Rock Hounds

Diamonds in Canada’s annual roundup of Canadian-listed producers, developers and active juniors

Alto Ventures

Alto Ventures (TSXV: ATV) has negotiated more time to earn a 60% stake in the GEFA claims next to North Arrow Minerals’ Pikoo project, in north-central Saskatchewan.

It now has until July 20, 2017 to pay North Arrow $35,000 in cash and complete a total of $750,000 in exploration work. The junior has already spent $500,000 on exploration and identified multiple kimberlite targets at GEFA. In return for the extension, Alto is issuing 1 million common shares to North Arrow.

Alto has already earned a 100% interest in the nearby Fisher property from North Arrow.

Alto attempted to raise $400,000 in flow-through and common shares last fall, but the financing did not proceed.

 

Arctic Star Exploration

North Arrow Minerals began drilling again in March at Arctic Star Exploration’s (TSXV: ADD) Redemption project, in the Northwest Territories.

North Arrow can earn up to 55% of the project by spending $5 million on exploration by July 1. By the end of the current drilling program, it will have spent $3.5 million.

The company reassessed its till sampling and survey data after failing to hit kimberlite in 6 of 7 holes drilled at the project in 2014. North Arrow is aiming to find a kimberlite bedrock source for the Coppermine indicator mineral train.

Redemption is located 32 km southwest of the Ekati mine and 47 km west of Diavik.

 

Canterra Minerals

Canterra Minerals (TSXV: CTM) completed a till sampling program across its South Slave properties in November. The company plans to add the 204 samples collected to its proprietary database of 22,850 till samples, microprobe analyses and 70,000 line-km of airborne and ground geophysics to generate drill targets.

Preparations were also made at the Hilltop property for a 70 line-km OhmMapper survey planned for early 2016.

After a review of in-house data, Canterra added four metallic and industrial minerals permits in two areas to its Buffalo Hills project, 400 km northwest of Edmonton. The land packages are 5 km north of its K91 kimberlite, and 15 km west of its K8 kimberlite.

In a release, Canterra president and CEO Randy Turner noted that the decision came

as the result of developing a geologically coherent model for the Buffalo Hills kimberlites.

The model suggested that untested geophysical anomalies in certain areas “had a high probability of being diamondiferous kimberlite.”

Canterra also conducted a breakage study on diamonds recovered from the K6 kimberlite in 2008. A 1.77-carat, colourless single tetrahexahedroid crystal was broken during processing. The study concluded, however, that diamond breakage in the sample was minimal. A 231.9-tonne sample from the K6 returned 16.28 carats of commercial-sized diamonds for a grade of 7.02 carats per hundred tonnes.

 

Crystal Exploration

In October, Trigold Resources changed its name to Crystal Exploration (TSXV: CEI) to reflect its new focus on diamonds. The junior acquired the Muskox, Contwoyto and Hood River diamond properties in the Slave Province last year.

The claims contain the diamond-bearing Rush, James River and Muskox kimberlites.

Mini-bulk sampling at Muskox, discovered by De Beers and Tahera Diamond, has returned grades of 0.53 carat per tonne in the magmatic phase and 0.35 carat per tonne in the pyroclastic phase. The largest diamond recovered at Muskox, 14 km southwest of the past-producing Jericho mine, was a broken, 2.73-carat white octahedron.

In January, Crystal sent 12 tonnes of previously unprocessed drill core from Muskox for testing. The sample was collected from five holes drilled in 2008 — part of an infill drilling program that was cut short by the difficult conditions of the Financial Crisis. The samples returned grades of 0.3 carat per tonne, 0.31 carat per tonne and 1.14 carats per tonne, and yielded 16, 17 and 48 diamonds larger than 0.85 mm, respectively.

The largest diamonds recovered include 0.245-carat, 0.365-carat and 0.253-carat stones described as off-white and transparent, with no to minor inclusions.

Further results are expected in the second quarter.

