Canabrava Diamond Corp - Street Wire
Canabrava finds glitter at King Eider
Canabrava Diamond Corp CNB
Shares issued 51,348,505 Oct 28 2002 close $ 0.19
Tuesday October 29 2002 Street Wire
Also Diamonds North Resources Ltd (DDN) Street Wire
by Will Purcell
The Victoria Island diamond play has produced another batch of encouragement for Canabrava Diamond Corporation and its partner, Diamonds North Resources, a few years after the diamond hunt seemed all but dead in the region to the northwest of Cambridge Bay. The latest glimmer of hope came from the King Eider kimberlite pipe, which had been discovered and tested by De Beers in the latter half of the 1990s. Those results were not enough to keep De Beers interested in the pipe, but others had a different opinion, including Diamonds North president, Mark Kolebaba, and George Read, the president of Canabrava.
Mr. Read has not been one to prematurely abandon what he believes is a promising diamond project, and as a result, the two companies are now partners on the Hadley Bay project that hosts King Eider and several other kimberlites, through a deal that allows Canabrava to earn a 50-per-cent interest by spending $5-million on exploration over a four-year period. The two companies drilled another hole into the King Eider kimberlite, and the diamond counts from three core samples brought new hope to speculators, as Diamonds North shares hit an intraday high of 88 cents following the news. Canabrava's promotion lagged by comparison however, as its stock failed to respond to the news.
In all, 193.5 kilograms of kimberlite produced 38 diamonds. That was not a particularly large haul, and it seemed typical of the diamond counts from most of the pipes that had been discovered on Victoria Island in the 1990s. Nevertheless, a dozen of the stones were macros and five were two-dimensional macrodiamonds, and that offered hope that King Eider would have a coarse diamond size distribution. That hope was supported by the fact that two of the diamonds were longer than one millimetre in two dimensions, with the largest stone measuring over 1.1 millimetres in all three dimensions. The samples recovered diamonds larger than a 0.10-millimetre screen, which is smaller than the 0.15-millimetre mesh that has often been used by a number of other explorers, and greater numbers of tiny microdiamonds were recovered as a result, which can make a direct comparison of results misleading.
Ashton Mining of Canada also uses a 0.10-millimetre cutoff however, and the company recovered 1,241 diamonds from 332 kilograms of kimberlite taken from its Artemisia pipe in the Coronation district of southern Nunavut. That worked out to about 3,750 stones per tonne, or about 18 times more than the 200 stones per tonne in the King Eider sample. Only 120 of the Artemisia diamonds were macros, and the 360 stones per tonne was just six times the rate of about 60 macros per tonne in the King Eider sample. The trend continued with two-dimensional macrodiamonds. There were 38 in the Artemisia sample, or about 115 stones per tonne, while King Eider had produced 2-D macros at a rate of about 26 per tonne, and based on that, Artemisia had just 4.4 times as many two-dimensional macrodiamonds as King Eider.
With still larger macrodiamonds, King Eider's diamond size distribution began to shine. Artemisia produced just two diamonds longer than one millimetre in two dimensions, or about six stones per tonne, which was actually less than the apparent rate of 10 stones per tonne for King Eider. The samples are too small to draw any clear conclusions, but the comparison does support the suggestion that King Eider might have a favourable diamond size distribution. On the other hand, Ashton's Artemisia proved to be a dud, although the abundance of microdiamonds in the pipe had brokers and speculators oohing and aahing over a number of Coronation diamond promotions, until the bubble burst a few months later. Ashton ultimately processed about 12 tonnes of kimberlite from the pipe, recovering 1.376 carats, for an indicated grade of about 0.11 carat per tonne.
Meanwhile, Ashton has been coming up with diamond counts from its Otish Mountains play in Quebec that suggest a few of the Renard pipes have quite coarse diamond size distributions. In all, Ashton has processed about 500 kilograms of kimberlite from Renard-3, Renard-4 and Renard 5, and all three bodies seemed to have quite similar diamond counts. The company recovered an average of 380 diamonds per tonne from the three pipes, counting two larger stones that Ashton thinks were broken during the processing. Of those, 180 would have been macros, and 115 were macrodiamonds in two dimensions. The three Renard pipes produced diamonds longer than one millimetre in two dimensions at the rate of about 25 stones per tonne. As a result, it seems possible that King Eider may have a similar diamond size distribution as the Renard pipes, although the Otish bodies do seem to have a greater diamond content at this stage. Nevertheless, the comparison would seem encouraging for King Eider, as speculators are optimistic that the three Renard pipes will have a grade in excess of the 0.7-carat-per-tonne figure that was produced by a small mini-bulk test at Renard-2.
Larger samples will be required to bestow a greater confidence upon the results, but Mr. Kolebaba said he was encouraged by the diamond size distribution of the sample. A better picture of the diamond content and size distribution could be available fairly soon, when the partners receive the diamond counts from additional samples from the current drill hole, as well as from a second short hole into the pipe.
