Di­a­mond & Spe­cialty Min­er­als Sum­mary for Nov. 13, 2017

Stockwatch Daily - - MINES & METALS - By Will Pur­cell

THE DI­A­MOND and spe­cialty min­er­als stocks box score for Mon­day was a weak 66-93-120. The TSX Ven­ture Ex­change rose six points to 802 while pol­ished di­a­mond prices fell slightly. Chuck Fipke’s Me­talex Ven­tures Ltd. (MTX) dropped one-half cent to five cents on 196,000 shares. Me­talex touts its ef­forts to reach a deal with the lo­cals and fi­nance a big bulk sam­ple of the U2 pipe in On­tario but is get­ting nowhere.

Richard Si­las’s halted Con­sol­i­dated Westview Re­source Corp. (CWS.H: $0.395) is dou­bling its pro­posed pri­vate place­ment ahead of a re­v­erse takeover of Bruce Counts’s Litho­quest Di­a­monds Inc. Con­sol­i­dated Westview had agreed to sell nine mil­lion shares at 27 cents as a con­di­tion of the merger, which would add $2.43-mil­lion in cash to the com­pany’s trea­sury. Now the com­pany says that it is planning to sell nearly 19 mil­lion shares for a to­tal of $5.12-mil­lion. Mr. Si­las, the com­pany’s pres­i­dent and chief ex­ec­u­tive of­fi­cer for now, says that the cash is mainly for ini­tial ex­plo­ration on Litho­quest’s North Kim­ber­ley di­a­mond project, near the north­ern coast of Western Aus­tralia, and for work­ing cap­i­tal. (Once the re­v­erse takeover is com­plete, Mr. Counts will re­place Mr. Si­las as pres­i­dent and CEO and the com­pany will be­come Litho­quest Di­a­monds Inc.)

The ad­di­tional cash will come in handy, as Mr. Counts says that he and his crew have “dis­cov­ered strong ev­i­dence of a di­a­mond-bear­ing kim­ber­lite clus­ter” on North Kim­ber­ley. Litho­quest points to three oc­cur­rences of ap­par­ent weath­ered kim­ber­lite, adding that rock sam­ples from two of the lo­ca­tions pro­duced “com­pelling” di­a­mond in­clu­sion chem­istry. As well, Mr. Counts says that di­a­monds had been re­cov­ered dur­ing historical stream sam­pling by pre­vi­ous ex­plor­ers. One of those old finds weighed 1.73 carats and was val­ued at $740 (U.S.) per carat.

Mr. Counts points out that Litho­quest’s prop­erty is in the heart of the Kim­ber­ley cra­ton of Western Aus­tralia, about 300 kilo­me­tres north­west — hardly neigh­bours — of the pro­lific Ar­gyle di­a­mond mine that has pro­duced over 750 mil­lion carats of low-value white and ex­cep­tional value pink di­a­monds since 1983. As well, the prop­erty is about 450 kilo­me­tres north­east of the El­len­dale mine, which pro­duced about half of the world’s fancy yel­low di­a­monds dur­ing its run. Fur­ther, Mr. Counts says that two other di­a­mond de­posits are “prox­i­mal” to Litho­quest’s project. One, the Sep­pelt-2 kim­ber­lite, has a re­ported grade of 2.25 carats per tonne.

Once Mr. Counts has the re­quired cash, Litho­quest plans drilling at its kim­ber­lite oc-

cur­rences to col­lect fresh rock for test­ing. The com­pany hopes to get started be­fore the end of the year, but it is run­ning out of time as the area goes through a rainy sea­son that typ­i­cally be­gins be­fore Christ­mas and ends in April. The goals of the core drilling pro­gram are to con­firm that the rock is in­deed kim­ber­lite and to as­sess any in­ter­nal vari­a­tions within the ma­te­rial. As well, the com­pany hopes to get an ini­tial sense of the size and ton­nage po­ten­tial of each oc­cur­rence. As­sum­ing the rock en­coun­tered is in­deed kim­ber­lite, Litho­quest will process the rock for mi­cro­di­a­monds to “ob­tain first in­di­ca­tions of di­a­mond grade and size dis­tri­bu­tion.”

