Metalex Ventures (MTX-V) spent nearly $2-million on exploration in fiscal 2022, which ended April 30, including over $230,000 on its U2 kimberlite project at Kyle Lake in Northern Ontario. At least that is what its financials say -- the company has also been saying for years that it "does not plan to undertake further work on this project" until it reaches an agreement with the local First Nations.
In fact, this year's expenses look much like last year's outlays, with much of the expenses charged to "shipping, freight and storage." Given the inaction, storage appears the most likely option. Metalex has been racking up comparable expenses year after year just to keep Kyle Lake ensconced in mothballs, but Mr. Fipke and his crew remain unwilling to write off the project, on which the company has now spent over $47-million in the past 20 years.
The project could have turned out differently had the Ontario government not dithered it to death a decade ago, refusing to grant drilling and exploration permits for a 10,000-tonne bulk sample that Metalex believed would prove or kill its big U2 kimberlite as the next Victor diamond mine. The bureaucrats insisted that Metalex negotiate deals with the locals -- and the locals were as intransigent in dealing with Metalex as they were with their relations with De Beers at Victor.
The Ontario government eventually relented, granting Metalex its required permits in 2015, about four years after the company first planned its big bulk sample, but by then its major benefactor had walked away. In 2011, Ned Goodman's Dundee Corp. (DC.A-T) agreed to acquire a 51-per-cent interest in the U2 and T1 kimberlites at Kyle in exchange for a four-stage investment of up to $51-million. In the summer of 2014, Dundee quit the deal, citing the delay in getting permits and exploration deals with the Attawapiskat and Marten Falls First Nations.
Now, while Mr. Fipke, Metalex's chairman, and Mr. Ulansky, its president and chief executive officer, have waited fruitlessly for over a decade for a deal with the locals, but that is now the least of their troubles. As with most diamond exploration projects these days, exploration cash is as rare as diamonds. Metalex says that "preliminary discussions with interested parties have been undertaken" to find a new backer, but if Metalex has the same experiences as its peers, the only thing shorter than the length of those preliminary discussions is the length of the list of interested parties.
A few years have now passed since De Beers Canada shuttered Victor, a move that made future mine development in the area far more challenging, without a winter road and infrastructure base to support satellite exploration projects. Nevertheless, the U2 pipe remains an intriguing story more than a decade since it was last mini-bulk tested by Metalex.
At first glance, the old mini-bulk test of U2 offered little promise. It took over 400 tonnes of kimberlite to produce roughly 27 carats of diamonds larger than a 0.85-millimetre sieve, a diamond content of less than seven carats per hundred tonnes. Larger tests typically yield better grades, but even Metalex appeared to set its threshold at a lowly 10 carats per hundred tonnes, suggesting its proposed 10,000-tonne bulk sample was seeking about 1,000 carats of diamonds.
U2 could have a hefty diamond value, however, as the modest first haul included a 2.61-carat gem and another diamond that weighed 1.25 carats. Two other gems weighed 0.73 carat each, showing U2 has a coarse diamond distribution profile. Further, most of the diamonds were white and the parcel contained a promising proportion of gem-quality stones. And so, without a large test, the U2 story remains incomplete.
by Will Purcell |