Still larger samples appear to be in the works for next year. Mr. Kolebaba could not say just how large a sample would be required to prove or kill a Victoria Island kimberlite, but the partners will are expected to take progressively larger tests, rather than rushing ahead to take one bulk sample. Assessing the grade of an eclogitic diamond deposit is not a trivial exercise, but it is nothing new for Mr. Kolebaba, who was a senior geologist for BHP Billiton for several years and was involved with the exploration program at the Ekati project.
Mr. Kolebaba has compared the eclogitic signature of the Victoria Island till samples with that of Ekati, and the mineral chemistry was enough to generate some enthusiasm from Mr. Read as well. Mr. Read was an employee of De Beers for more than a decade, and he was involved with that company's Victoria Island play in the early 1990s. De Beers lost interest in Victoria Island after 1999, but Mr. Read and Canabrava seemed to place more hope on the mineral chemistry than on the diamond counts obtained from the small kimberlite samples that had been processed by De Beers.
It is far too early to suggest that the faith was warranted, but it appears that the Victoria Island play is once again alive and well, and headed toward an even busier time next year. Mr. Kolebaba said that the plan would be to drill test a number of the previously discovered kimberlites, where the earlier data supported that work. Most of the De Beers discoveries had been tested with just one shallow hole, and the amount of kimberlite that was processed was generally minimal.
As well, there will probably be more work completed at King Eider, thanks to its potential size and the encouraging diamond size distribution. The body is believed to be a pipe that is at least 100 metres in diameter, and it could be larger. Mr. Kolebaba said that geophysicists were still poring over the data, as the results are still not fully understood. The geophysical signature at King Eider apparently goes a long way from what has been drilled, and Mr. Kolebaba said that might mean that more kimberlite is present, or it might be because the signal carried through the nonmagnetic limestone. "We just do not know yet," he added. Finding the answer to that question would become important if the larger samples suggest that the pipe has a shot at being economic, as it would likely take a significant amount of kimberlite to support a mine in the region, but it is still far too soon to be contemplating a Victoria Island diamond mine.
So far, it has been the previously discovered kimberlites that have revived the Victoria Island diamond play, but Canabrava and Diamonds North are expected to poke around in the hunt for new bodies. There are several anomalies that had been found earlier, but were never drilled, and at least some of these will likely be tested next year. As well, additional anomalies should be found as additional airborne geophysical survey data are perused.
Most diamond promotions exist on the promise of new finds, but so far at least, Diamonds North has been having success exploring and promoting a number of old finds. In addition to King Eider, the company got good mileage out of the diamond counts from the Sand Piper kimberlite on its Blue Ice property, in September. A 31.74-kilogram sample of kimberlite did not produce much hope, but a 6.49-kilogram batch produced a very high diamond content, with an encouraging size distribution to go with it. The latter result was also at odds with the results obtained by De Beers in the 1990s, which makes the high-grade sample appear to be a bit of a fluke, although Mr. Kolebaba prefers to use the term "nugget effect" to describe the sample. Whatever the description, only larger samples will show just how common the richer nugget zones are in the Victoria Island kimberlites.
Another apparent example of a bit of good luck, or the nugget effect, was De Beers's recovery of a 0.23-carat diamond in the Gosling kimberlite on the Blue Ice property. The stone was one of 55 diamonds recovered from about 150 kilograms of kimberlite, and although there were just three macrodiamonds in the parcel, the other two may have weighed something close to about 0.01 carat as well, based on the total weight of the stones.
Meanwhile, Diamonds North has also had some success with a new find in the region. The Carina kimberlite was discovered on the company's 100-per-cent-owned Blue Ice property earlier this year, and a 68.72-kilogram batch of medium-grained kimberlite produced encouraging numbers. The sample produced 78 diamonds, including six macro-sized stones. One of the diamonds was larger than one millimetre in two dimensions. As a result, Diamonds North is expected to process additional, larger samples from Sand Piper and Carina next year, to come up with a better understanding of those bodies and their diamonds.
In addition to De Beers, the Victoria Island diamond play had also attracted the attention of Dia Met Minerals Ltd., but the project was dropped after that company was taken over by BHP Billiton. Although two majors decided to quit the project at a relatively early stage, Mr. Kolebaba and Diamonds North have had success at selling the merits of the play to Canabrava and several other explorers, and lately, Victoria Island has become one of the hotter regions in the Canadian diamond hunt.
Although most of the active exploration work will not take place until next year, there could be a steady flow of news in the coming months, as diamond counts from several additional samples will trickle in over the coming days. As a result, the Victoria Island diamond play could continue to attract the market's attention, especially if Diamonds North and its partners continue to produce promotable diamond counts. The King Eider results did little for Canabrava, as the stock continues to trade fairly close to its yearly low, closing down a penny on Monday at 19 cents. Meanwhile, interest in Diamonds North cooled off just a bit, losing eight cents on Friday, but regaining two cents Monday to close at 72 cents.
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