 

Diamcor Mining

Diamcor Mining (TSXV: DMI) secured a long-term water-use licence in April for its alluvial Krone-Endora diamond project, in South Africa. The 15-year licence will allow the company to achieve its processing target of 300,000 tons per month, and help it make a production decision.

Diamcor has not completed any economic studies on Krone-Endora; it is using revenue from production during commissioning and testing to advance the project, which so far has a small inferred resource.

A Tomra XRT sorting unit installed at the project last year started processing about 600,000 tons of oversized stockpile in the +26-mm size fraction in December.

The unit recovered a 12.78-carat special and a 7.5-carat diamond in Diamcor’s fourth quarter ended March 31. The diamonds sold for US$4,747.47 per carat and US$4,152 per

carat, respectively. Diamcor sold 6,896.5 carats during the quarter for US$1.03 million or US$149.12 per carat — a 49% increase over the same quarter a year earlier.

A former De Beers project, Krone-Endora is located next to the diamond giant’s Venetia mine and is thought to be a direct shift of material from Venetia.

 

Dunnedin Ventures

Dunnedin Ventures (TSXV: DVI) tested three kimberlites in Nunavut last year that were previously held by a joint venture of Shear Diamonds, Stornoway Diamond and BHP Billiton. It also conducted till sampling, and identified new targets.

A 0.82-tonne sample from the PST kimberlite returned 96 diamonds greater than 0.85 mm for a grade of 5.34 carats per tonne. A 2.4-tonne sample from Notch was being  processed at presstime, but had already returned 36 commercial size stones at 40% complete.

The Kahuna kimberlite near Rankin Inlet is a 5.5-km long, 2-to 4-metre wide dyke, that has returned a grade of 1.04 carats per tonne in three previous bulk samples totalling over 360 tonnes.

 

GGL Resources

GGL Resources (TSXV: GGL) received $25,000 in a line of credit from shareholders related to one of the company’s directors in March. The funds will allow GGL to pay property fees and other overhead costs.

The company also closed a portion of a previously announced private placement in November, raising $45,000. GGL has diamond claims in the Northwest Territories, as well as gold and VMS exploration projects.

 

Kennady Diamonds

At presstime, Kennady Diamonds (TSXV: KDI) was still working on a maiden resource for the Kelvin kimberlite at its Kennady North project in the Northwest Territories. While a resource report was ready early in the year, in February, Kennady announced that more time was needed to capture the north end of the Kelvin North Lobe in the geological model.

The company believes that drilling completed at the north end in late 2015 could account for 20% of the overall tonnage at Kelvin. Kennady expects to release a resource incorporating the new information in the second quarter.

In the meantime, Kennady is continuing a 500-tonne bulk sample at the Kelvin North lobe via large-diameter reverse-circulation (RC) drilling. The program is aimed at collecting 1,000 carats of diamonds for valuation and revenue modeling.

The junior has also commissioned a preliminary economic assessment for Kelvin, which should be ready in the fourth quarter.

In March, Kennady discovered a third body at the Faraday kimberlite cluster, when a drill hole about 80 metres southwest of Faraday hit 55.8 metres of kimberlite.

Meanwhile, samples at Faraday 1 have continued to return high grades, including a 0.5-tonne sample that yielded 2.41 carats of commercial-sized diamonds for a grade of 4.65 carats per tonne.

In December a 14.7-tonne sample from the Kelvin North Lobe returned 3.29 carats of commercial-sized diamonds for a grade of 3.55 carats per tonne.

Kennady Diamonds was spun off from Mountain Province Diamonds in 2012. As it moves into a more advanced phase, two independent directors and a new CEO have been appointed to provide independent governance. In April, Rory Moore replaced Mountain Province head Patrick Evans as CEO. Moore has 30 years of diamond experience, including as manager of diamond exploration for BHP Minerals.

 

Lucara Diamond

In November, Lucara Diamond (TSX: LUC) recovered the second-largest diamond in history, and the largest in the past century from its Karowe mine in Botswana. The 1,109-carat, gem-quality Type II stone has been dubbed the Lesedi La Rona, meaning ‘Our Light.’

