Hudson's Greenland play inches forward
2005-07-13 15:08 by Will Purcell
Jamie Tuer's Hudson Resources Inc. now has the diamond counts from drill hits on a series of kimberlite dikes near Garnet Lake in Greenland. The tallies offer a mixed message that did nothing to stop Hudson's slipping share price. The company wowed speculators last fall with diamond counts that were far better than all earlier Greenland efforts. The first Garnet diamonds came from kimberlite float that Hudson found while prospecting on its large property and the company spent the spring looking for a bedrock source for the rock. The drill program did deliver some encouraging hits, but Hudson will have to produce some big intersections to generate more excitement.
The counts
Hudson processed about 40 kilograms of kimberlite, from three of its Garnet Lake drill holes. The rock contained 23 diamonds larger than a 0.106-millimetre sieve, which works out to just under 600 stones per tonne. There were no large macrodiamonds in the latest samples and just one of the stones clung to a 0.425-millimetre screen.
That was barely 4 per cent of the haul, but such a tiny sample has a large margin for error. Six of the stones sat on a 0.30-millimetre mesh, or about 26 per cent of the parcel. That more promotable proportion is likely more representative of the diamond size distribution.
Late last summer, Hudson recovered 120 diamonds larger than a 0.106-millimetre sieve when it processed 108 kilograms of float. That worked out to a more promotable 1,100 stones per tonne, roughly double what the drill core samples delivered. The larger samples of float contained some larger diamonds and the finds got the market's speculative sap flowing.
Four of the diamonds remained on a 0.85-millimetre sieve, and that haul weighed 0.073 carat, pointing to a diamond content of roughly three-quarters of a carat per tonne. Grade calculations based on tiny samples is usually misleading, but there was nothing in Hudson's recoveries to suggest a lucky find was skewing its results.
There were 26 diamonds large enough to sit on a 0.30-millimetre screen, which worked out to about 22 per cent of the haul. As well, the 16 stones that Hudson picked off a 0.425-millimetre mesh amounted to a healthy 13 per cent of the company's diamond parcel. At this stage, there is nothing in the new numbers to suggest the size distribution is materially different from what Hudson recovered from its drill core samples.
That leaves the matter of the lower stone counts, but Hudson has an answer for that concern. Two of the three core samples, which weighed about 14 kilograms each, came from narrow kimberlite intersections unrelated to the main Garnet Lake body. As a result, Hudson thinks the two samples were diluted.
The third sample was the only hole that tested just the main kimberlite body. About 11 kilograms of kimberlite produced 13 diamonds larger than a 0.106-millimetre sieve, and that worked out to a rate of nearly 1,200 stones per tonne. That was comparable with what Hudson found in its float last year. As well, five of the six largest diamonds came from that third batch of core.
The spin
With hints of promotional sparkle in its drill core, Hudson launched a few new promotional salvos. Mr. Tuer described the latest result as "highly significant," adding that it established that the Garnet Lake site hosts its own diamondiferous kimberlite body. "This is a very important result for our company."
The diamond counts from the core samples do support the earlier encouragement. Further, they prove that Garnet Lake is home to a significantly diamondiferous kimberlite body. Unfortunately, the tallies say nothing about the potential size of any such kimberlite body, and that remains a continued source of concern for investors.
Hudson's head of exploration, Dr. Mark Hutchison, had some words of enthusiasm to address those concerns. He stated that the company proved wrong the argument that the float could have come from a kimberlite long since scraped away by glaciers. As support, he cited the diamond counts and promising geochemistry recovered from an area 150 metres long and 100 metres wide.
Hudson's drill program did produce drill hits over that area and the dikes remain open in all directions. Still, if most of Hudson's enthusiasm stems from just one of its samples, the company still has a long way to go to show that it has a significantly diamondiferous kimberlite body with promotable dimensions. Speculators were clearly hoping for a lengthy drill hit into a big Greenland pipe and they judged the results of the spring drill program to be disappointing.
Nevertheless, Dr. Hutchison believes that the Garnet Lake kimberlite could be significantly more extensive than Hudson's limited drill program shows. Still, proving a dike has promotable dimensions will take a major drill effort, and that will take tome and money. Time is short in the harsh Greenland climate, and Hudson usually has a similarly short supply of exploration dollars.
