Northern Miner and Diamonds in Canada, spanned the earliest days of Canada’s diamond rush in the early 1990s to present trends and predictions for the future.

Held in Toronto in June, the event featured keynote speakers Grenville Thomas, Eira Thomas and independent analyst Paul Zimnisky, as well as corporate presentations and more.

Here are a few of our takeaways from the day.

Canada’s enduring diamond exploration potential
With intense diamond exploration only starting in Canada during the early 1990s, and an exploration scene that has been quiet since the financial crisis, Canada still has immense diamond potential.

“Canada has vast cratonic areas — many are underexplored or unexplored,” said George Read, senior vice-president exploration and development for Star Diamond (TSX: DIAM). “De Beers is still following up targets to my knowledge that came out as highlights in the 1960s.”

Discoveries are still being made, even in areas that have seen previous exploration. Stornoway Diamond (TSX: SWY), for example, recently found a kimberlite about 70 km north of Elliott Lake, Ont. “It wasn’t found with conventional methods and I can’t tell you how we found it, but it was an area that’s been explored before,” said Stornoway president and CEO Matt Manson.

Peter Ravenscroft, managing director of Burgundy Diamonds, had a slightly different take on the theme. “Someone asked me the other day where do I think the next new mine in Canada’s going to be discovered, and I said it’s already been discovered. We’ve found so many diamondiferous kimberlites that there is a new mine in there somewhere,” he said.

Gren Thomas — chairman of North Arrow Minerals (TSXV: NAR) and an admitted optimist — said all the elements are in place for Canada to retain its place as a top diamond producer.

“Canada has a depth of talent and people that do exploration, the best in the world — as long as the government doesn’t screw it up,” said Thomas, who was the founder of Aber Diamond (now Dominion Diamond). “We’ve got it made — we’ve got the geology, we’ve got the geologists, and I suppose because the government’s been so slow to develop the north that’s why it’s still wide open.”

Optimism about De Beers’ Lightbox initiative
De Beers’ announcement that it was starting Lightbox Jewelry — a company selling lab-created diamonds — was made two weeks before the Diamond Symposium. The initiative received a supportive response.

“I think it’s genius from a strategy standpoint,” Zimnisky said. “If this strategy works, you’re going to see it in case studies in textbooks.”

Miners, including Lucara Diamond (TSX: LUC) president and CEO Eira Thomas, also saw the move positively.

“There’ve been mixed views on the whole Lightbox initiative, but I think the reality is that synthetics are here to stay, but they don’t need to be a competitive market and I think that’s what De Beers is saying with Lightbox,” she said. “Setting up Lightbox for one specific part of the market is a smart thing to do — I think it really differentiates natural stones now from synthetic stones.”

The diamond sector is innovating
Aside from De Beers’ move into synthetics, other aspects of innovation in the diamond sector were highlighted.

Stornoway Diamond’s new ore waste sorter, for example, has helped to reduce diamond breakage — a problem that is “endemic” in the sector — at its Renard plant, Manson said.

Renard is also the first mine of any in Canada to use the technology, which uses spectral analysis to remove waste from the head feed. In Renard’s case it removes about 20% of the feed, which is almost entirely hard waste rock.

“It’s actually reduced the power consumption of our plant because the power we were using to crush that waste is more than the power to run the sorters,” Manson said.

Lucara’s Clara platform — a technology aimed at modernizing the diamond-selling process — was another notable example of innovation. Although Lucara’s Thomas said the move had yet to be recognized by the market, the company is confident Clara will unlock value for all participants and be a money maker when it’s fully up and running in 18-24 months.

“Our view is that Clara will generate revenues that will match or exceed the revenues we’re generating from our mine,” Thomas said.

Bright future for mined diamonds
The supply/demand fundamentals of diamonds are solid, said Zimnisky, who noted that there has been a real rise in rough diamond prices from US$91 per carat per in 2008 to US$106 this spring.

He noted that in 2015, all five publicly listed diamond stocks were profitable and paying dividends based on 2014 diamond prices, which weren’t far below current price levels.

“I see that as the key level for rough prices, where a lot of these companies really start to generate some cash again,” Zimnisky said. That level was about 5-10% higher than current prices, he added. “But I think we’re pretty close to this, and I think the fundamental backdrop is pointing towards a picture where this is quite possible in the next few years.”

The need for a diamond champion
Canada’s diamond sector has suffered from not having a multi-asset, publicly listed diamond miner that could act as a consolidator of assets and companies, Manson noted. When Dominion Diamond was acquired by private, U.S.-based Washington Cos. last year, hopes that it would become a consolidating champion in the diamond sector vanished.

But Lucara, a single-mine company that is looking for growth through M&A in addition to other avenues, could step into this role:

“I think if we want to get more momentum back into the business, we need an investable-sized company that the market can get behind and I think that, in turn will help junior explorers and the whole pipeline,” Lucara’s Thomas said. “We think that Lucara is well positioned to be that company.”

— This article was first published in the November 2018 issue of Diamonds in Canada.