Di­a­mond & Spe­cialty Min­er­als Sum­mary for Oct. 12, 2017

Stockwatch Daily - - MINES & METALS - By Will Pur­cell

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.


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