Yes, we are in diamond territory too! Have not given up on the lithium either. Drilling needed.
Canadian diamond mine team hit ‘home run’ at Quebec site: CEO
November 22, 2010, 9:16 AM
By Bill Mann
Diamonds may be a girl’s best friend, but gold has been some investors’ love interest in recent years.
But a dwindling world supply has diamonds becoming a good friend to investors. Resource-rich Canada, many will be surprised to learn, is now the world’s third-largest producer of diamonds, behind Russia and Botswana.
Could the much-coveted sparklers take some of the lustre off gold and literally become the next “Dow diamonds”? Diamond-price indexes have climbed steadily in recent years.
The first diamond mine in Quebec is coming closer to reality, says the enthused CEO of Vancouver-based Stornoway Diamond Corp.
The company’s share price (CA:SWY) has doubled in the past year, to 56 cents a share, as the mining outfit gets closer to production. According to the Toronto Star, the company had quite a bit of success “digging up bling” in Canada’s Northwest Territories in the 1990's, and is now partnered with the Quebec government in developing its next big project, the Renard diamond site in north-central Quebec. (There are also diamond mines in Ontario).
Actual diamond production is slated for as early as 2013, says Stornoway’s Scottish-born geologist/CEO, Matt Manson. The long-awaited, $510 million capital project keeps looking more and more promising as exploratory shafts are drilled and the size of the strike grows. At first, Manson told the Star, it looked as if the Quebec site had only a seven-year supply of diamonds. But the more the company dug looking for rough diamonds, the more an unusual phenomenon began to become evident to those at the surface.
Manson:
“During 2009, we discovered that one of our main ore bodies at Renard was actually four times bigger than we had previously thought. Kimberlites, which are the bodies that host diamonds, are supposed to be carrot-shaped, fat at the top and skinny at the bottom.
“Turns out, one of these ore bodies at Renard is upside down. And as we were drilling deeper we were getting all this extra tonnage, so by the end of the year we had tripled the size of the resource on the project.”
In other words, the upside-down carrot can produce far more carats than originally believed.
The company had to do a hostile takeover in 2006 to acquire the Renard property. At first, it didn’t look like a sparkling acquisition, Manson told the Star, Canada’s largest daily newspaper:
“We spent the first two years getting the project up to having the first formal resource calculation and first formal statement of economics. In December 2008, we put out the first study and it wasn’t setting the world on fire. Back then, it was only a seven-year mine life with pretty marginal economics. And this was in the middle of the credit crisis. So our stock hit 5.5 cents at the bottom after we had acquired it with all this fanfare two years before.”
“The conventional wisdom back then was to pack it up, conserve your cash. Luckily, the only kind of venture capital that was available to us in 2008 was Quebec super flow-through (a government program that provides tax incentives for grassroots exploration). Those funds were available to companies drilling from surface in Quebec. So here we had this asset that we could drill to make bigger, and we had a complete home run.”
So why couldn’t the company figure out how big the diamond deposit was the first time around?
“We just hadn’t drilled enough and didn’t have a good idea of the size of the ore bodies,” says Manson.
Diamonds are revered both inside and outside the mining industry, and Manson says they’re becoming scarcer these days — “we’re running out of them,” he told the Star, adding:
“If you look at all the mineable reserves of diamonds anywhere in the world, there’s only thought to be 12 to 13 years of supply left. So the hunt is always on. They don’t come along very often. In the exploration business, it’s probably the hardest commodity to find.”
When asked if his company will operate the mine once it’s in production or sell it off to the big players, he says, “We want to — and expect to — be the operators.
“We’re all in our late 30's or 40's. We’ve all worked for other mining companies, so this is our company-building exercise.”
Because this is a Canadian-mining operation, there’s no blood-diamond political downside here, either. Last summer, the company also signed an agreement with the local Cree indians to provide employment and business opportunities at the Renard site.
“We want to be in construction in 2012 and through 2013 in support of a production schedule beginning at the end of ’13 and beginning of 2014,” says Manson. “We’re contemplating a mine plan that has both open pit to start and then quite quickly we go underground with a shaft, and most of that 25 years will be underground.”
A Montreal Gazette story says the company expects to extract 30 million carats from the mine. That’s a whole lot of “bling.”
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