From: http://www.stockwatch.com
This was written in late May, and since then, there hasn't been much of anything going on with SUD's diamond play.
Sudbury Contact revives an old play
Sudbury Contact Mines Ltd SUD
Shares issued 16,691,085 May 27 2002 close $ 3.95
Tuesday May 28 2002 Street Wire
by Will Purcell
An old diamond play refuses to die. After years of inactivity, Sudbury Contact Mines has decided to revive its Timiskaming diamond play, which was last big news six years ago. Although nothing much ever came of any of the several kimberlite finds in Northeastern Ontario, several of them did produce a few diamonds of a commercial size, but for the most part, the grade of the kimberlites was microscopic. Nevertheless, one of the kimberlites in the area produced some interesting diamond counts a larger stone from a smaller sample, but the pipe was never subjected to a further test. Nearly seven years have now passed.
The heyday for Sudbury Contact's diamond play came in the mid-1990s, when the company discovered four of its own kimberlites, in what was still a fairly hot region. The best of the lot was the 95-2 pipe, which has a surface area of about three hectares, based on an anomaly measuring about 250 metres long and 150 metres wide. Based on that, the pipe could contain up to about 20 million tonnes of kimberlite to a depth of 300 metres, should the body be a steep-walled pipe.
The size is enough to attract a bit of notice, but only if it proved to be significantly diamondiferous. Sudbury Contact drilled four core holes and two reverse circulation holes into the 1995 discovery, and it sent off 1,104 kilograms of kimberlite for microdiamond recovery. The diamond counts were certainly modest, as only 56 stones were recovered, but the size of the diamonds seemed to suggest that the pipe had a coarse diamond size distribution curve.
Of the 56 stones, 21 were large enough to be considered macros, which suggested a macrodiamond ratio of 0.6 to 1. The ratio of macrodiamonds to micro-sized stones is a relatively meaningless statistic and is rarely mentioned today, but it was certainly still in vogue in the mid-1990s. The ratio for 95-2 would likely have attracted a bit of notice if the company had made the effort to tout it, as it was at the favourable end of the scale, offering hope that the kimberlite would contain larger stones.
Today, the market places much more emphasis on the numbers of larger diamonds and the dimensions of those stones. Such data provide a better indication of the commercial potential of a kimberlite, but even at the time, it seemed likely that 95-2 contained some larger stones. Four of the diamonds measured longer than one millimetre, and two of them were longer than two millimetres. Sudbury Contact missed a good opportunity to promote the pipe, as the company never made much of the fact that one of the diamonds weighed 0.14 carat.
Based on those numbers, the 95-2 kimberlite contains just 50 diamonds per tonne, and only about 20 macros per tonne. Just over half of the macros were large enough to be classified as two-dimensional macrodiamonds, or about 10 per tonne. In addition, there were four stones per tonne that were longer than one millimetre, and it seems likely that at least two of them were big enough to remain on a one-millimetre screen.
Sudbury Contact continued to talk optimistically about its find for some time, but the company quickly seemed to lose interest in its Ontario diamond play, perhaps helped along by the modest microdiamond haul. Kimberlites in Canada's North were producing micros and macros at much higher rates, with microdiamond counts well in excess of one stone per kilogram, and macrodiamond numbers that approached that level on occasion. With little mention of the larger diamond and the minuscule micro counts, promoting 95-2 as a viable diamond project would likely have been a tough sell.
Since then, there have been a few additional kimberlite finds that have produced unusual numbers. One of those is the Freightrain pipe of Twin Mining. Earlier this year, the company processed 234 kilograms of drill core from the pipe, recovering just 70 diamonds. That total included just 10 macrodiamonds, although eight of those were large enough to remain on a 0.5-millimetre screen. As well, there were four diamonds that were longer than one millimetre, including two that remained on a 1.18-millimetre screen. Two of the diamonds were longer than two millimetres. Twin never officially revealed the fact, but the four largest stones are believed to have weighed just over 0.04 carat, accounting for nearly 80 per cent of the weight of the entire parcel.
Based on that, the Freightrain sample contained about 300 diamonds per tonne, a tiny amount compared with other promising pipes, but still six times the number at 95-2. There were just 42 macrodiamonds per tonne in the Freightrain kimberlite, which was about double the number in Sudbury Contact's material. Freightrain did a bit better with two-dimensional macros however, with about 34 stones per tonne, a bit more than triple the number from the Ontario pipe. Similar ratios seemed to prevail at the larger stone sizes, as the number of stones longer than one millimetre and two millimetres was about four times higher in Freightrain than it was in the 95-2 rock. Nevertheless, the Sudbury Contact pipe certainly did win one of the battles, as its diamond parcel weighed more than the Freightrain core sample, thanks to the one larger diamond.
Twin has subsequently taken a number of mini-bulk tests from its Freightrain pipe, which indicated an average grade of about 0.20 carat per tonne. Two of the samples that came from the central portion of the Freightrain anomaly had a somewhat higher grade, averaging about 0.27 carat per tonne, and recent grade modelling exercises have suggested the two sites have an average grade of about 0.5 carat per tonne, for diamonds larger than 0.85 millimetre.
