CMKM Diamonds Inc. (fka CMKX)

[Ignutz]

Minews Story
Date: October 04, 2004

Shore Gold Moves Ahead of Kensington Resources In The Saskatchewan Diamond Stakes.

Minews has long considered the chances of the two main operators in Saskatchewan having economic diamond mines to be high. The Star kimberlite project owned by Shore Gold is huge and the cluster of pipes at Fort a La Corne, where Kensington Resources is in joint venture with De Beers and Cameco, is also big on a world scale and both are diamondiferous. This takes them a long way down the road, but for many years it has been thought that the diamonds would prove to be too small. The bulk sampling in progress at Star is starting to disprove this and, of course, the economics of working in Saskatchewan close to infra-structure and in relatively mild weather makes a huge impact on costs when compared with Nunavut and the Northwest Territory.

In the last year new CEOs with Scottish heritage have taken over at both Kensington and Shore Gold and there is an interesting difference between the two. Robert McCallum at Kensington was introduced to Minews as being the right man to stand up to De Beers which has long given its junior partner a difficult time. This has been faithfully chronicled on these pages, but now McCallum has cut off all contact which looks as if he may be acting on orders. He seems disinterested in promoting the company outside the confines of Canada which seems a little odd as one of the major problems faced by both companies in recent years has been to maintain investor interest during a long drawn out programme of exploration.

A look at the graph of the share price of Kensington shows that its price is around where it was last March with a dip in between. Shore Gold, however, is powering ahead under the guidance of Mr Kenneth MacNeill as it should be with several bits of good news under its belt recently and a strong market in rough diamonds. The company is currently engaged on a 25,000 tonne bulk sample in order to recover a parcel of 3,000 carats to determine the value per carat of run-of mine ore. For most of last year a 14.5 metre diameter exploration shaft was being sunk down to a depth of 250 metres. The sinking of the shaft alone produced around 5,000 tonnes of ore and lateral drifting at various levels will provide the rest. A 10 tone/hour modular Dense Media Separation plant is processing the kimberlite ore concentrate is being forwarded to SGS Lakefield Research for final diamond picking. After this the stones will be subject to independent valuation.

In July Shore Gold recovered a 19.7 carat diamond, which tends to disprove the theory of small stones and the latest results are equally encouraging. At just over the half way stage 1,589.7 carats have been recovered from 13,129 dry tonnes processed. The rate of recovery will therefore have to improve slightly to achieve the bulk sampling target, but the three largest stones in the latest 196 carat parcel were 12.84 carats, 8.33 carats and 4.05 carats to give an average grade of 19.58 carats/100 tonnes. As the company points out , large diamonds are being found throughout the underground development and are more prevalent in the Early Joli Fou equivalent kimberlite than the last Joli Fou.

It ain’t over until the fat lady sings, but Beny Steinmetz clearly thinks she is coming out of her dressing room and Beny knows quite a lot about diamonds.. He is already a shareholder through Magma Diamond Resources which is part of Steinmetz Diamond Group. This company is one of the world’s largest integrated diamond marketing and trading companies with offices in Antwerp, Tel Aviv, Mumbai, Johannesburg, New York and Chicago. Shore Gold has just raised C$27.5 million by a private placement and Steinmetz chipped in C$2.64 million to maintain Magma’s 9.4 per cent holding. This is hardly the action of a man who is pessimistic about the results from the bulk sampling programme. He may be in international investor with extensive holdings in natural resources, engineering and real estate as well as diamonds, but every dollar counts. Shore Gold, of course, has the advantage over Kensington that it owns the Star diamond project 100 per cent and it cleared out its gold assets in the summer to simplify the corporate structure. One to watch.

http://www.minesite.com/storyFull.php?storySeq=128