Mountain Province Diamonds (MPV-T, MDM-X) and joint-venture partner De Beershave found a 25.13- carat gem-quality diamond at their Gahcho Ku diamond project in Canada’s Northwest Territories.
The diamond was recovered from Gahcho Ku’s Tuzo kimberlite. Tuzo is one of three primary kimberlites at Gahcho Ku, the last major diamond discovery 11 years ago and today one of the largest diamond mines under development in the world.
“To the best of our knowledge, this is the largest gem-quality diamond ever recovered from a Canadian diamond exploration drill program,” Mountain Province president and chief executive Patrick Evans says.
The second-largest gem-quality diamond was a 23.8-carat diamond discovered at the Jericho mine owned by Tahera Diamond (TAH-T, TAHEF-O) (now under creditor protection) in Nunavut, Evans says.
Evans describes the diamond as a “perfect ‘ice crystal'” with excellent shape and clarity, and good colour. “In terms of the clarity, it’s flawless,” he says.
The stone has been independently valued at about US$17,500 per carat, or a total of US$440,000 by Antwerp-based International Diamond Consultants.
Gahcho Ku is made up of a cluster of three primary kimberlites (Tuzo, 5034 and Hearne) with an indicated resource of about 14.4 million tonnes grading 1.64 carats per tonne (roughly 23.6 million carats) and an inferred resource of about 17 million tonnes grading 1.35 carats per tonne (roughly 22.9 million carats).
Previous exploration has recovered a number of large diamonds of gem quality. These have included diamonds that weighed 9.9, 7, 6.6 and 5.9 carats from the 5034 kimberlite, and 8.7, 6.4 and 4.9 carats from the Hearne kimberlite.
Mountain Province owns 49% of the joint venture, while De Beers Canada holds 51%. De Beers is the operator and can be called on to fund the project through to commercial production. Gahcho Ku is in the permitting and advanced exploration stage.
The large-diameter drill program on the Tuzo kimberlite was completed in March and concentration of the bulk samples at De Beers’ Grand Prairie facility was completed in May.
Diamond recovery from the bulk sample is taking place at De Beers’ GEMDL laboratory in South Africa, and recovered diamonds are being sent to De Beers’ Diamond Trading Co. in London for cleaning and valuation. Results will be released during the third quarter.
The Tuzo bulk-sampling program was designed to recover about 1,500 carats using two 24-inch large-diameter drill rigs.
Nine holes were drilled in total — seven holes to depths between 100 and 130 metres and two to roughly 300 metres. A total of about 1,390 metres were drilled.
Evans says the company has completed exploration and is in the process of permitting the mine through the Mackenzie Valley. He expects the permitting process to take another 18-24 months and that the mine will be in production towards the second half of 2012.
Evans predicts an increase in prices for rough diamonds of 30- 40% this year, following an increase last year of 25%. Prices are already up 20% over last year.
De Beers recently announced that it is going to increase the rough diamond price again this month,” Evans says. “For a long time, analysts have been forecasting a one-hundred- per-cent increase in diamond prices by 2012 and I think that’s going to happen a lot sooner.”
He attributes that to the diamond shortage and the fact that there has not been a major diamond discovery since Gahcho Ku.
There are only about 25 operating diamond mines in the world today, Evans adds, and most of them are coming to the end of their lives.
“Nothing has been found since Gahcho Kue and if anyone found a new deposit now it would take at least ten to fifteen years before it was brought into production. . . There’s an acute shortage of large, gem-quality diamonds.”
At presstime, Mountain Province traded atabout$4.88 per share. Over the last year, it has traded in a range of $3.77-5.56 per share.
In a research note to clients, analyst Raymond Goldie of Salman Partners, has set a target price of $5.20 per share.
“Noting that most of the value in a diamond mine comes from only a few large and rare stones, we consider that the discovery of such a large diamond in a sampling program is a good harbinger of potential profitable production,” Goldie says.
Mountain Province Diamonds has 59.9 million shares outstanding.
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