Patrician (consolidated) plans a busy Sahtu spring
2008-12-10 17:46 ET - Street Wire
by Will Purcell
The shares of Robin Dow's Patrician Diamonds Inc. are bumbling along as low as they can go, yet the company hopes to spend up to $1-million on its Sahtu gem play next spring. Most of Patrician's rivals are suffering from rigor mortis, but Mr. Dow says he will stick with gems and has the money to drill more targets. The company is going to be one of the first in what will soon be a flood of TSX-V rollbacks, consolidating its almost 68 million shares 1-for-10 to become Diamond Exploration Inc. At its current price of one-half cent, a 1-for-50 rollback might be more appropriate. Patrician will focus its 2009 effort on Sahtu play, just east of the Mackenzie River in the Northwest Territories.
The plan
Patrician spent $1.4-million on exploration this year, with nearly all of the money going to a drill program at Doctor Lake on the Sahtu project. Mr. Dow said getting the drill to the site and back racked up a big part of the cost. Patrician had been expecting the drill and associated equipment would weigh in at 17,000 pounds, but the final number was 22,000 kilograms. The net result of the optimistic number and incorrect unit of measure was a tripling of the transportation charge.
Mr. Dow will be counting his pennies more carefully next year. Patrician will wait until March to move the drill to the Doctor Lake site, anticipating the cold weather will hold for several weeks more. The company still has about six targets to test, and Patrician wants to poke another hole or two into the Hillside kimberlite that provided Mr. Dow with his first microdiamonds last year.
As a result, Mr. Dow is contemplating a drill program of between six and eight holes, which is likely to cost about $500,000, he said. Added to that total are the associated costs for the camp and transportation, which are likely to cost at least a few hundred thousand dollars more, even with a miserly approach.
Mr. Dow, who left a career as a stockbroker in Calgary during the mid-1980s to start promoting his own junior explorers, will have to wring some more cash out of his backers at some point next year. A new share sale is not urgent, as Patrician still has $500,000 in cash, more than the company's market value and enough to get a drill turning next spring ahead of any new share sale.
The shares of rival gem hunters that jumped the consolidation gun this fall took just a few weeks to slump back to their preconsolidation share price. Patrician is holding off on its reorganization until the start of 2009. That should prevent shareholders from wiping out the mathematical boost of the consolidation on its lowly shares in a final frenzy of tax loss selling.
The encouragement
Several diamond explorers have been working the area north of Norman Wells and east of the Mackenzie River, but kimberlites have been harder to find than diamonds. Patrician was the first explorer to drill into a pipe in the area, but its first small batches of rock proved barren.
Last year, Patrician drilled more holes into the pipe and sent 111.5 kilograms of rock off for processing. The material yielded six microdiamonds, but all were tiny. The market yawned, and Patrician's shares struggled to cling to their then seven-cent perch. Still, for Mr. Dow, the modest diamond parcel and Hillside's seven-hectare size are enough to warrant a few new holes next year.
There are several signs pointing to larger diamonds in the area. Diamondex Resources Ltd. spent well over $10-million working ground farther to the north. That company never found any pipes, but it recovered several macrodiamonds, including one that was at least three millimetres long. Other groups worked the area for years, including De Beers Canada Inc. They failed to hit kimberlite as well, but their preliminary work yielded abundant numbers of indicator grains.
Patrician closed down one-half cent to one-half cent Tuesday on 33,300 shares.
