Diamond & Specialty Minerals Summary for Oct. 12, 2017
THE DIAMOND and specialty minerals stocks box score for Thursday was a ho-hum 62-62-138 draw. The TSX Venture Exchange fell fractionally to 790 while polished diamond prices dropped 0.1 per cent. Matt Manson’s Stornoway Diamond Corp. (SWY) slid three cents to 76 cents on 4.59 million shares following a grumpy reaction by analysts to the company’s third quarter production and sales results from Renard.
Dean Taylor’s Diamcor Mining Inc. (DMI), down 1.5 cents to 47 cents on 80,000 shares, sold 7,771 carats of rough during its latest quarter at its Krone-Endora at Venetia project in South Africa. The diamonds were “recovered from continuing exercises performed during the quarter” — a bit of bafflegab needed to avoid calling an operation that has been running for years, what many investors call it: a mine.
Diamcor got $1.33-million (U.S.) for its gems, an average of $171.70 (U.S.) per carat. It had sold 8,31 8 car ats for $1.85-million (U.S.) during the previous quarter, averaging $222.52 (U.S.) per carat. Mr. Taylor, the company’s Kelowna-based president and chief executive officer, says the latest result was nevertheless pleasing given the “continued price weaknesses in certain categories of rough diamonds” during the period. He says that the price achieved is “indicative of the overall quality” of Krone-Endora’s diamonds.
Diamcor has now sold $20.4-million of diamonds in a little over four years, in what appears to be one of the longest bulk sampling programs ever undertaken. (In Africa, such tests are usually called trial mining exercises.) Whatever the name, the company’s “operating activities” have generated about $6-million in net income over that span, suggesting the exercise has been a success.
The company has been extracting some larger diamonds from Krone-Endora during its program, enough that it has upgraded the plant to avoid breaking any huge diamonds that might show up. So far, they have not, although the largest diamond recovered so far weighed more than 90 carats. In May, Mr. Taylor touted the recovery of a 5.36-carat green diamond, but as the company expected, the greenness was limited to just the outer shell of the stone. Nevertheless, Mr. Taylor believes that the find bodes well for the recovery of more desirable coloured stones.
Still, there are hiccups. Diamcor put considerable effort into upgrading its processing facilities at Krone-Endora, and while they are capable of processing material at significantly higher rates, Diamcor has been unable to recover water from its settling dams fast enough to allow the higher rates. Mr. Taylor says that this is “unfortunate,” but he believes that it is the only thing preventing a much higher operating rate. The good news — there is always good news on Howe Street when one is looking ahead — is that Diamcor’s crew has identified a solution that will fix the water problem and “provide other operational benefits” in the longer term.
David Hodge and Chris Grove’s Commerce Resources Corp. (CCE), up one-half cent to eight cents on 151,000 shares, has wrapped up its 2017 program at the Ashram rare earth project in Northern Quebec. The company is awaiting assays from 1,256 drill core samples that it collected this year. (It did the collecting of the samples this year; the drill core was acquired in last summer’s 14-hole, 2,000-metre program, but it was never tested.) Mr. Grove, president, says that the company has also collected 36 prospecting rock samples from the Miranna target ahead of drill testing. (He does not say how far ahead.)
Ashram hosts 29.3 million tonnes measured and indicated at 1.88 per cent total rare earth oxides, and another 219.8 million tonnes are inferred at a similar grade. Commerce pushed the project to the study stage at the height of the rare earth elements price bubble, rolling out a preliminary economic assessment in 2012. That dream sheet projected a discounted net present value of $2.32-billion before taxes, based on a 4,000-tonne per-day mine that would cost $763-million to build. Unfortunately, prices are much lower now than they were then. Still, there have recently been signs of life from a few rare earth promotions, as prices inch higher once again.
Keith Anderson’s Far Resources Ltd. (FAT), down 2.5 cents to 27 cents on 602,000 shares, has wrapped up its latest drill program on the No. 1 pegmatite dike at its Zoro lithium project near Snow Lake in Northern Manitoba. Mr. Anderson, president and CEO, says that the drilling hit 40.5 metres of light green spodumene in one of the holes and 39.8 metres in a second. The three other holes also encountered the material, with hits across at least 7.5 metres. The company has collected a series of core samples and the assays are pending.
The intersections are no surprise and the assays may not provide much of a shock either. Far Resources drilled the No. 1 dike on two occasions over the past year, completing seven holes each time. The assays ranged as high as 1.2 per cent lithium oxide over 38 metres. Mr. Anderson says that Far is getting a “more complete understanding” of the lithium distribution within the No. 1 dike, and it is moving ahead with target definition at dikes No. 2, 3 and 4. “We have a plan and we have the funds,” he says, “so we are striving to move Zoro ahead every single day.” That was yesterday; there is no word on how Zoro has advanced today.
Paul Matysek and Brian Paes-Braga’s Lithium X Energy Corp. (LIX), down five cents to $1.87 on 511,000 shares, has arranged a bought-deal financing in which it is selling 6.85 million shares at $1.90, for a total of $13.02-million. (If the underwriters’ option is fully exercised, the placement will rake in nearly $15-million.) Mr. Matysek, CEO, and Mr. Paes-Braga, president, say the cash is for “general corporate purposes.” They can therefore use it for most anything, but most of it will go to advancing the Sal de los Angeles lithium brine project in northern Argentina.
Lithium X’s stock had been trad ing in a n arrow ran ge near the $2 mark since mid-spring, save for a brief trip to $1.73 in late Septem-
ber, an apparent reaction to what Mr. Matysek called “false rumours” circulating on the Internet. At last report, Sal de los Angeles held 390 million cubic metres indicated at 60.8 grams of lithium per cubic metre and another 457 million cubic metres inferred at 49.3 grams per cubic metre, roughly two million tonnes of lithium carbonate equivalent. At last report, the company expected to have a feasibility study late this year, but there has been no word about that of late.