The track record
Hudson's Garnet Lake results remain encouraging, despite the lack of a lengthy drill hit. Still, the company's shares recently dipped below the 40-cent mark, the level from which Mr. Tuer launched his company's Sarfartoq promotion last September. The stock jumped to $1.10 in an early burst of enthusiasm, then traded in a range near 60 cents for much of the fall and winter.
Hudson got its start in 2000, when Mr. Tuer created a cash shell seemingly intended to capitalize on the high-tech frenzy. The company started out as eVoluton networking corp., but it had a slightly better handle on the rules of capitalization when it began trading the following year as Tekwerks Solutions Inc. Mr. Tuer had a background in computer software and technology, but he reconsidered a high-tech move for Tekwerks amid the market meltdown.
The company used the Greenland diamond project as its major transaction in 2002, but the play proved a tough tout at first. A share cost less than a nickel late in 2002, but the company made the transition to Hudson without benefit of a share rollback. It took over a year for speculators to nibble at Mr. Tuer's story, but Hudson did manage to spark some interest in the Greenland hunt early in 2004 with some promotable geochemistry.
Mr. Tuer took another cash shell the other way. True Exploration Corp. became Compusoft (Canada) Inc. late in 1998, getting a jump on the high-tech frenzy. The company's shares ran from pennies to a $4.25 crest in the spring of 2000, but the wheels fell off the company's bandwagon after the market crash. Another name change did not help and a share cost just a nickel by early in 2002, when the story collapsed for good.
Mr. Tuer was also briefly involved on an earlier Greenland gem hunt. He provided Citation Resources Inc. with management help, when a current Hudson director, Dr. John Ferguson, was running things. As well, Mr. Tuer was a director of the company during the latter half of 2002, just as it was consolidating itself into Macarthur Diamonds Ltd. through a 2-for-5 rollback. Dr. Ferguson left Macarthur earlier this year, but the company could use another management assist. It recently became Macarthur Minerals Ltd. after another 1-for-10 consolidation and last traded for just 15 cents.
The Spider site
Mr. Tuer and Hudson mustered less enthusiasm for the diamond counts from two core samples drilled up at its Spider Lake site. Both batches of rock proved diamondiferous, although just barely. One sample weighed 14.85 kilograms and the rock delivered just one tiny microdiamond. That minuscule stone failed to cling to even a 0.106-millimetre mesh.
The second batch contained two slightly larger diamonds, but it took 26.8 kilograms of kimberlite to double the other Spider test. Both stones clung to a 0.106-millimetre sieve, but the largest stone fell through anything larger than the 0.15-millimetre screen. In all, Hudson recovered two diamonds larger than a 0.106-millimetre cut-off from nearly 42 kilograms of rock. That works out to about 50 stones per tonne, with no hint of a hopeful size distribution curve.
The dismal counts added to the Spider disappointment. Hudson had reasonable expectations going into its spring drill program, because of a large electromagnetic anomaly within Spider Lake. Still, Mr. Tuer found something to cheer about in the result. Each of the three holes that tested the anomaly hit roughly 30 separate kimberlite occurrences that appear to be narrow sills averaging about 0.24 metre thick. That works out to about seven metres of kimberlite, spread over a zone roughly 70 metres thick. Hudson also hit kimberlite in its holes on the shore of Spider Lake. The largest hit was 3.7 metres across, compared with 1.7 metres for the longest hit within the lake.
Kimberlite rocks at Spider Lake provided Mr. Tuer with his first hint of Greenland sparkle. In the fall of 2003, the company processed 56.65 kilograms of kimberlite bits and the material produced 20 diamonds. That worked out to 350 stones per tonne, well above what the drill core samples produced. There was little joy in the size distribution, as just one of the stones sat on a 0.30-millimetre mesh.
Hudson still has time to get more work done, and at last report it had $1.7-million in working capital, although that was before the big spring drill program. The company plans to scout along a five-kilometre swath with promising chemistry near Garnet Lake, seeking kimberlite outcrops that would provide much larger samples. Healthy counts and larger diamonds from such a test could attract new interest in Mr. Tuer's project.
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