Diamond & Specialty Minerals Summary for Dec. 7, 2017
THE DIAMOND and specialty minerals stocks box score for Thursday was a mediocre 71-86-121. The TSX Venture Exchange gained three points to 787 while polished diamond prices inched upward. Adrian Hobkirk’s NRG Metals Inc. (NGZ) tumbled nine cents to 52 cents on 5.98 million shares — and as low as 41 cents in the morning — on word that it had “discovered lith ium” at its S alar Escondido project in Argentina. Mr. Hobkirk, chief executive officer, was “very excited with the initial results,” but investors appeared distressed by the low grades.
Patrick Power’s Arctic Star Exploration Corp. (ADD), unchanged at 13.5 cents on 22,000 shares, has appointed its new director, Roy Spencer, to “the newly created position of country manager for Finland.” (No, this is not a coup d’etat against Finnish prime minister, Juha Sipila. Mr. Spencer will be responsible for handling Arctic Star’s exploration activity on its recently acquired Timantti diamond project.) Arctic Star also has a vice-president of exploration, Buddy Doyle, who presumably will have a hand in managing the program; otherwise, Mr. Doyle may be feeling underemployed given Mr. Power’s new focus on Finnish gems.
Mr. Spencer joined Arctic Star in July as a director, which was no surprise, since he had been the fellow leading the exploration team when European Diamonds PLC discovered White Wolf and Black wolf, the two diamondiferous pipes on Timantti, in 2006. He has had a knack for finding diamonds and kimberlites since he first went to work for De Beers in the mid-1960s.
His first finds, the 1989 discovery of the Edmund kimberlites in the Pilbara region of Western Australia, were uneconomic, but he had much better luck — much more than his employer had — several years later in an area a few hundred kilometres east of Timantti, in the Archangelsk region of Russia. Mr. Spencer went to work for the now defunct Archangel Diamond Corp. in 1995 and in Mr. Power’s words, he was “largely responsible for” — Howe Street lingo for “had a hand in” — the discovery of Archangel’s Grib pipe in early 1996. Mr. Spencer was Archangel’s on-site country manager until he was let go at the end of 1999.
It was an amicable parting triggered when Archangel’s Russian partners decided Grib was too good to share after all. (Most things Russian — the people, their companies and the country — are often difficult to manage.) Archangel said it would rehire Mr. Spencer in a heartbeat, if he was still available once it sorted out its problems. He was probably available but Grib was not, and soon Archangel was gone as well: As the adage goes, the Russians got the mine; Archangel (and subsequently De Beers) got the shaft. At last report, Grib held a reserve of about 100 million carats worth nearly $200 (U.S.) per carat and the Russian oil giant, Lukoil, held a 100-per-cent interest in the mine until a year ago when it sold it to Otkritie Holding Joint Stock Co. for $1.45-billion (U.S.).
Grib features prominently in Arctic Star’s promotion of Timantti, although the diamond potential of the two Wolf pipes are a far cry from Grib and the other rich Archangelsk pipes to the east. Although Arctic Star has been saying it plans to drill the two Timantti pipes to reassess their potential, Mr. Spencer is more likely to focus on identifying new targets that might be more Grib-like and less Wolfish. For now, he says only that the company has begun ground geophysics, which will be followed by drilling.
Tim Fernback’s Lico Energy Metals Inc. (LIC), down one cent to 15 cents on 4.91 million shares, has received assays of up to 0.55 per cent cobalt over five metres from one of three new holes drilled at its Glencore Bucke project in Northeastern Ontario. The two other holes were less encouraging, although one produced 0.13 per cent cobalt and 5.4 grams of silver per tonne across 1.25 metres. The third encountered a 4.85-metre zone that assayed just 0.01 per cent cobalt. Lico is expecting plenty more assays, as the company completed 21 holes on Glencore Bucke and another 11 on the neighbouring Teledyne property.
Mr. Fernback, president and CEO, says that he and his crew are extremely pleased with the results to date. The bulk of his pleasure probably stemmed from previous results, in which Lico had encountered 1.11 per cent cobalt over two metres and 4.45 per cent over 0.3 metre at Glencore Bucke and 0.62 per cent cobalt over six metres at Teledyne. In any case, Mr. Fernback says that the new assays are confirming historical data and once the rest of them are in, Lico will design a
follow-up program for next year.
Greg Burns’s Quantum Cobalt Corp. (QBOT), up two cents to $1.80 on 217,000 shares, has wrapped up its exploration program at the Nipissing Lorrain cobalt-silver-nickel project, southeast of Cobalt in Northeastern Ontario. It was a quick program — Quantum collected just 28 rock samples from an area centred on the Staples vein. Mr. Burns, CEO, says that he and his crew are “eagerly expecting” the assays from those samples, adding that based on the interpretations, Quantum will be able to “continue its strategic exploration of its cobalt assets.” The assays should not yield a big surprise, as the vein had sporadically been mined in the past. About 122 tonnes of rock produced 2.5 tonnes of cobalt and 1.6 tonnes of nickel, plus nearly 11,000 kilograms of silver. Those figures work out to an average of 2 per cent cobalt, 1.2 per cent nickel and 89 grams of silver per tonne.
David Hodge and Chris Grove’s Commerce Resources Corp. (CCE), unchanged at 8.5 cents on 1.03 million shares, is touting a plan to upgrade material from its Ashram rare earth deposit in Northern Quebec to above 50 per cent rare earth oxides, using only flotation. The company says this can occur at “appreciable recovery” rates. (In the absence of numbers, this is prob ably t he Howe Street version of appreciable, which translates as “encouraging, but not as high as we would like.”)
Mr. Hodge, CEO, and Mr. Grove, president, are seeking ways to cut the costs of an Ashram mine. A 2012 preliminary economic assessment 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. That was near the height of the rare earth craze; prices are much lower today, so cutting costs is key to reviving the Ashram promotion. The deposit 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, so there is plenty of opportunity to trade recovery rates for lower costs, if need be.