Diamonds star of geology show
Murray Lyons
The StarPhoenix
Every year when the Saskatchewan Geological Survey open house takes place at the end of November, I make a mental note that I should enroll in a University of Saskatchewan entry-level geology class. Even so, just attending the geology open house over a number of years allows one to start to pick up the lingo.
For example, a basement formation is not a room in the house where the furnace is located. Finding fault is something that tort lawyers get excited about. So do geologists. You don't want to hear about anomalies when you're getting results from your doctor, but finding anomalies 200 metres below the surface is indeed what mining companies want to see from their expensive airborne electromagnetic surveys.
Wednesday's final open house session on Saskatchewan's kimberlites was popular with the geology professionals who fully understood what was being explained.
Looking at the computer modeling of the kimberlites that have been done during the past few months, an impressive picture is emerging of the shape and composition of these giant structures.
Geologists, geo-engineers and geo-chemists from government and industry are sharing what they know. Information gleaned from the multiple drill holes that Shore Gold Inc. and the Fort a la Corne joint venture are matched up with work done by the government geological survey, which has mapped the Fort a la Corne forest from planes with electromagnetic transmitters flying less than 100 metres above the spindly trees that qualify the region as a forest.
Fifteen years ago, the kimberlites in the forest were just a long-standing rumour.
U of S grad Brent Jellicoe, now head of exploration for Kensington Resources, which is the junior partner to De Beers in the joint venture, was part of the original Uranerz exploration team that did the drilling late in the 1980s that proved there were diamond-bearing kimberlites only 45 minutes east of Prince Albert.
Now, a whole group of young Saskatchewan-trained geologists have become enthralled with this industry, including Jellicoe's protege Kristin Marcia, who is on the Shore payroll.
George Read, the vice-president of exploration for Shore, brought the geologists in the room Wednesday back to the business side of diamond exploration when he pointed out investors are interested in diamonds and not kimberlites. How many stones? How big? How much are they worth? Investors are considerably less interested in how they roared out of the Earth's mantle in a volcanic eruption millions of years ago.
So it was smart public relations for Shore Gold to invite local investors to join the geologists Wednesday afternoon to get a good look at some samples of the diamonds brought up to surface from the multi-million-dollar bulk mining program which is now winding down.
Shore has demonstrated the wisdom of keeping its project 100 per cent Canadian-owned and funded.
However, a critical time is coming early in 2005 when Shore will report the carat value from an independent valuation of its stones.
And while mining stocks are still a highly speculative venture where hope sometimes leads to hyperbole, geologists still value their credibility.
Thus, it took a bit of courage Wednesday to make a comparison of the low-grade Star kimberlite to the high-grade, highly profitable Diavik deposit in the Northwest Territories. But Read says there is a similarity. In the Star kimberlite, despite the low grade, a healthy percentage of the 20,000-plus stones recovered so far are large.
"In the Diavik mine, 70 per cent of the value of the mine comes from the top 15 per cent of the size distribution curve. The presence of large diamonds is very much in our favour," Read said.
"The other important factor is that there is a high proportion of white goods and we can equate that with gem-quality diamonds. These two factors will play a pivotal role in raising the average value per carat of the diamonds from Star."
Should Read's bold predictions of an average carat value of $125 US and ore as valuable as $18 US a tonne be verified, the next stage of the Fort a la Corne story might be triggered.
It could be that De Beers or another big mining company that wants to become the global rival to De Beers might decide the Star kimberlite is an asset that must be bought. A takeover bid could thus be the end game and ultimate reward for loyal Shore investors.
Or it could be that Shore, with its war chest of money, continues to forge its own fate, finding its own marketing partners, and continuing to raise money on the stock market to provide the capital it needs to make a working mine.
It is quite possible in years to come that 2004 may be viewed as the pivotal year in the development of what could be Saskatchewan's third-largest mining sector with all its attendant spinoff jobs.
And it has all happened because a small company in Saskatoon proved through its high-stakes bulk mining program that there really was something in the ground.
