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THIS JUST IN REGARDING KENSINGTON..
2004-03-24 12:20 ET - Street Wire
by Will Purcell
David Stone's Fort a la Corne diamond hunter, Kensington Resources, has come up with another batch of diamonds. The latest stones came from the caustic dissolution of nearly 600 kilograms of core samples drilled up from another of its priority pipes in central Saskatchewan, No. 141/140. The No. 141/140 complex has been the top target in recent years, and about 2.4 tonnes of material has already been processed in a series of mini-bulk tests. Nevertheless, the latest tiny batches provide additional signs that there is a higher-grade zone within the mammoth pipe, and the numbers should help point the way to the best section for the next series of tests. As well, the result offers new encouragement for No. 148.
Kensington and its Fort a la Corne partners recovered 1,159 diamonds from 595 kilograms of core samples from the south-central portion of No. 141/140, for an indicated rate of about 1,950 stones per tonne, which is significantly better than what the partners had come up with a year earlier.
The numbers in the detailed results continue to point toward a richer zone within the pipe. About 140 kilograms of the kimberlite had come from the material classified as repeated graded beds, and the rock produced 323 diamonds, or nearly 2,300 stones per tonne. A further 275 kilograms of rock had been drilled up from the breccia beds, and the material yielded 593 diamonds, or about 2,160 stones per tonne.
Two other types of kimberlite produced markedly fewer diamonds. Nearly 110 kilograms of kimberlite from the speckled beds contained 134 diamonds, for a rate that was just a bit better than 1,200 stones per tonne, while a 68-kilogram lot of rock from other units of kimberlite produced 109 diamonds, or about 1,600 stones per tonne.
All that would suggest that it is the repeated graded beds and the breccia beds that hold the greatest diamond potential and a closer look at the numbers provides further encouragement. About 417 kilograms of rock from the two phases of kimberlite yielded 431 diamonds larger than a 0.106-millimetre sieve, which is the minimum cutoff used by many labs.
Even with that larger cutoff, there were still a bit better than 1,000 diamonds per tonne in the two top kimberlite units. That is a toutable haul, as a number of effective promotions have been sustained recently, based on numbers roughly comparable to that figure.
For instance, the Aviat play in Nunavut continues to be a market favourite, with an absolute number of diamonds that is only marginally higher than what came from the No. 141/140 complex. Stornoway Diamond has processed about 1.67 tonnes of material from the AV-1 body, coming up with 2,350 diamonds larger than a 0.106-millimetre sieve, or about 1,400 stones per tonne. The Aviat play was the key factor in carrying Stornoway's stock from pennies in 2001, to a peak of $2.99 earlier this year.
Diamonds North has had nearly as much luck touting diamond hauls from a number of Victoria Island kimberlites, despite the fact that some of its numbers are lower than what Kensington and De Beers have come up with at No. 141/140. At this stage, the best result from a larger sample on Victoria Island has come from the Sculptor kimberlite, where 978 diamonds from 723 kilograms of kimberlite suggest a rate of about 1,350 stones per tonne, just marginally better than the No. 141/140 sample.
It is the size distribution of the diamond parcels, not the absolute numbers of diamonds recovered, that matters most, and the No. 141/140 results fall far short of the recoveries in many of those more northerly kimberlites. Only 19 of the diamonds in the two richest kimberlite units were large enough to be recovered by a 0.30-millimetre screen, and that worked out to a mere 4.4 per cent of the parcel of diamonds retained by a 0.106-millimetre screen. Just seven diamonds were recovered by a 0.425-millimetre mesh, or 1.6 per cent of the parcel.
Meanwhile, nearly 26 per cent of the AV-1 diamonds were large enough to be retained by a 0.30-millimetre screen, and just over 13 per cent of the stones had been recovered by a 0.425-millimetre mesh.
Those rates were hardly unusual. About 23 per cent of the diamonds in the parcel from the Sculptor kimberlite had been retained by a 0.30-millimetre mesh, and about 12 per cent of the diamonds were larger than the 0.425-millimetre sieve.
Nevertheless, the No. 141/140 sample did manage to deliver something that AV-1 and Sculptor did not. The largest diamond in the latest samples weighed an impressive 0.77 carat and measured 5.5 millimetres long and over four millimetres in its two remaining dimensions. Six of the Sculptor diamonds were longer than two millimetres, but they fell well short of the size of Kensington's stone, and although the largest AV-1 diamond was four millimetres long, it was only 3.5 millimetres long and 1.8 millimetres deep.
