STOCK MARKETS — Diamond explorers rebound from sample error

Investor interest in diamond exploration in the Lac de Gras region of the Northwest Territories continued to fuel trading activity on western markets, despite the somewhat embarrassing disclosure from several companies that yellow microdiamonds recovered from drill core were found to have originated from the diamond drill bit.

The disclosure was made by Commonwealth Gold, the top trader during our report period, and TSE-listed project partners SouthernEra Resources and Aber Resources. The shares of all three companies dived, then recovered after details were released to explain the error, and after it was confirmed that the one colored and two white microdiamonds were indeed natural stones derived from the kimberlite drill core.

Analysts say the discovery puts an end to the “Fipke curse,” an alleged and much repeated claim that Dia Met Minerals has secured all areas near Lac de Gras prospective for kimberlite pipes. Directors of Dia Met are anxious to diffuse this claim, which has taken on near-mythical proportions. The company believes it has secured much of the best ground, but not necessarily all of it, and a spokesman said founder Charles Fipke would be pleased if other diamond discoveries are made.

In any event, the selling and buying related to diamond exploration generated healthy commissions for western brokerage firms, and gave a boost to the Vancouver Stock Exchange resource index, which gained 30 points to the 600 level during the week ended noon, Nov. 25. The VSE composite index also gained ground, up 10 points to the 577 level from a week ago. More results are expected from the fall drill program on ground in the Lac de Gras area held 50% by SouthernEra, and 25% each by Aber and Commonwealth (the SouthernEra and Aber interests are subject to a 60% earn-in by Kennecott) as seven separate kimberlites were tested in the program.

Vancouver’s movers and shakers all appear to be getting into the diamond exploration business. Bruce McDonald’s Pure Gold Resources is attracting interest because of a joint venture with Ashton Mining, an Australian company with a 40% ownership in the Argyle mine, famous for its valuable colored diamonds.

Murray Pezim is also negotiating to acquire properties in the Lac de Gras region for a number of his junior companies, including Golden Ring Resources, which is beginning to recover from its recently aborted foray into a Jamaican copper-gold project. Golden Ring gained a healthy 16 cents to settle at 24 cents.

Lytton Minerals was also active on the VSE, down a nickel to $1.12. The company is coming under scrutiny because one of its shareholders, John Dupuis, is processing and analyzing samples from the sampling program, also managed by Dupuis’ Canamera Geological. The relationship between Dupuis and Lytton is considered to be too cozy for some local market watchers. Layfield Resources, also involved in the Lac de Gras region, moved up 7 cents to 45 cents. The company recently granted 200,000 “incentive options” to director Christopher Jennings, a diamond expert who also heads up SouthernEra Resources. The market obviously endorses Jennings’ involvement. Bellex Mining inched up 2 cents to 42 cents, with trading activity related to the company’s involvement on a diamond prospect in the Lac de Gras region. Calco Resources moved ahead 18 cents to 58 cents after releasing a progress report from the Amad Claims in the Northwest Territories, a joint venture with equal partner Teryl Resources. The juniors, which optioned their properties to Kennecott, noted that six of seven samples returned positive diamond indicator mineral results.

A number of companies have been reporting the presence of diamond indicator minerals from sampling programs in the Lac de Gras region, and these types of reports are bound to continue. Some should be taken with a grain of salt, however, including one junior’s recent report on the discovery of “pyrite garnets.”

Investor interest is beginning to cool in the recent polymetallic discovery reported by Barkhor Resources and Chapleau Resources near Cranbrook, B.C., operated by TSE-listed Consolidated Ramrod Gold. The partial drill results from the “Sullivan-type” base metal prospect were not as good as expected. Barkhor lost 4 cents to 46 cents, while Chapleau fell 7 cents to 55 cents.