The exceptional diamond was recovered with the US$55-million large diamond recovery circuit Lucara finished installing at Karowe last spring. The company installed XRT machines at the processing plant to replace dense media separation processing in the coarser size fractions and recover diamonds up to 1,000 carats. Shortly after recovering the Lesedi La Rona, 813- and 374-carat stones were also recovered.

The 1,109-carat stone, which measures 66 by 56 by 40 mm, is the largest ever recovered by a processing facility. Before its recent upgrade, the Karowe plant couldn’t process anything larger than 35 mm.

Believing the mine could yield even larger diamonds, the company is installing a US$15-18 million “mega” diamond recovery circuit to recover stones greater than 1,000 carats.

For 2016, Lucara forecasts that Karowe will produce more than 350,000 carats of diamonds, generating revenue of $US200-220 million, excluding the sale of the Lesedi La Rona and the 813-carat stone.

Lucara posted earnings of 21¢ per share for 2015 on revenues of $224 million, compared with 13¢ per share on revenue of US$265.5 million in 2014.

The company is off to a good start in 2016: its first special tender of the year generated US$51.3 million from the sale of 10 stones at an average of US$33,632 per carat.

On the exploration front in Botswana, Lucara is expecting sample results from the company’s BK02 kimberlite in the second quarter, and is also conducting a bulk sample at the AK12 kimberlite and trench sampling at AK11.

The company has relinquished its 75% stake in the Mothae project to the government of Lesotho after a sale of the asset fell through last year.

 

Mountain Province Diamonds

Mountain Province Diamonds (TSX: MPV; NASDAQ: MDM) and 51% partner De Beers are on target for first production at their Gahcho Kué mine, in the Northwest Territories in the third quarter. At presstime, the project was more than 90% complete.

In a release, Mountain Province CEO Patrick Evans noted that in March the joint venture was focusing on remaining earthworks, commissioning of the primary crusher and diamond plant, prestripping and stockpiling of kimberlite.

Evans said that ice road deliveries were being made as planned, and critical large mining equipment had already been delivered to the site.

As construction nears completion, the joint venture has hired 10 senior operational staff. The appointments included Allan Rodel, a longtime senior De Beers manager and most recently project manager at Gahcho Kué as the operation’s new general manager.

In October, Mountain Province named Reid Mackie, a former manager of sales and marketing for Argyle Pink Diamonds, as its new vice-president, diamond marketing. The company will market its own share of production from Gahcho Kué.

 

North Arrow Minerals

Recent drilling at North Arrow Minerals’ (TSXV: NAR) Pikoo project, in Saskatchewan, has intersected two to four new kimberlites. The most significant discovery was in the North Pikoo area. PK346, which North Arrow interprets as a near-vertical northeast-trending body, is located 25 metres north of PD314, discovered in 2015.

North Arrow also completed 2,124 metres of drilling to test new targets and delineate the diamond-bearing PK150, PK311 and PK312 kimberlites discovered in 2013 and 2015. Kimberlite was intersected in 14 of the 19 holes drilled in the North Pikoo, South Pikoo and East Pikoo areas.

Of seven kimberlites discovered so far at Pikoo, four have proven to contain diamonds, including, at South Pikoo, PK150, where a total of 531.1 kg have returned 1,232 diamonds greater than 0.106 mm, including 32 stones larger than 0.85 mm.

North Arrow has earned an 80% stake in the project from Stornoway Diamond; After spending $1.69 million on drilling this year, its interest will rise to 85%.

The junior also has a drill program at Arctic Star Exploration’s Redemption project (see Page 12). To fund the campaign, North Arrow sold a royalty interest on base and precious metals in Redemption for $800,000 to Umgeni Holdings International, a company connected with North Arrow director Chris Jennings.

Lastly, North Arrow’s Qilalugaq project in Nunavut may see more work in the future after disappointing but inconclusive results from the valuation of a 383.55-carat parcel last year. The diamonds were valued at US$36 per carat, with a possible high model price of US$92 per carat. However, the small sample size and the presence of two distinct diamond populations — including a population of rare Type Ib yellow stones — mean that a larger sample is required.