Meanwhile, the size distribution of the remaining kimberlite types at No. 141/140 was significantly poorer than in the two richer zones. Of the 119 diamonds larger than a 0.106-millimetre cutoff, only four were retained by a 0.30-millimetre mesh, or about 3.4 per cent, and none of the diamonds had been recovered by a 0.425-millimetre screen.
The latest numbers would appear to confirm the results of the mini-bulk sampling over the past few years, as well as the latest modelling effort completed by De Beers. The best of the sample grades came from the kimberlite breccia, where a diamond content of nearly 0.19 carat per tonne had been obtained, although De Beers subsequently produced a somewhat more modest estimate of 0.15 carat per tonne for the material in the breccia beds.
Nevertheless, the breccia was still the best of the various kimberlite types, with a diamond value modelled at nearly $100 (U.S.) per carat, the rock was estimated to have a gross value of nearly $15 (U.S.) per tonne. De Beers had come up with a grade forecast of 0.12 carat per tonne for the coarse material in the graded beds, with lower values for the remaining material in the repeated graded beds.
The latest microdiamond recoveries will provide additional information that will help De Beers and its partners refine their model for the complex No. 141/140 kimberlite, as well as help with the selection of the best areas to continue their exploration efforts.
As well, the No. 141/140 data provide an intriguing comparison with the results from No. 148 that had been received about a month ago. Like No. 141/140, the No. 148 body is quite complex, with several kimberlite types having a potentially distinct diamond content.
Just over 510 kilograms of material from the two richest phases at No. 148 had produced 1,691 diamonds, and 959 of them, or about 1,875 stones per tonne, had been large enough to be retained by a 0.106-millimetre screen. That was significantly better than what the best phases at No. 141/140 had produced, and the No. 148 parcel seemed to have a slightly better size distribution curve as well. There were 49 diamonds larger than a 0.30-millimetre screen, or about 5.1 per cent of the parcel, and 13 diamonds, or about 1.4 per cent, were large enough to be retained by a 0.425-millimetre mesh.
A negative spin on the latest numbers might suggest that the recoveries from the better kimberlite types at No. 141/140 were poorer than the results from No. 148, but that would mean little, due to the fact that No. 141/140 has already been extensively tested with mini-bulk samples, and there should be no unexpectedly unpleasant surprises about the diamond content at this stage.
On the other hand, the No. 148 body has seen very limited mini-bulk testing at best, and that would make a positive spin on its apparently healthier microdiamond recoveries seem more realistic. As a result, No. 148 could be a candidate for mini-bulk testing at some point in the future, despite the fact that a 121-tonne test of the body in 1993 had produced just 2.37 carats. That resulted in a sample grade of a minuscule 0.02 carat per tonne, although De Beers was much rosier with its forecast, coming up with a 0.10-carat-per-tonne prediction.
Kensington and its partners are still waiting for diamond counts from two additional kimberlites. The No. 122 and No. 150 bodies were also drilled last year, and the numbers could shed additional light on possible higher-grade regions within those bodies as well.
The latest numbers provide additional grist for Mr. Stone's promotional mill and offer new hope for a play that seemed on its last legs in the late 1990s. The Victoria-based Mr. Stone has doggedly touted the flagging Fort a la Corne project since he took over as president in the summer of 1997, and Kensington's promotion has succeeded in attracting a new crop of speculators in recent years. De Beers also showed new interest in the play in 2000, commencing a series of new tests on the priority pipes, and that has added to the promotability of the play.
Although it likely will be quite some time before Kensington and its partners take another larger test of their top kimberlites, the Fort a la Corne play would get a big boost in the next few months, if Shore Gold can meet its recovery targets at the big Star pipe. Shore initially hoped for about 3,000 carats from a 25,000-tonne test, but the company's exploration head has recently suggested that as much as 5,000 carats might be recovered. If Shore can come up with a grade close to 0.20 carat per tonne, it would add to the promotability of the entire district.
Mr. Stone has been an effective promoter in recent years. Kensington's shares peaked at $2.36 in the spring of 2002, helped by a favourable set of predictions from De Beers. Although the stock dipped back to less than 70 cents a year later, Kensington's story sparked a new wave of interest that carried the company's shares to $1.70 last June. Kensington dipped back to just 83 cents early this year, but Mr. Stone's promotion is rolling once again, as the stock briefly topped the $1.50 mark last month.
Kensington added two cents on Tuesday, closing at $1.25.
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