Shore Gold processed about 2.24 tonnes of kimberlite from its Star pipe, and the rock contained about 230 diamonds per tonne, more than four times the number at 95-2. Star produced 53 macrodiamonds per tonne, nearly triple the number at 95-2. As well, Shore is believed to have recovered about 10 diamonds per tonne that were longer than one millimetre, which is roughly 2.5 times the number in the Sudbury Contact pipe. The largest diamond recovered by Shore is believed to have weighed about 0.04 carat, significantly smaller than the largest stone from 95-2. Shore has since processed a small mini-bulk test that produced an indicated grade of just under 0.07 carat per tonne, and the company's hopes are that the modelled grade of the pipe will be double that figure, or a bit more.
What all that means for 95-2 is hard to say, but the kimberlite is probably worth of a closer look. Although Sudbury Contact seemed to lose interest in the project for a time, the company did manage to attract another explorer, however briefly. About a year ago, John Illidge's Hucamp Mines acquired an option to earn a 50-per-cent stake in the play, in exchange for spending $1-million over a four-year period. Nothing much happened however, as the wheels fell off Hucamp later last year. The company's cash accounts apparently became embroiled in the bankruptcy of Mr. Illidge and his unsaintly St. James Capital Corporation. Hucamp's stock plummeted from a high of $2.30 last summer to a low of just a penny early last month. Trading has since been suspended and legal action has since ensued, but no matter what the future holds for Hucamp, it is all too late for the company's involvement in the Ontario diamond play, as three months ago, the deal between Hucamp and Sudbury Contact was terminated.
Sudbury Contact has had a few problems of its own over the past several years. The stock, two-thirds of which is owned by Agnico-Eagle Mines, has had a tough stretch after a few glory years in the mid-1990s, when it peaked at $20. That lofty height was more due far more to the company's gold exploration programs than anything to due with diamonds, but the metal play fell on hard times as well, and a Sudbury Contact share could be had for just 33 cents in the summer of 2000. Things have turned much rosier of late, and this year the stock has jumped from 60 cents to a recent high of $3.75, helped along by Agnico-Eagle's decision to write off a $25.6-million debt owed by Sudbury Contact. That move wiped out most of the company's capital deficiency, which was just over $26.3-million at the end of March.
It remains to be seen just how committed Sudbury Contact will be to picking up where it left off with its old diamond play. The company has picked up additional land in the region, and it has processed some old core samples from 95-2. Rock weighing 38.5 kilograms produced five diamonds. That included two macro-sized stones, but neither of the macros remained on a 0.5-millimetre screen.
Although 95-2 was never bulk tested, larger tests were completed from several kimberlites further to the north. In the early 1990s, KWG Resources took a 22.5-tonne sample from the Bucke pipe, but it was a failure. Just five diamonds were recovered, and although KWG neglected to bother investors with the details, the diamonds are believed to have weighed about 0.08 carat, which implied a grade of just 0.004 carat per tonne.
One of the Ontario pipes that got a good look was the C-14 or Clifford pipe, near Kirkland Lake. An initial 15-tonne test had produced eight stones, including one that weighed 0.17 carat, and a few explorers decided to take a crack at a larger test. That group included Chuck Fipke's Dia Met Minerals for a time, but it was ultimately Regal Goldfields that completed the next sample, extracting 123 tonnes of C-14 kimberlite. The rock produced seven diamonds weighing a total of 0.544 carat, which indicated a grade of 0.004 carat per tonne. The largest stone weighed 0.204 carat. Regal Goldfields also obtained a similar grade from a 47-tonne sample taken from the Alfie Creek pipe, also to the northeast of Kirkland Lake.
All of those pipes are believed to have contained modest numbers of G-10 garnets, a mineral widely associated with diamondiferous pipes. Although the area around Kirkland Lake has produced comparatively few G-10 garnets, Sudbury Contact is believed to have had better success with its discoveries further to the south. About 8 per cent of the garnets from the company's 95-1 pipe were classified as G-10s, while approximately 16 per cent of the garnets at 95-2 were G-10s.
The latter figure is encouraging, although it pales in comparison with some other kimberlites. About 24 per cent of the garnets at the Diavik A-154 South pipe were G10s, and the pipe is certainly diamondiferous by any standard, with a grade of more than five carats per tonne. Twin Mining found that nearly 30 per cent of its garnets at Freightrain were G10s, although its grade is a far cry from the Diavik pipe. As well, Mano River reported that about three-quarters of its garnets at its K-003 kimberlite were G-10s, although the subsequent diamond counts were nothing to get excited about. Nevertheless, although G-10 garnets do not guarantee a diamondiferous pipe with promise, they certainly are a good first sign.
Word that Sudbury Contact was reviving its diamond play has likely had little to do with the recent share surge, but the move certainly did not slow the advance. The stock has posted gains in seven of the last nine trading days since the news, jumping from $2.30 to its $3.95 close on Memorial Day Monday.
(c) Copyright 2002 Canjex Publishing Ltd. http://www.stockwatch.com
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