Diamond & Specialty Minerals Summary for Nov. 8, 2018
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.