Diamond prospects shine
Kensington stock value leaps on promising report from Fort a la Corne
Murray Lyons
Saskatoon StarPhoenix
ADVERTISEMENT
Investors appear to be betting heavily on more positive news coming out of De Beers this spring on the diamond potential of the Fort a la Corne kimberlites.
The stock price in De Beers junior partner at Fort a la Corne, Vancouver-based Kensington Resources Ltd., has been pushed almost 50 per cent higher in the past week, thanks partially to the impending release by De Beers of the results from the 2001 drill program.
Mining analyst John Kaiser helped fuel a run-up in the price of Kensington stock Monday with a positive report which predicted Fort a la Corne could quickly become a $2 billion mining project if De Beers continues to model carat and ore values in the project as it did last year.
De Beers and Kensington both have a 42.5 per cent working interest in the mine with Cameco Corp. of Saskatoon, staying on board with a 5.5 per cent interest.
By mid-day more than 910,000 Kensington shares had traded on the Canadian Venture Exchange with the price bouncing as high as $1.70 before settling down into the $1.47 range. Kensington was the second most actively traded stock Monday on the CDNX.
The buzz about Kensington also helped push up the share price of Saskatoon's Shore Gold Inc. which rose six cents to 76 cents on fairly brisk volume of 140,000 shares. Shore owns an adjacent property it calls the Star Kimberlite.
The huge kimberlite bodies in question are located about 100 metres under the sandy-soiled Fort a la Corne provincial forest, about 60 kilometres east of Prince Albert.
Kaiser released an 11-page speculative report Friday on the Fort a la Corne project where he predicted Kensington will emerge as "the new star of the Canadian diamond industry" and institutional investors will want to become involved. He predicted the stock could reach the $3 to $5 range in the next six weeks.
Kaiser says De Beers' internal expert on diamond mine modeling, Johan Ferreira, appears to be extremely confident in the figures he produced after the 2000 drill program.
Those figures resulted in a model that showed Fort a la Corne could have mine revenues of about $28 US a tonne. He also predicted the grade would be in the low mid-range at about $153 per carat US.
Kaiser says that using the type of strip mining pioneered in the Alberta tar sands, a Fort a la Corne mine could have an operating cost that would be half of the revenue per tonne which would produce high cash flows for each tonne of kimberlite mined.
Kaiser says the value of just one kimberlite on the Fort a la Corne property, known as 141, could be $12 billion which would make it worth double the current value of the Diavik diamond property in the NorthWest Territories.
Kensington president David Stone says national and international media organizations are now paying attention to Fort a la Corne, based on interviews done in Toronto at the recent prospectors show.
"We were talked about a lot at the conference," Stone said.
The Kensington president says the speculation made by Kaiser that Kensington could become a takeover target is also within the realm of possibility.
Because they are partners, De Beers cannot initiate a hostile takeover of Kensington, but it could jump in if another company made a move on the stock, Kaiser reports.
The mining analyst speculated Kensington might work with Cameco to help push a mine along.
"Cameco has clout in Saskatchewan," Kaiser observed. "There is nothing to prevent a deal whereby Kensington acquires Cameco's diamond division for stock, making Cameco the largest minority shareholder in Kensington."
Stone says De Beers is the only diamond company capable of putting out statistical models where it can predict the number of gem-sized diamonds by the presence of micro-diamonds in a sample and De Beers seems confident in Ferreira's model.
"When he's plotted all his microdiamonds, he can tell you what the macro-diamond grade will be," Stone said. |
