Diamond play leaves Alberta in the rough as NWT shines.
Maturing investors won't buy kimberlite
David Jordan
Business in Vancouver June22-28, 1999
As the Alberta diamond play turns to dust, a mature industry is growing around a handful of Vancouver junior mining companies now developing sites in the Northwest Territories.
A year ago, all it took was a press release announcing the discovery of a kimberlite pipe to incite an investor frenzy on the Vancouver and Toronto stock exchanges. Today, savvy investors want to know more about the quantity and quality of diamonds found in the pipe.
The result is a shake-out in the junior mining patch that has left just a handful of rapidly maturing diamond exploration companies.
" Over the years this has become a much more mature business because people have learned so much," said Canaccord mining analyst David James. "The crazy little guys have departed for Voisey's Bay and then Indonesia and then turned to dust."
The shake-out has left the Alberta diamond play all but dead, while investment dollars pour into companies developing properties in the Northwest Territories.
The biggest loser in the investor flight to quality is Ashton Mining, which hitched its fortunes to Alberta's Buffalo Hills area. Ashton was riding high last year following a string of reported kimberlite discoveries. But as more discerning investors looked for favourable evaluations from Antwerp diamond appraisers, Ashton quickly lost its shine. News of yet another disappointing evaluation last November sent the stock plummeting to the $1 range, after it had trading between $3 and $6 for most of 1998.
Juniors following Ashton to the bottom of the charts include Everst Mines and Minerals, Lucero Resource Corp., Mount Hope Resources, Primero Industries, Pure Gold Minerals and Trymin Resources. All are trading at or near 52-week lows.
Senior companies with proven diamond properties have given the NWT diamond play worldwide credibility, and juniorswith promising bulk samples still offer plenty of opportunities for investors with a higher tolerance risk.
Kelowna-based Dia Met Minerals and partner BHP Diamonds of Australia brought international attention to Canada's North with the opening of the Ekati mine last October. Ekati's production has exceeded expectations and high prices commanded in world auctions have dispelled fears that overproduction could lead to a slump in world diamond markets.
There's still plenty of upside potential for investors in Dia Met, according to Yorkton Securities analyst Art Ettlinger, but it's the juniors offering much higher risk/reward ratios that have lit up the trading board. Leading those is Vancouver's Winspear Resources.
" As far as specualtion goes, thank God for Winspear, because along with Ekati, that has brought by far the most attention to the Canadian diamond industry," said Ettlinger...
djordan@biv.com
The article continues on about Winspear so I will end it here. |
