Diamond & Spe­cialty Min­er­als Sum­mary for July 14, 2017

Stockwatch Daily - - MINES & METALS - By Will Pur­cell

THE DIAMOND and spe­cialty min­er­als stocks box score for Fri­day was a so-so 59-64-134. The TSX Ven­ture Ex­change gained four points to 757 while pol­ished diamond prices were flat. Do­min­ion Diamond Corp. (DDC) jumped 69 cents to $16.91 on 228,000 shares be­fore ru­mours of an im­pend­ing buy­out tripped a reg­u­la­tory cir­cuit breaker. The com­pany promptly re­set the switch, say­ing it con­tin­ues to talk, but has noth­ing new to say.

Pa­trick Power’s Arc­tic Star Ex­plo­ration Corp. (ADD) dropped an­other 4.5 cents to 23 cents on 1.46 mil­lion shares. The stock opened strong yes­ter­day, hit­ting a 34.5 cent high, but ended the day down 2.5 cents to 27.5 cents on 2.94 mil­lion shares on word that the com­pany is ac­quir­ing an­other diamond play. The new project, cov­ers a 243-hectare per­mit in north­ern Fin­land host­ing two old kim­ber­lite discoveries: Black Wolf and White Wolf. (Arc­tic Star does not men­tion their size, so they prob­a­bly are small.) Mr. Doyle, vice-pres­i­dent of ex­plo­ration, says that the com­pany “views this new project as a unique op­por­tu­nity to ad­vance a new diamond dis­trict.” It be­lieves the two pipes are part of a clus­ter of yet to be dis­cov­ered pipes, which is why Arc­tic Star has ap­plied for a 95,700-hectare ex­plo­ration reser­va­tion cen­tred on the two pipes. The com­bined project will be called Ti­mantti.

Mr. Doyle and Mr. Power, Arc­tic Star’s pres­i­dent and chief ex­ec­u­tive of­fi­cer, say that once the deal closes, they will seek to “quickly gain a bet­ter un­der­stand­ing” of the two Wolf kim­ber­lites. They pro­pose geo­phys­i­cal sur­veys that will be used to tar­get fur­ther drilling. The drilling will help de­fine the shape and ton­nage of each kim­ber­lite and pro­vide a bet­ter idea of their diamond con­tent. That, in turn, will pro­vide the data needed to de­ter­mine the pa-

ram­e­ters for a bulk sam­pling pro­gram. Fur­ther, they say that Arc­tic Star plans an air­borne geo­phys­i­cal survey over the rest of Ti­mantti, or at least the ar­eas with in­di­ca­tor min­eral anom­alies.

The Wolf kim­ber­lites are in­trigu­ing, but they have not seen much work since the mid-2000s. They were dis­cov­ered by Euro­pean Di­a­monds PLC in 2005 and a 41.2-kilo­gram sam­ple of kim­ber­lite yielded 42 mi­cro­di­a­monds with one up to 0.88 mil­lime­tre in length. Roy Spencer, who led the team mak­ing the dis­cov­ery, went back the fol­low­ing year and col­lected an 8.8-tonne cu­mu­la­tive sam­ple from two shal­low trenches. The rock pro­duced 1.25 carats, im­ply­ing a grade of 0.14 carat per tonne, with the largest diamond weigh­ing 0.09 carat. Those numbers were unim­pres­sive, which is prob­a­bly why in­ter­est in the Wolf kim­ber­lites dried up, but they of­fer hope that new finds in the area could be eco­nomic.

Mr. Spencer knows the diamond prom­ise of area well, as Mr. Power points out that he was “largely re­spon­si­ble” for the dis­cov­ery of the Grib pipe, 450 kilo­me­tres east in the Ar­changelsk re­gion of Rus­sia. (On Howe Street, “largely re­spon­si­ble” can trans­late to “was nearby when it was found,” but Mr. Spencer was the ex­plo­ration man­ager for Ar­changel Diamond Corp. in the lat­ter half of the 1990s. He and Ar­changel’s Rus­sian part­ner iden­ti­fied the geo­phys­i­cal anom­aly and he pushed the two com­pa­nies to drill the dis­cov­ery hole.) While no­body but the Rus­sians made money on Grib, Mr. Power has now added Mr. Spencer to Arc­tic Star’s board. A na­tive of South Africa, he joined De Beers out of high school in the mid-1960s and trot­ted the globe with the com­pany for years. He is also a tech­ni­cal di­rec­tor for Eric Fried­land’s Pere­grine Di­a­monds Ltd. (PGD: $0.135).

