Di­a­mond & Spe­cialty Min­er­als Sum­mary for Nov. 8, 2018

Stockwatch Daily - - MINES & METALS - By Will Pur­cell

THE DI­A­MOND and spe­cialty min­er­als stocks box score for Thurs­day was a ho-hum 75-83-132. The TSX Ven­ture Ex­change lost four points to 667 while pol­ished di­a­mond prices rose 0.2 per cent. Der­mot Des­mond’s Moun­tain Prov­ince Di­a­monds Inc. (MPVD) strug­gled to stay above the $2 mark but failed, end­ing the day off 10 cents to $1.99 on 574,000 shares. The com­pany will have its third quar­ter re­sults on Mon­day.

Matt Man­son’s Stornoway Di­a­mond Corp. (SWY) closed un­changed at 24.5 cents on 437,000 shares. The com­pany, near its all-time low of 24 cents, is look­ing to boost di­a­mond pro­duc­tion from its Re­nard mine in North­ern Que­bec through some changes to its mine plan start­ing next year. To do so, it spent 2018 drilling and sam­pling two key kim­ber­lites, Re­nard 3 and Re­nard 4, to de­velop enough re­serves in the ap­pro­pri­ate ar­eas to sup­port open-pit min­ing at Re­nard 4 and per­haps Re­nard 9, as well as un­der­ground min­ing at Re­nard 3.

Mr. Man­son, pres­i­dent and chief ex­ec­u­tive of­fi­cer, says that the work at Re­nard 3 is about ac­cel­er­at­ing the sched­uled min­ing of high-grade ore and al­low­ing the mine to main­tain a blend of ore from two sources, Re­nard 2 and Re­nard 3, at in­creas­ing depths in the un­der­ground mine over the longer term. He says that Re­nard 3 has been suc­cess­fully de­lin­eated to 315 me­tres, sup­port­ing the in­clu­sion of kim­ber­lite above the 290-me­tre level in the 2019 mine plan, sev­eral years ear­lier than ini­tially planned. The cur­rent mine plan calls for the min­ing to oc­cur in 2026 and 2027.

Over 5,300 me­tres of drilling this year, most of it be­tween 255 me­tres and 290 me­tres, has shown minable widths of kim­ber­lite to at least 315 me­tres and the con­tin­u­a­tion of high-grade kim­ber­lite phases at depth. Mr. Man­son says that the data is be­ing in­cor­po­rated into a re­vised ge­o­log­i­cal model and re­source es­ti­mate that pre­sum­ably will be ready in time to re­vise the mine plan for 2019. Stornoway lists an un­der­ground re­serve of 1.15 mil­lion tonnes at 68.2 carats per hun­dred tonnes, or 780,000 carats. As well, it had an ad­di­tional 542,000 tonnes in­ferred at 112 carats per hun­dred tonnes and a tar­get for fur­ther ex­plo­ration of be­tween 3.35 mil­lion and 3.77 mil­lion tonnes grad­ing be­tween 105 and 168 carats per hun­dred tonnes, pro­vid­ing a po­ten­tial 3.5 mil­lion to 6.3 mil­lion ex­tra carats.

Mr. Man­son says that the work at Re­nard 4 is about ex­pand­ing the com­pany’s un­der­stand­ing of the di­a­mond pop­u­la­tion at the top of the pipe be­fore Stornoway com­mits to de­vel­op­ing a new open-pit mine. That mine would re­quire a wa­ter re­ten­tion dike to hold back a small lake, but it would al­low Stornoway to take ad­van­tage of the in­creased pro­cess­ing ca­pac­ity that re­sulted from the com­pany’s re­cent ad­di­tion of a new ore-sort­ing cir­cuit to the pro­cess­ing plant. (Given the work re­quired, min­ing at Re­nard 4 is still a few years off.)

