Di­a­mond & Spe­cialty Min­er­als Sum­mary for Dec. 7, 2017

Stockwatch Daily - - MINES & METALS - By Will Pur­cell

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.


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