Mountain Province Diamonds Inc (C-MPV) - Street Wire
Mountain Province finds new Kelvin and Faraday hope
Mountain Province Diamonds Inc MPV
Shares issued 50,272,170 Mar 20 2003 close $ 2.06
Friday March 21 2003 Street Wire
by Will Purcell
Mountain Province Diamonds Inc. and De Beers continue to come up with intriguing kimberlite hits in the area about 10 kilometres to the northeast of its primary diamond project at Kennady Lake. The latest drill data suggests that there is a significantly greater amount of kimberlite in the area, but the bodies appear very complex and are spread out over an area several kilometres in length. Nevertheless, the latest results bring additional hope to the partners, as the initial batch of diamond counts from the Kelvin and Faraday kimberlites had produced numbers that were reasonably similar with what had been obtained from the two key Kennady Lake pipes.
A Mountain Province share could be had last summer for less than 70 cents, but the stock hit a high of $2.26 earlier this month. The partners are expecting to update their projections for the Gahcho Kue project at Kennady Lake any day, and speculators are clearly expecting good news from the revised analysis. Still, the recent drill program to the northeast could have a significant impact on the project as well. If the latest kimberlite samples match those obtained earlier, De Beers is expected to continue its drilling in the region, in order to better delineate what seems to be a series of kimberlite dikes and blows. Those features could well be related and potentially may add a significant amount of kimberlite to the resource in the region.
The first kimberlite hit in the region was scored in the spring of 1999, when De Beers drilled a hole into what it called the Faraday kimberlite. De Beers was checking out geophysical targets near the head of a long and broad train of kimberlite indicator minerals, and a drill hole into what is believed to be a magnetic low with a coincident electromagnetic signature hit kimberlite at a vertical depth of about 30 metres. The hole produced a horizontally projected kimberlite interval of 22 metres, which seemed to suggest that Faraday was a small body. That hole had been inclined toward the north, and a second hole, inclined to the southwest, produced a series of kimberlite intervals up to seven metres thick.
The partners trotted out the diamond counts from a small sample later that year. The news did not create much of a stir, due to the small size of the Faraday body, but the 40-kilogram sample produced 88 diamonds, including six-macro-sized stones. Those recoveries were roughly similar with what had come from the Kennady Lake pipes, although the size of the Faraday sample was too small to provide any meaningful degree of confidence. Still, the result offered hope that larger pipes lay waiting discovery in the immediate area, and that they would be potentially economic.
The play took another turn the following year. De Beers continued testing geophysical targets in the area, and that work produced a second hit, about three kilometres to the southwest of Faraday. The Kelvin kimberlite was a lake-based body, and two drill holes indicated something a bit larger than Faraday, although it also seemed too small to be of immediate impact. A drill hole inclined in a northerly direction hit a kimberlite zone that was horizontally projected to be 40 metres wide, while a hole drilled perpendicularly produced a 23-metre hit.
The partners never touted the Kelvin kimberlite and it took nearly three years for the diamond counts to see the light of day, but Kelvin produced results that are clearly encouraging. De Beers processed 184 kilograms of Kelvin kimberlite, and the material produced 446 stones larger than a 0.104-millimetre mesh. Included in the haul were 69 diamonds that remained on a 0.3-millimetre screen, or about 15 per cent of the entire parcel, and 14 stones that clung to a one-millimetre mesh, or just over 3 per cent of the Kelvin diamonds.
That was promising, as a comparable batch of rock from the flagship AK-5034 pipe at Kennady Lake had produced 498 diamonds using a similar minimum cutoff, and about 15 per cent of them remained on a 0.3-millimetre screen. The similarity persisted with a larger mesh as well, as about 3 per cent of the AK-5034 diamonds had remained on a one-millimetre screen as well. All that suggested that Kelvin had a diamond size distribution that would be comparable with what had been found at AK-5034. The presence of five diamonds in the Kelvin sample that were large enough to remain on a two-millimetre screen added to the optimism, as that was actually more than had been recovered in the AK-5034 sample, and in a batch from the Hearne pipe. Hearne and AK-5034 are the two main pipes that investors expect will ultimately be part of a Mountain Province and De Beers mine at Kennady Lake. Both pipes have a diamond grade of about 1.7 carats per tonne, along with a rock value that could be well in excess of $100 (U.S.) per tonne.
The Hearne and AK-5034 pipes are clearly among the best in Canada's North, but preliminary studies into the project have failed to produce a sufficient rate of return to advance the project to feasibility. Speculators are hopeful that a new update to the modelled grades and values for the two key pipes will deliver the goods, but the bottom line of the project would also be enhanced if De Beers can come up with an additional quantity of economic kimberlite in the region. Based on the diamond counts from Kelvin, the chances seem good that it has a rock value that is similar to the Kennady Lake pipes.