Stornoway col­lected 13,500 tonnes of kim­ber­lite from near the sur­face at Re­nard 4 this sum­mer and just over 11,600 tonnes have been pro­cessed. About 10,360 tonnes of the Re­nard 4a phase av­er­aged 24 carats per hun­dred tonnes and 1,287 tonnes of the 4b phase av­er­aged 45 carats per hun­dred tonnes. In 2007, a sam­ple of out­crop tested the high-grade 4d phase, re­turn­ing a grade of 129 carats per hun­dred tonnes. Stornoway cur­rently lists an un­der­ground re­serve of 3.46 mil­lion tonnes at 48.3 carats per hun­dred tonnes. An­other 2.93 mil­lion tonnes were in­di­cated at 57.8 carats per hun­dred tonnes and 2.46 mil­lion tonnes are in­ferred at 51.7 carats per hun­dred tonnes. The com­pany also lists a tar­get for fur­ther ex­plo­ration of be­tween 11.1 mil­lion and 15.4 mil­lion tonnes, grad­ing be­tween 50 and 77 carats per hun­dred tonnes.

Mr. Man­son says that early in­di­ca­tions are that the grade, size dis­tri­bu­tion and qual­ity as­sort­ment of the near-sur­face di­a­monds are con­sis­tent with pre­vi­ous sam­pling. If the num­bers work out, Stornoway will con­sider open-pit min­ing about two mil­lion carats from the top 140 me­tres of Re­nard 4, although when that might start is un­clear. The cur­rent mine plan calls for un­der­ground min­ing only at Re­nard 4, slated to oc­cur in the lat­ter half of the 2020s.

Paul Cowley’s First Vana­dium Corp. (FVAN), down two cents to $1.38 on 145,000 shares, has re­ceived as­says of up to 0.81 per cent vana­dium ox­ide over 32.01 me­tres from 10 holes of a stepout drill pro­gram at its Car­lin vana­dium project in Ne­vada. Mr. Cowley, pres­i­dent and CEO, called the re­sults “an ex­cel­lent start to the de­posit ex­pan­sion,” point­ing to the in­ter­cepts of “good grade and thick­ness” near the sur­face in a flat val­ley. He says that the new area of min­er­al­iza­tion, which re­mains open to the north, has a pos­i­tive im­pact for the project and will aid a re­source es­ti­mate ex­pected be­fore the end of the year. As­says from an­other 23 stepout holes are pend­ing. A his­tor­i­cal re­source es­ti­mate, pre­pared in 2010, listed 28 mil­lion tons at 0.515 per cent vana­dium ox­ide.

William Dawes and Alexan­der Le­mon’s Mkango Re­sources Ltd. (MKA: $0.17) has re­ceived as­says of up to 1.6 per cent to­tal rare earth ox­ides over 114.8 me­tres at its Songwe Hill de­posit in Malawi. The as­says, from an­other 45 holes, pro­duced plenty of en­cour­ag­ing grades over sig­nif­i­cant in­ter­vals. Mr. Dawes, CEO, says that the lat­est batch of ex­cel­lent re­sults from the now com­pleted drilling at Songwe, “fur­ther demon­strates broad min­er­al­ized zones with con­ti­nu­ity of min­er­al­iza­tion” that will un­der­pin a com­ing re­source up­date. That up­date will be­gin once the as­says from the re­main­ing 21 holes are avail­able.

A new es­ti­mate will pre­sum­ably build upon the now dated re­serve of 8.5 mil­lion tonnes av­er­ag­ing 1.6 per cent to­tal rare earth ox­ides that sup­ported a prefea­si­bil­ity study, last up­dated three years ago. That study pro­posed a 500,000-ton­neper-year mine that would cost $216.3-mil­lion (U.S.) to build and would sup­port a dis­counted net present value of $345-mil­lion (U.S.). Un­for­tu­nately, that study was pre­pared based on rosy price fore­casts that came on the heels of the 2011 rare earth price bub­ble. Mr. Dawes and his crew hope that an op­ti­mized mine plan and larger re­source will make Songwe eco­nomic at cur­rent prices.

Yves Rougerie’s Vi­sion Lithium Inc. (VLI), up one cent to 20.5 cents on 48,000 shares, has re­ceived as­says of up to 1.85 per cent lithium ox­ide over 13.5 me­tres from chan­nel sam­pling at the East zone of its Sir­mac project in north-cen­tral Que­bec. As well, the com­pany drilled 5.6 me­tres of 1.36 per cent lithium ox­ide. Mr. Rougerie, pres­i­dent and CEO, says that the East zone has the po­ten­tial to be a sig­nif­i­cant lithium oc­cur­rence, so more work is planned.


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