To ac­quire the 243-hectare postage stamp prop­erty host­ing the Wolf kim­ber­lites, Arc­tic Star has agreed to is­sue 14.5 mil­lion shares at a deemed price of 20 cents per share to the own­ers of Fin­land-based Foriet Oy. Ten mil­lion of those shares go to a pri­vate United King­dom-based com­pany, Dragon Eq­ui­ties Ltd. The rest will go to the share­hold­ers of Foriet’s joint ven­ture part­ner. The cost to ac­quire the big sur­round­ing prop­erty will be min­i­mal, but keep­ing it all will cost con­sid­er­ably more. Arc­tic Star is con­sid­er­ing a $2-mil­lion rec­om­mended bud­get for the Wolf kim­ber­lites, in­clud­ing analyzing boxes of old core to ex­pand the mi­cro­di­a­mond par­cel and ground geo­physics. The big-ticket items are more till sam­pling this win­ter, at a cost of $720,000, and a 1,500-me­tre drill pro­gram that would cost $900,000.

Jim McKen­zie’s Ucore Rare Met­als Inc. (UCU) closed un­changed at 30 cents on 78,000 shares. The com­pany has not made much progress lately at its Bokan-Dot­son Ridge rare earth project in south­east­ern Alaska, but Mr. McKen­zie, pres­i­dent and CEO, still touts the project at ev­ery op­por­tu­nity. Lately he has been sound­ing more like a po­lit­i­cal pun­dit than a stock pro­moter, of­fer­ing cheer­ful pro­jec­tions on what the Trump ad­min­is­tra­tion will do about sup­port­ing do­mes­tic pro­duc­tion of strate­gic min­er­als. This week, he cheered the U.S. Se­nate’s move to pro­vide “fund­ing and di­rec­tion” to the De­part­ment of De­fence to in­crease strate­gic min­er­als pro­duc­tion.

Bokan-Dot­son Ridge will need all the help it can get. The de­posit hosts 4.8 mil­lion tonnes in­di­cated and an­other 1.05 mil­lion tonnes in­ferred, at 0.60 per cent to­tal rare earth ox­ides. A pre­lim­i­nary eco­nomic assess­ment, now five years old, put the cost of a

mine at $221-mil­lion (U.S.). It cred­ited the project with a dis­counted net present value of $577-mil­lion (U.S.), but the dream sheet was rolled out just as the 2011 rare earth price bub­ble be­gan to burst.

David Blann’s Happy Creek Min­er­als Ltd. (HPY), up three cents to 20 cents on 81,000 shares, hit the news again this week. Just af­ter it raised the full $3-mil­lion it was seek­ing, the com­pany sent a crew to the Fox tung­sten prop­erty in prepa­ra­tion for a 5,000-me­tre drill pro­gram. The 35 to 50 holes are in­tended to ex­pand the cur­rent re­source es­ti­mate; the rest of the work will be part of a pro­posed pre­lim­i­nary eco­nomic assess­ment. (Fox cur­rently hosts 486,000 tonnes in­di­cated at 0.817 per cent tung­sten ox­ide and an­other 316,000 tonnes in­ferred at 1.57 per cent.)

Jeremy Poirier’s Bear­ing Lithium Corp. (BRZ), down seven cents to 92 cents on 121,000 shares, has an up­dated re­source es­ti­mate for its Chile-based Mar­i­cunga project, which it touts as “one of the high­est-grade un­de­vel­oped lithium brine projects in the world.” (Bear­ing is ac­quir­ing a 17.7-per-cent in­ter­est in the project.) The com­pany es­ti­mates Mar­i­cunga hosts 300 mil­lion cu­bic me­tres of brine av­er­ag­ing 74 grams of lithium per cu­bic me­tre and an­other 60 mil­lion cu­bic me­tres at 114 grams of lithium per cu­bic me­tre, or about 2.15 mil­lion tonnes of lithium car­bon­ate.


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