Pipe variations require large sample

The importance of taking a representative sample before calculating diamond reserves was stressed recently at “More about Diamonds,” a seminar sponsored by Canaccord Capital, a private offshoot of LOM Securities.

Although the requisite sample size varied from 5,000 to 10,000 carats depending on the speaker, the experts agreed that without a large sample, the “tremendous” variations in the quality and size of diamonds within a kimberlite pipe could be overlooked.

Although industry leader De Beers remains secretive about its diamond exploration and evaluation techniques, keynote speaker John Gurney — a professor at the University of Cape Town and a world leader in geochemical analysis of kimberlites — estimates the South African company samples an average of 30,000 tons, depending on the richness of the pipe, before calculating minable reserves.

“There are no kimberlite pipes in the Western World that are mined by anyone but De Beers. There’s a lot of secrecy involved and you’re going to have to feel your way,” he told diamond hopefuls.

The half-day seminar, which was generally long on information and short on promotion, also featured talks by Christopher Jennings, president of SouthernEra Resources (TSE) and well-known diamond expert; Richard Garnett, vice-president of Canadian Overseas Exploration (VSE) and long-time marine diamond miner; and George Poling, director of Dia Met Minerals (TSE) and professor of mineral process engineering at the University of British Columbia.

Poling said Dia Met, which recently listed on The Toronto Stock Exchange, will complete a lot more sampling on its property before zeroing in on any particular pipe.

“It’s very important that we tackle the biggest and best pipe first,” said Poling. “We need a high-grade mine.”

Dia Met has reported the discovery of 10 kimberlites at Lac de Gras, including the Point Lake pipe.

Other key points Gurney advised investors to take into account when sizing up the Lac de Gras play include:

— Pipe size — The biggest pipe in a cluster is frequently the most economic. — The ratio of payable to non-payable pipes in the world’s diamond fields — “Even if you find a kimberlite within close proximity to another one you cannot draw a comparison between the value of their diamonds,” he said. Within the Premier cluster in South Africa, for example, only one in 12 pipes is economic.

— The depth of erosion — The uppermost crater zone is usually higher grade but less homogeneous than the underlying diatreme zone. Without elaborating, Poling said the depth of erosion at Point Lake is “somewhere between the middle and upper reaches of the pipe.”

— The percentage of gem-quality diamonds — The average value of diamonds in producing pipes ranges from US$5 to US$300 per carat, depending on the number of gems. Because of the high costs of operating in the north, the Lac de Gras pipes will need to produce a relatively large proportion of gems to be economic.

— The diamond market — “The diamond market is not in as bad a shape today as it was in 1981, by any means, and is not as bad as 1973,” said Gurney.

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