 

Olivut Resources

Olivut Resources (TSX: OLV) completed a $340,000 private placement in October.

Insider Pierre Lassonde increased his stake to 16.7% by buying 571,400 flow-through common shares priced at 17.5¢ each for a total of $100,000.

President and CEO Leni Keough purchased 50,000 common shares. A total of 1.8 million common shares were issued at 13.5¢ per share, generating $240,000.

In preparation for a better financing environment, Olivut is defining new drill targets at its HOAM project in the Northwest Territories, based on its extensive regional airborne geophysical database.

 

Pangolin Diamonds

Botswana-focused explorer Pangolin Diamonds (TSXV: PAN) closed a $693,000 private placement of 13.9 million units at 5¢ a unit (one share and a 5¢ warrant) in April. Insiders represented $100,000 or 14.7% of the offering. (Pangolin also raised $628,600 in September.)

The funds will be used primarily to continue exploration, including drilling at its Malatswae project, 90 km southeast of the Orapa mine.

The company has so far discovered 11 diamonds through soil sampling in three different areas of Malatswae: the MSC, Modala, and most recently MTS grid areas. Nine of the diamonds are white, and two brown. Sampling has also returned many KIMs, including pyrope garnets with near-source surface features.

Five of 30 targets tested so far have not hit kimberlite. Further drilling, guided by the soil sample results, is planned for this year.

 

Peregrine Diamonds

Peregrine Diamonds (TSX: PGD) is working towards a June release of a preliminary economic assessment for its Chidliak project, in Nunavut. At presstime, a maiden inferred resource for the CH-7 kimberlite was also due out.

In the meantime, it has increased inferred resources for the CH-6 kimberlite at Chidliak by 33%. CH-6 now contains 11.4 million carats in 4.6 million tonnes grading 2.45 carats per tonne.

In January, Peregrine announced that an 814-tonne bulk sample from CH-7 yielded a grade of 0.88 carat per tonne and 717.65 carats of diamonds of +1.18 mm and greater. Fifty-three weighed 1 carat or more and 183 were more than 0.5 carat.

As a high proportion of the diamonds were broken during collection of the sample via RC drilling, the company believes the grade is conservative.

A valuation of CH-7 stones (the 717.65-carat parcel plus 47.29 carats of previously recovered diamonds) in March revealed a base modeled price of US$114 per carat, and a modeled average price ranging from US$94 per carat to US$155 per carat. The eight highest-value stones (between 1.35 carats and 5.33 carats) had an average value of US$1,619 per carat.

The highest-valued diamond, a 5.33-carat sawable, white/colourless octahedron with no inclusions, was valued at US$16,555 or US$3,106 per carat.

White gem goods make up 25-30% of the parcel, with brown diamonds making up the same proportion.

The modeled prices take into account the high level of diamond breakage, particularly of seven large stones that would have been 3 carats or larger before breaking.

In Botswana, Peregrine has budgeted $550,000 for exploration this year. The program will focus on its recently acquired Sikane licence, a former De Beers project that contains diamond-bearing kimberlites. Five kimberlitic occurences will be tested with about 500 metres of core drilling.

 

Rio Tinto

In December Rio Tinto (NYSE: RIO; LSE: RIO) unveiled a 187.7-carat diamond mined at its 60%-owned Diavik mine in August. The Diavik Foxfire is the largest on record ever recovered in Canada.

Rio and 40% joint-venture partner Dominion Diamond, are spending US$350 million to develop the A21 kimberlite pipe at Diavik – the fourth to be mined. First ore from the open-pit development is expected in 2018. Current operations are underground only.

The Diavik mine plan extends to 2023.

Rio Tinto recently appointed Simon Trott to lead its Diamonds business, replacing Jean-March Lieberherr.

Last June, the company sold its Zimbabwe diamond assets to local partner RioZim Ltd.