Still, the tiny size of Kelvin and Faraday seemed to peg them as mere geological curiosities. The latest round of drilling has altered that perception to a significant degree, although it remains difficult to determine just what the geometry of Kelvin, Faraday and several other dikes and stringers in the region will mean for the Gahcho Kue project as a whole. Nevertheless, there are signs in the cumulative drill data that suggest poking additional holes in the region could be well worth the time and expense.
Much of that hope depends upon all of the kimberlite samples from the series of intersections having a diamond content and size distribution that will be similar to the initial batches. That remains an unknown at this stage, although a closer look at the tiny Faraday sample, which was taken from the northeastern fringe of the area, would seem to support the hope. In all, 74 of the Faraday diamonds were large enough to remain on a 0.104-millimetre screen. That is a bit less than what had come from the Kelvin sample, but it is well within the expected range of normal statistical variability. Also within that expected range is the fact that about 23 per cent of the Faraday stones had remained on a 0.3-millimetre screen, which is higher than what had been found at Kelvin. The tiny Faraday sample also yielded one stone that was large enough to remain on a two-millimetre screen, and that also supports the notion that the Faraday sample has a diamond content comparable with that at Kelvin and the top Kennady Lake pipes.
Based on the latest drill program, combined with the holes drilled earlier, the Faraday kimberlite system appears to be a kimberlite dike that pinches and swells along its strike length. That strike length is an unknown at this stage, but it could be significant. A hole drilled about 160 metres to the north of Faraday produced a 1.54-metre thickness in 1999, and two years later, De Beers came up with three narrow intervals, including one that was 1.74 metres wide, when it poked a hole about 600 metres to the southwest of Faraday. Even those narrow intervals could be worthy of investigation, but some additional drilling has now provided much more in the way of encouragement. Two holes drilled to the south of Faraday produced horizontally projected intersections of 5.6 metres and 21.5 metres respectively.
The most significant feature of those hits is their location. The first hit was recorded about 100 metres southwest of the original Faraday target, but the second, more substantial intersection was just over 500 metres to the southwest of Faraday. There are other possible swells as well. Earlier this year, De Beers completed a ground geophysical program over the area between the two most distant earlier holes, and two promising features produced the recent hits. The geophysical survey produced several other possible targets, and those could be tested as well.
The latest drilling may have transformed the market's expectations for Faraday from a tiny blow, into a significant dike with a number of swells or blows along its length. De Beers will have to drill many more holes to glean a sufficient understanding of the geometry of Faraday, but a dike with an average width of about two metres, with a series of swells along a strike length that could be in excess of one kilometre, suddenly takes on more substantial proportions. Such a body could contain a few - and perhaps several - millions of tonnes of kimberlite.
Even that may not be the entire picture. It remains conceivable that Kelvin and Faraday are in some way connected, and in any case, the Kelvin complex could contain a significant amount of kimberlite on its own, although the geometry of the body now seems more complex than at Faraday.
Like at Faraday, a subsequent drill hole to the south of Kelvin produced a relatively narrow dike intersection. The feature is about 300 metres to the south of Kelvin, under the same narrow lake. De Beers came up with a 2.3-metre intersection a few years earlier, and the dike, now named Hobbes, appears related to the original Kelvin find. Kelvin and Hobbes could well be a dike with pinches and swells along its length, much like Faraday. That is supported by a 7.4-metre hit between the two bodies, along with another hit about 70 metres south of Hobbes, which yielded a total of 5.4 metres of kimberlite, horizontally projected.
There are a few added twists with the southern body however. De Beers came up with a 25-metre intersection in a hole about 50 metres west of Kelvin, and a hole about 60 metres east of Kelvin yielded a two-metre intersection. Those two holes add a new dimension to the Kelvin feature, which is a bit of a surprise. The apparent complexity of Kelvin may take some time to unravel as a result, and firm plans for the area surrounding Kelvin, Hobbes and Faraday will likely wait until the diamond counts and petrographic analysis from the news cores is completed. If the diamond size and content of the latest samples are as encouraging as the first batch of material from the two bodies, the region to the northeast of Kennady Lake could quickly become a priority.
In the meantime, investors await the results of De Beers's latest analysis of the existing Gahcho Kue project at Kennady Lake, which is expected any day. The partners processed additional mini-bulk samples from the two key pipes last year, and the results of that program were encouraging. As a result, there is a good chance that De Beers may advance the project to a full feasibility study in the coming months, if the diamond value climbs enough to meet the required rate of return. That would be good news for Mountain Province shareholders, and it could also enhance the prospects at Kelvin and Faraday kimberlites as well.
Investors remained in a hopeful mood Thursday, as Mountain Province closed up 13 cents, at $2.06.
(c) Copyright 2003 Canjex Publishing Ltd. stockwatch.com
old url (better for printing) |