Paul Fer­gu­son and Paul Gor­man’s Great Lakes Graphite Inc. (GLK), down one-half cent to 7.5 cents on 325,000 shares, has sold $2-mil­lion of con­vert­ible deben­tures to fi­nance its op­er­a­tions and ex­pan­sion plans. As a re­sult, Great Lakes is can­celling the pri­vate place­ment of 40 mil­lion shares at five cents that it planned in mid-Au­gust. Mr. Gor­man, pres­i­dent and CEO, says that his com­pany “in­stead has closed a less di­lu­tive fi­nanc­ing.” He says that the deben­ture fi­nanc­ing was of­fered to the com­pany by a “ma­jor, long-stand­ing share­holder.” (The com­pany said noth­ing more to re­veal the iden­tity of its lender, but Mr. Fer­gu­son is a ma­jor share­holder and so are his par­ents, Frank and Mitzi Fer­gu­son, who have pre­vi­ously ac­quired Great Lakes Graphite deben­tures.)

Mr. Gor­man and his crew did not re­veal the in­ter­est rate of the deben­tures, nor did they say at what price the con­vert­ible deben­tures might be con­verted into stock. Mr. Gor­man sub­se­quently said that the in­ter­est rate on the deben­tures is 10 per cent, payable at ma­tu­rity in 18 months. He also says that the com­pany is is­su­ing 3.39 mil­lion war­rants, ex­er­cis­able at 7.5 cents, in lieu of the deben­tures be­ing con­vert­ible into stock.

Ear­lier this year, Great Lakes can­celled its plan to pro­duce mi­cronized graphite at a fa­cil­ity in North­ern On­tario. The com­pany now has an ar­range­ment with Ash­land Ad­vanced Ma­te­ri­als for “com­mer­cial-scale pu­rifi­ca­tion op­er­a­tions” at Ash­land’s big fa­cil­ity in western New York. The terms of that ar­range­ment were not spelled out ei­ther, but Great Lakes pre­sum­ably will be us­ing some of its cash to get that pro­duc­tion rolling.

Farhad Abasov’s Mil­len­nial Lithium Corp. (ML), down nine cents to $3.50 on 407,000 shares, has sold 6.3 mil­lion shares at $2.50 to Mil­lion Surge Hold­ings Ltd., a sub­sidiary of Golden Con­cord Group Ltd. This is a first tranche of the “strate­gic in­vest­ment,” which parks Mil­lion Surge with 9.9 per cent of Mil­len­nial’s stock un­til the reg­u­la­tors com­plete the clear­ance process for new in­sid­ers. Once com­plete, Mil­lion Surge will buy an­other 5.7 mil­lion shares, com­plet­ing its $30-mil­lion in­vest­ment. The cash will al­low Mil­len­nial Lithium to con­tinue de­vel­op­ment of its Pas­tos Gran­des lithium brine project in North­ern Ar­gentina. The com­pany is set to start a pre­lim­i­nary eco­nomic as­sess­ment of the project.

Thomas Yin­gling’s Berk­wood Re­sources Ltd. (BKR), down one cent to 36.5 cents on 185,000 shares, has sold 1.26 mil­lion shares at 29 cents and 5.84 mil­lion flow-through shares at 31 cents, for a to­tal of $2.17-mil­lion. The cash is for work on the com­pany’s Que­bec prop­er­ties and for work­ing cap­i­tal. Berk­wood, which claims to be “plugged in” to high-tech me­tals, is dab­bling in ex­plo­ration for most of the me­tals needed by bat­tery and en­ergy stor­age com­pa­nies.

Its ros­ter of projects need­ing ex­plo­ration cash is led by the Lac Gueret Ex­ten­sions graphite project, on the fringe of the Lac Gueret de­posit in North­ern Que­bec that Ma­son Graphite Inc. (LLG: $2.36) hopes to mine. Berk­wood re­cently wrapped up a 13-hole drill pro­gram there and while as­says are pend­ing, Mr. Yin­gling has al­ready said that his crews hit graphite in ev­ery hole. Berk­wood also owns the Cobalt Fold cobalt project in North­ern Que­bec, where it plans pre­lim­i­nary work. (The com­pany, per­haps think­ing of its pro­mo­tional con­nec­tion to elec­tric cars, of­ten calls the project “Cobalt Ford.”) The com­pany also holds the Roscoe vana­dium and the Del­breuil lithium projects.


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