Hello Goalie, Gemseacher, et all.
I am not sure about you, but I thought SUF was doing precisely what they always said they were going to do in every AR I have read in the past eight years, explore, put discoveries into production and make SUF one of the largest and most successful diamond and platinum miners in the world. I do not see any confused mandate or game plan. You may quarrel with the amount spent here and there, or a priority, and pine over being screwed over on Marsfontein, but the only surprise management sprung on me which I did not see coming was Messina, and that does not send me into fits of hand ringing.
Yes I would like to have seen less spent in Angola and more spent on Yamba, but that really is not the problem. Resource stocks are all in the tubes, SUF is not alone yet our balance sheet out shines most. All will come around with exploration success and that is where our bread is buttered.
So on that note...
Regarding blue sky and what will excite the market in the new year, it is perhaps time to start talking about what we should anticipate in the way of good news outside of Africa. I had a long talk with HB recently who was very forthright and informative as usual and as a result, I can offer the thread some food for thought.
I'll outline Brazil first as Howard felt we might be hearing some initial test results from there possibly as early as January or February, and he is extremely enthusiastic about our property potential. I think the word he used was fantastic, and for those of you who know Howard, you know he is not given to uttering colourful adjectives.
As you probably recall from previous releases, there are at least 500 kimberlite like geophysical targets on our property, however, what you might not know is that this figure is based on targets suggestive of pipes +300m or greater. That is the cut off Teck apparently used to prioritize their exploration programme. In other words, if there were pipe targets smaller than three football fields in circumference or if my math is correct, less than 7 hectares in size, Teck did not bother to count them. Of these 300 targets, Teck only drilled 80 and then only with very limited single cores. Howard has not counted them all, but feels there are at least another 200 pipe targets of less than 300 meters in size and that is a conservative estimate.
Testing and even preliminary target evaluation has been inadequate to say the least.
Now you are probably aware that DeBeers Brazilian arm is putting a kimberlite into production about 100km to the south. Keeping in mind that the cost of building a mine and production in Brazil is probably less than 10% of what it costs in the NWT, you should know that DB's pipe is only 1Ha in size and only runs .4 carats/tonne, however, its diamonds are averaging $200/carrat . This suggests that the ore of that pipe is averaging $80/tonne. The value of the stones principally results apparently from the quality of the stones rather than the size, but I would imagine if DB's encounters a few of Brazil's historically large or fancy stones, the economics will be even more attractive. Interestingly, alluvials recovered immediately downstream of that pipe are averaging $560/carrat.
Now for those who have been following the Brazilian play in general, you probably know that one of Canabrava's other JV partners on another property was trying to put an alluvial operation into production, but progress was temporarily stalled awaiting an environmental assessment. A process as we all know, can drag on for some time. However, apparently there are some interesting similarities between Brazil's none-hard-rock deposits and those of the Yukon's historic placer camps. Specifically, guemparos (sp?) historically have had excellent results working paleo-channels beside rivers and above them on old terraces. So long as miners stay at least 50meters away from rivers test permitting can be approved within a month of application allowing up to 40,000 tonnes of gravel to be mined. That is a significant amount of ore which can take a considerable amount of time to recover and process, so given that a highly attractive ore source is identified, it can be effectively worked for some time while an environmental assessment is conducted, alluvial mining permitting sought to work the source river channels, and a processing plant built. That 80carrat fancy red that Black Swan ended up buying and is trying to sell for $40,000,000 was recovered from just such a small, suction dredge and pick operation on a terrace.
Now SUF has retained Myron Berezowsky who is an extremely knowledgeable alluvial mine manager with extensive experience working Guinea's vast alluvial deposits. He has selected five sites and is auger testing them right now. What he is initially looking for is the right depositional environment, benches, traps, reserves, etc. and diamonds aside, other minerals with the same specific gravity such as Jasper and Rutile which have apparently been located in significant quantities. This is indicative of not only the right velocity environment for deposition of diamonds, but also the right physical traps to retain them.
As I said, Howard felt that we should have some interesting data released in this regard early in 2000 if not before, and as noted, any discoveries can be mined up to 40,000 tonnes immediately as the permitting is in place. All that is required to work these initial deposits is a backhoe, a truck and I would imagine, some small suction dredges to clean out the traps. We could possibly be realizing initial Brazilian production early in 2000 and it only takes one of those historic stones to pay for one hard rock mine and one hell of a lot of years of exploration.
On that subject, you probably know George Read is directing our hard rock Brazilian exploration programme. George is an extremely knowledgeable kimberlite exploration geologist and a wonderfully interesting man to talk to. He was responsible for tracking down GMD's pipes currently optioned to DB's up here, which as an aside, I believe will be one of the two big 2000 NWT stories. SUF has also brought in Frank Gaunt an Australian with significant experience including most recently 15 years in the Brazilian play. SUF's principal interest in Brazil is our hard rock potential and these men are directing that effort locally. In that regard, they are not simply looking at kimberlites and as you know lamprolites (sp?). The diamond geochemistry is Brazil is to put it politely s…t, yet these fabulous diamonds quite obviously exist and are sourced there. Other ultramafic rocks will also be examined closely to see if they might possibly be the source of these remarkable stones. In that regard, you might have noticed this NR yesterday:
Spider Resources Inc. and its partners Line Islands Exploration and KWG Resources are pleased to announce the discovery of a kimberlite pipe on the Alto Paranaiba property in Brazil. The pipe was first indicated by an auger drill program and subsequently confirmed by diamond drilling. The site of the discovery is very favorably located at the headwaters of a small stream, from which the recovery of a 200 carat stone, has been recorded (Barbosa 0. 1991 Diamente no Brasil, CPRM). The auger drill exploration program encountered massive reddish brown saprolite, field identified as phlogopite kimberlite. The samples were panned and the opaque minerals within the concentrate were about 90% picroilmenite.
So while there is mounting evidence that there might be some real potential in evaluating none typical sources, with at least 700 probable pipes, there are a significant number of known targets to test.
Lets hope for a nice red chickens egg to show up in some of our early alluvial operations.
I'll post some information on our 2000 NWT potential later.
Best regards, and hang in there, we'll be back!
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