 

Rockwell Diamonds

In late 2015, alluvial miner Rockwell Diamonds (TSX: RDI; JSE: RDI) conducted a strategic review of its operations in South Africa. As a result, the company is restructuring, closing its head office in Johannesburg and transferring personnel to the Middle Orange River area where its operations are located.

Early this year, Rockwell stopped mining at its Saxendrift mine, which has reached the end of its economic life. Mining will continue by contractors who will keep any revenue generated minus a 10% royalty to Rockwell.

The company is also recommissioning its Wouterspan mine at a cost of $4.4 million, using processing and mining equipment from Saxendrift, and other closed operations. The project will be able to handle 200,000 cubic metres of material a month with commissioning expected mid-year. Rockwell is also bringing its Remhoogte-Holsloot Complex operations up to 180,000 cubic metres a month by increasing in-field screening capacity.

A fatality at Rockwell’s Remhoogte plant in September, a weak diamond market, and lower grades at its mines negatively affected Rockwell’s third quarter, ended Nov. 30

The company processed about half the volume during the quarter than it had a year earlier, with grades down 25% and carat production down 61% to 3,990 carats.

Rockwell’s mid-term target is to process 500,000 cubic metres a month in total.

 

Shore Gold

In November, Shore Gold (TSX: SGF) updated resources at its Star-Orion project in Saskatchewan. Indicated resources at the Star kimberlite jumped by 38% to 28.2 million carats, while the grade rose by 11% to 15 carats per hundred tones (cpht). At Orion

South, indicated resources climbed by 134% to 27.1 million carats at 14 cpht. The estimate at Star was also recalculated with the same methodology as Orion South.

The estimate incorporated results from a 12-hole large-diameter drill program completed on Orion South in 2015.

A valuation of Star-Orion South diamonds was completed in October in order to update resources. Using June 2015 prices, the value of diamond parcels from the various units of Star and Orion South increased between 31% and 125% in U.S. dollar terms compared with the last valuation conducted in March 2008.

With the decline in the Canadian dollar, the increase in model prices would be higher measured in Canadian dollars. Model prices for the kimberlite units range from US$161-333 per carat.

 

Talmora Diamond

At presstime, Talmora Diamond (CSE: TAI) had announced a $60,000 financing to cover administrative costs. The financing, a part-brokered private placement of up to 3 million shares at 2¢ per share, was to close by the end of April.

The junior is waiting for better markets to raise money for a major drill program on its claims in the Lena West diamond region of the Northwest Territories.

 

Tango Mining

Tango Mining (TSXV: TGV) has agreed to sell its 51% interest in the Oena mine for $3 million. South Africa-based Bothma Diamante will buy the alluvial diamond project, located in the Northern Cape, in a two-stage transaction.

Oena is in the middle of a bulk-sample program, which Bothma will continue in stage one. Tango will receive at least 15% of the proceeds of all diamond sales for 12 months, or until the sale is approved by South Africa, whichever is the longer term.

Tango is focused on acquiring the past-producing BK11 diamond project in Botswana from Firestone Diamonds. The purchase will cost US$8.8 million in total.

In March, Tango lined up a proposed US$30-million, five-year term loan with Vanderbilt Commercial Lending. Tango has secured an extension on the acquisition from Firestone to July 29 in order to finalize the loan.

 

True North Gems

Construction at True North Gems’ (TSXV: TGX) Aappaluttoq ruby and pink sapphire mine, in Greenland, is well under way.

In April, the company reported that all major heavy processing equipment was already in place at the processing plant as construction progresses. Stripping operations at the pit area have been under way since early December.

Aappaluttoq is a joint venture with LNS Greenland, which will own 27% of the open-pit mine once it reaches production. In August 2015, Greenland Ventures bought a 7% stake in the operation.

In January, True North entered into an offtake agreement with Chinastone, a gemstone polisher and gem supplier. Under the deal, True North must supply Chinastone with US$7 million in rough gemstones per year for the next three years.

The project has an initial mine life of nine years.

In April, True North engaged Endeavour Financial to help it find additional financing to boost its working capital.