Canada's Diamond Exploration Boom Continuing Apace
By Stephen Clayson
15 May 2005 at 09:37 AM EDT
LONDON (ResourceInvestor.com) -- Presently active in Canada is an impressive array of diamond prospectors, all hoping to find the country's next big mine and further its ascendancy as a hard rock diamond producer. A goodly number of these companies have been outlining their credentials to the financial community this week at the 2005 London Diamond Conference, making now an opportune time for a roundup of their stories.
Canada itself is now firmly ensconced in the leading rank of diamond producing nations, becoming the third largest producer by value on the back of the successful development of two world class mines; BHP Billiton's Ekati mine and Rio Tinto's Diavik. Indeed, Rio is accelerating the development of the Diavik mine, and along with its 40% partner Aber Diamond (TSX: ABZ-T), sees a great deal more potential in the project, though is typically cagey regarding exact details. Despite this, Rio says that it sees diamonds and specifically those from Canada as an increasingly important part of its business. Next for the Diavik mine is the $190m construction of a new open pit focused on the A418 kimberlite.
Interestingly and aside from its involvement in the Diavik mine, Aber is seeking to make the novel switch from diamond mining into retailing, after acquiring an $85m controlling state in the US based retailer Harry Winston.
Likely to soon join Canada's diamond initial producers is Tahera Diamond (TSX: TAH-T), whose Jericho mine is under construction and pegged for first commercial output in 2006. Tahera has secured its position in the market by forming an alliance with Tiffany & Co., which has agreed to purchase or market Jericho's entire output, as well as providing a C$35m loan facility to aid mine construction. Tahera also remains an active explorer with three areas of focus in Canada, including a joint venture with diamond leviathan De Beers.
In terms of highly exploration biased Canada diamond plays, there are several options. Diamondex Resources (TSX: DSP-V) boasts a team of Russian exploration geologists who have honed their skills uncovering Siberia's diamonds, and have now been brought to bear on Canada's deposits by Diamondex. The company has the endorsement of Barrick Gold as a stakeholder of close to 20%. Diamondex's two primary exploration properties are Lena West, which will undergo drill testing of its promising detected kimberlites this year, and King, which is postulated as an extension of De Beers' Snap Lake project.
Kensington Resources (TSX: KRT-V) is another junior engaged in a joint venture with De Beers, each holding 42.245% of the Fort à la Corne project in Saskatchewan's eponymous kimberlite field along with some more minor stakeholders. Drilling of 14 choice kimberlites this year is to be focused on moving the project, whose size is estimated at 350mt grading 10-20cpht, towards pre feasibility stage by 2008. The Fort à la Corne project's advantage is its location in relatively temperate and highly developed Saskatchewan, which could bode well for the feasibility of a comparatively low cost operation.
Also active in Saskatchewan's Fort à la Corne kimberlite field is Shore Gold (TSX: SGF-T), which recently received a substantial cash injection from Newmont, leaving the gold giant with just under 10% of the company. Newmont were seemingly taken with Shore's Star project, which is undoubtedly very promising geologically and also benefits from the amenities of Saskatchewan. A full resource calculation and pre feasibility study is underway for the Star project, but a preliminary estimate is a deposit of 240mt grading 16cpht.
Stornoway Diamond's (TSX: SWY-T) strength is in its diverse portfolio of joint ventured properties. Foremost among these are the BHP Billiton partnered Aviat and Churchill properties, drill testing of both of which will take place this year. Stornoway has also recently embarked on an early stage joint venture in Botswana with Motapa Diamonds (TSX: MTP-V), which is shortly to undertake an aerial geophysical survey of the project area in order to try and define drillable targets.
Spawned and 44% owned by Agnico-Eagle Mines, Contact Diamond (TSX: CO-T) is exposed to three prospective Canadian diamond provinces. The company's primary area of focus is its Timiskaming project area straddling the border between Ontario and Quebec, where drilling on new targets is to take place this year after a previous $4m programme successfully defined two significant kimberlites.
Majority owned by Rio Tinto is Ashton Mining (TSX: ACA-T), which is also exploring in three different areas of Canada. Most advanced is the company's Renard project in Quebec, at which a resource of 20mt has been defined at an average grade of 50cpht. To remedy the deposit's small size, the company is hoping to discover additional kimberlites that would improve the project's financials.
All in all, the 2005 Canadian diamond exploration season looks to be an exciting one in prospect, and could well see strong returns for investors in the right companies. Diamond exploration spending in Canada by majors and juniors alike continues to grow, with the latter applying the fervour that is their virtue and recruiting many of the sector's best personnel. However, the involvement of sizable gold producers Newmont and Barrick and of diversified majors Rio Tinto and BHP Billiton is both indicative and important to the realisation of the potential for further growth of diamond mining in the country, whichever of the vying companies it is ultimately derived from.
AI
