Tahera's Ranch still shows signs of life
Tahera Corp TAH
Shares issued 304,940,970 Jul 17 close $0.215
Thu 18 Jul 2002 Street Wire
by Will Purcell
Tahera Corporation still has hope that its Ranch Lake kimberlite pipe has
what it takes to become an economic source of diamonds. The large pipe was
discovered nearly a decade ago, but Ranch Lake still has a bit of life,
thanks to the recent interest shown by BHP Billiton. The company acquired
an option to explore the pipe and its surrounding claims last year, and
much of the company's effort has been directed to the Ranch Lake pipe
itself. So far at least, work on the old discovery has not caught the
attention of the market in the same way that it did in the early 1990s,
when a major promotional campaign by Lytton Minerals, Tahera's predecessor
company, created a market frenzy.
Using the developing diamond play in Canada's North, Desmond Alexander and
David Dobson managed to overpromote Lytton from just pennies to a high of
$6.75, helped along in large part by the discovery of the Ranch Lake
kimberlite. The peak of the promotion came with the release of the first
diamond counts from the pipe in the spring of 1993. At the peak, the play
had a market capitalization of more than $500-million, but the largely
European (with considerable help from Oregon) promotion then seemed to run
out of hot air, and the balloon slowly began to deflate from there. After a
brief flurry of attention, Ranch Lake faded away until earlier this year,
when BHP drilled four delineation holes into the steep-walled pipe, about
nine years after Lytton Minerals had poked the first holes into the body.
The results of the latest program seem mixed, as indications of a
higher-grade zone helped provide a rosier spin on the modest diamond counts
obtained from the pipe as a whole.
The 2002 program processed a total of 854.6 kilograms of kimberlite from
the pipe, and that material yielded just 266 diamonds large enough to
remain on a 0.1-millimetre square mesh. That worked out to about 311
diamonds per tonne of rock, which was a fairly modest haul. Included in the
diamond parcel were 46 diamonds larger than a 0.425-millimetre screen, or
about 54 stones per tonne. There were four diamonds large enough to remain
on a 0.85-millimetre screen, or about five stones per tonne of kimberlite.
The results are not directly comparable with the earlier program, as the
results were reported using different parameters. About 208 kilograms of
Ranch Lake kimberlite was processed for microdiamonds in 1993, and 44
diamonds were recovered. That worked out to about 210 stones per tonne, and
although that was significantly fewer than had been recovered by BHP, it
could be the result of a larger minimum cutoff. The 1993 samples were
processed at two laboratories, and at least one of them is believed to have
used a 0.15-millimetre minimum cutoff at the time. The 1993 samples
contained six macrodiamonds, diamonds longer than 0.5 millimetre, and that
worked out to about 30 such stones per tonne of kimberlite. That seems to
be a similar result to what BHP may have obtained with their recent
program.
The most intriguing comparison is not with the earlier result, but within
different sections of the Ranch Lake pipe. Unlike the 1993 program, which
did not provide any real hint of a higher-grade zone, the 2002 samples
appear to indicate that there is a richer area within the upper portion of
the central zone of the pipe. Samples weighing 320.6 kilograms were taken
from the top 100 metres of kimberlite of two drill holes, and that material
produced 107 diamonds, or about 330 diamonds per tonne. That was not much
better than the result as a whole, but it was with larger sizes that the
difference became more apparent. There were 20 diamonds larger than the
0.425-millimetre screen, or about 62 stones per tonne. All four of the
largest diamonds originated in this zone, which works out to about 12
stones per tonne.
All four of the larger diamonds measured longer than one millimetre, with
the longest measuring 2.00 millimetres long. Three of the four diamonds
were longer than one millimetre in two dimensions, and the four stones
weighed a total of 0.091 carat. That suggested a grade of 0.28 carat per
tonne, based on those four stones. Although such a calculation would be
subject to enough statistical error to make the result almost meaningless,
it is fairly similar to the result of a mini-bulk sample that was completed
at Ranch Lake in 1994.
That year, Lytton extracted 28.45 tonnes of kimberlite from the pipe by
large diameter core drilling, and the sample was processed at the Dia Met
plant in Colorado. A total of 112 diamonds were recovered, weighing a total
of 5.384 carats. That suggested a grade of about 0.19 carat per tonne,
which was considered to be quite a disappointment at the time. That took a
bit of starch out of Lytton's promotional sails, but despite the modest
grade, the company managed to keep some interest in its Ranch Lake play
alive in the months that followed, thanks to an encouraging spin on some of
the more promising data that was obtained from the mini-bulk program.
Lytton did not reveal the size of its larger diamonds, but the average
weight of the stones was nearly 0.05 carat, which was encouraging for a
smaller sample. Just how encouraging the result was is hard to say, as the
company never bothered to mention the size of the minimum cutoff, but the
stone size distribution of Ranch Lake was subsequently determined to be
quite coarse, based on a subsequent study recovered diamonds. The apparent
quality of the Ranch Lake diamonds also seemed quite promising. Slightly
more than 30 per cent of the diamonds were described to be of gem quality,
and most of the diamonds were apparently colourless.
