News from diamondsville ...
Shore Gold Inc. caused a stir in the final hour of the annual geological show at the Delta Bessborough on Wednesday by showing off a parcel of its rough diamonds extracted during the past year through its bulk mining program in the Fort a la Corne forest.
The sparkle in the diamonds on display impressed local investors and brokers who have followed Shore, the Saskatoon company that now trades on the TSX big board.
The quality of the gems also caught the eye an experienced diamond geologist from rival Montreal company Forest Gate Resources, which has an exploration program in a much earlier stage of development underway in the forest about 70 kilometres east of Prince Albert.
Pieter duPlessis, a South African geologist and former De Beers employee, was impressed by what he saw displayed from Shore's bulk sample. He says he thinks the "speculative" carat value estimate of $125 US provided by Shore's head geologist is close to the mark.
George Read, the vice-president of exploration for Shore, who is also a South Africa-trained diamond geologist, told fellow geologists that based on $125 US a carat and a grade of just 15 carats per hundred tonnes, Shore's Star kimberlite formation could produce revenue of about $18 US a tonne. He says that revenue per tonne would be the same as or better than some of the large kimberlite formations in Africa and Australia.
He says it appears 75 per cent of the diamonds recovered are "white goods," which are gem-quality diamonds.
Canada's two operating diamond mines in the Slave Lake area of the Northwest Territories are much higher grade than Saskatchewan kimberlites, but Read points out that the costs to mine there are enormous.
Read says the next mine in the North -- the Jericho mine -- will see electricity costs alone of $7 a tonne because of the need to have diesel generators. He says the total operating cost per tonne of an open pit mine in Fort a la Corne, including the capital costs, would probably range from $6 to $8 a tonne.
Read told geologists that the percentage of white stones and large carat stones is quite high within the 20,734 diamonds recovered so far in the Shore bulk mining program.
DuPlessis, the Forest Gate geologist, agreed.
"The proportion of whites to stones with a lot of inclusions is excellent," he said.
"They are mostly whites and good quality stones. Compared to a lot of the diamonds that I've seen, the quality looks very good."
Inclusions are foreign material in the diamond that can make it look cloudy.
The Shore show-and-tell, held after Saskatchewan geologists finished their annual meeting Wednesday, proved interesting to Jim Murphy, a broker with RBC Dominion in Saskatoon.
Murphy was a mining employee with the former Uranerz uranium mining company that did kimberlite exploration in Fort a la Corne in the late 1980s and proved there were huge kimberlites in the forest. Cameco Corp., which took over Uranerz, still has a share in the Fort a la Corne joint venture operated by De Beers Canada, which is the neighbouring project to Shore's.
Murphy says many Saskatchewan clients of RBC are followers of the diamond play and have faith the forest will yield a working diamond mine in the future. Most of these investors stick with the company and aren't jumping in and out of the stock, he added.
Read says the company should be able to report its carat values in January, when an independent valuation of the approximate 2,500 carats worth of stones recovered is complete.
Geologists who gave a detailed presentation of how the Fort a la Corne kimberlites came to be point out that the sand cover over top of the formation is extremely fortunate in that it has prevented the kimberlites from being worn away.
Read says science now accepts that kimberlite itself was just a vehicle to transport the stones from the Earth's mantle and didn't create the stones. He says the Fort a la Corne diamonds are probably about 3.2 billion years old and they came to the surface with the kimberlite volcanic eruption about 100 million years ago.
The 250-hectare surface area of Shore's Star kimberlite is among the largest in the world and Read says the good news is that it appears about 80 per cent of the kimberlite is classified as coming from the early Joli Fou kimberlite formation.
"Most of the body is the material we would want to mine and even the lower grade material is probably economic through some form of ore blending," he said.
Geologists also heard from Andrew Williams of De Beers Canada who is project manager for the Fort a la Corne joint venture with Vancouver's Kensington Resources Ltd. That project's kimberlite 140/141 adjoins the Star kimberlite. Williams says nearly $8 million was spent on drilling out large diameter bulk and smaller core samples to find out where the richest spots are in the joint venture kimberlites.
He says the view of De Beers at the moment is that the grade within each of the kimberlites alone is not enough to develop a mineable resource, but that the high grade portions of two or three nearby kimberlites, taken together, could form a resource that would justify a mine.
© The StarPhoenix (Saskatoon) 2004