All that was encouraging, but the apparent poor grade of Ranch Lake seemed
to make it all academic. Nevertheless, Lytton soon had an answer for that.
When the mini-bulk sample failed to produce an encouraging grade, the
company turned to its indicator minerals to produce some encouragement.
Lytton touted the garnet chemistry of Ranch Lake, suggesting that it
implied a good or even high-grade source, offering an estimate of more than
0.5 carat per tonne. Later, the somewhat less promotional Tahera scaled
that forecast back somewhat, suggesting that Ranch Lake had a grade between
0.30 carat per tonne and 0.35 carat per tonne. Meanwhile, Kennecott Canada,
which for a time had an option of the Ice claims that contained Ranch Lake,
estimated the global grade of the pipe to be somewhere between 0.20 carat
per tonne and 0.375 carat per tonne, however none of that seemed to offer
any real hope that there might be a higher-grade zone within the pipe.
It remains to be seen just how encouraging that BHP believes the result
from the central portion of the Ranch Lake pipe to be. Under the terms of
an arrangement reached last fall with Tahera, BHP can earn a 60-per-cent
stake in the Ranch Lake pipe by beginning a 200-tonne mini-bulk test by
July, 2003. That would seem to suggest that the extraction would have to
begin earlier in the year, as the kimberlite is located under Ranch Lake,
and a drilling program would likely have to be conducted from the ice
covered lake in the spring. If so, that would leave BHP with several months
to assess the data that it has currently obtained, but perhaps
comparatively little time to do more preliminary drilling and testing.
As a result, Tahera now says that BHP will concentrate its efforts on
determining the economic significance of the shallow central portion of the
pipe. Although that would suggest that much of the Ranch Lake pipe is
clearly uneconomic, the potentially richer zone could still be fairly
large. One of the BHP drill holes, P02-3, was completed into the central
portion of the pipe, and the top 100 metres of the kimberlite from that
hole produced three of the four largest diamonds. The fourth came from a
115-metre zone at the top of a second hole, P02-2, that was drilled about
100 metres to the north.
As well, there were at least a few hints that the upper portion of one
other BHP hole contained a better diamond grade. Although none of the
diamonds from a 114.3-kilogram sample taken from hole P02-1 were large
enough to remain on a 0.85-milimetre screen, there were 14 diamonds that
remained on a 0.425-millimetre mesh, or about 120 per tonne, and that was
significantly more than had been encountered in the richer zone. As well,
there were 68 diamonds recovered from that section, or about 600 stones per
tonne. That could potentially be encouraging as well, although a more
detailed examination of the diamond distribution would be required.
In any case, there is reason for optimism that the high-grade zone might
just produce the numbers bandied about by the earlier promotions. Ashton
Mining of Canada produced some fairly similar diamond counts from its
Renard-2 kimberlite in Quebec, and its K-252 pipe in Alberta, and
subsequent mini-bulk tests were encouraging. Ashton processed about 227
kilograms of K-252 kimberlite, recovering 263 diamonds, including 19
macro-sized stones. Ten of those were greater than 0.5 millimetre in two
dimensions, or about 44 per tonne, and four were at least one millimetre in
two dimensions, which worked out to about 17 per tonne. Ashton subsequently
processed a number of small mini-bulk tests of K-252, coming up with a
grade that was approximately 0.55 carat per tonne.
The initial diamond counts from Renard-2 kimberlitic body also seemed
fairly similar to the better Ranch Lake numbers, although as with K-252,
Ashton did recover significantly greater numbers of microdiamonds. A
163-kilogram sample from Renard-2 produced 145 diamonds, but just five of
them were at least 0.5 millimetre long in two dimensions, or about 30 per
tonne. Three of those were more than one millimetre in two dimensions, or
about 18 per tonne. Ashton subsequently processed a 2.44-tonne sample,
coming up with a grade of just less than 0.7 carat per tonne.
All of those samples are far too small to make any firm conclusions, and
although the number of larger macros was about 50 per cent higher in the
Ashton samples, the numbers would seem to offer some hope that the shallow
central portion of Ranch Lake will have a higher grade than the
0.19-carat-per-tonne result of the 1994 test. Whether the grade and the
size of the zone will be sufficient to warrant a closer look by BHP is
another matter entirely. So far, Tahera and its partner have offered no
clear indication that the required 200-tonne test will be completed as
required next year, and until a decision is made, speculators appear
unwilling to hop aboard the 2002 version of a Ranch Lake bandwagon.
Tahera's stock jumped two cents just after the news Tuesday, closing at 22
cents. That added several millions to Tahera's market capitalization, but
it was a far cry from the heights attained during Mr. Alexander's 1993
promotion. Tahera dropped one-half cent on Wednesday, closing at 21.5
cents. |
