Diamonds North's Snow Bunting brings a new flock of gems
Diamonds North Resources Ltd DDN
Shares issued 13,047,885 Oct 16 close $0.79
Fri 17 Oct 2003 Street Wire
Also (TEK)
by Will Purcell
Diamonds North Resources has some more diamond counts from Victoria Island, and the latest batch of stones again included enough larger macrodiamonds to give its Nunavut diamond play a boost. As well, the company provided the market with an enticing glimpse at the colour and clarity of its latest diamond haul. Unusual colours can usually be counted on to spark the interest of speculators, but generally serve little purpose otherwise at the microdiamond stage. Nevertheless, there are some intriguing comparisons that can be made with other deposits. The latest Diamonds North samples are from the Snow Bunting body, which is near the southeastern end of the Galaxy structure, on the Blue Ice property where Teck Cominco has an option to earn up to a 65-per-cent stake in the project. The Snow Bunting body, which appears to be a small blow along the lengthy and complex Galaxy feature, is not a new find, but the diamond counts from the earliest sample seemed to paint a different picture than subsequent work. The latest numbers also produced variable counts, but there now appears to be an explanation for the variance. The Snow Bunting body was one of the 1997 discoveries made by De Beers Canada, which once was the most active explorer on Victoria Island. The company is believed to have processed about 137 kilograms of Snow Bunting kimberlite, but the rock yielded just 23 microdiamonds, or not quite 170 stones per tonne, which was not enough to keep the diamond giant interested. Diamonds North was created in 2002, when another old, but much smaller Victoria Island diamond hunter, Major General Resources, decided to spin off all of its old diamond projects to the new company. Diamonds North's initial president was Mark Kolebaba, a former senior geologist for BHP Billiton, another company that decided to abandon the Victoria Island gem hunt. Since then, Mr. Kolebaba and Diamonds North's dogged belief has produced several diamond counts that appear more promising than what had initially been found. That tenacious streak has been part of Mr. Kolebaba's diamond hunt over the past decade. In the early 1990s, he was working for BHP in the Hope Bay area, well northeast of Lac de Gras near the Arctic coast, when he first heard of his employer's interest in Canadian gems. The idea of diamonds appealed to Mr. Kolebaba, but the notion of Mr. Kolebaba working on its Lac de Gras play was not quite so appealing to BHP initially, so he moved on, landing a gem job in Venezuela, where he worked on a series of kimberlite dikes in the Guaniamo region. Some of the dikes were significantly diamondiferous, and although they were too small and shallow to be mined, the experience did help land the Regina-born Mr. Kolebaba a job with BHP in Kelowna. His BHP stint lasted for several years, until he moved on to Vancouver, taking the more senior job with the decidedly more junior Diamonds North. Snow Bunting was one of the kimberlites that offered a more promotable diamond haul to Diamonds North than it had to De Beers. Last year, Mr. Kolebaba's crews sent 16.71 kilograms of material off to the lab for processing, and that tiny sample produced 15 diamonds. That worked out to about 900 diamonds per tonne, more than five times the rate that the De Beers sample had produced. As well, there were larger diamonds in the mix. Four of the diamonds were large enough to sit on a 0.30-millimetre screen, and all four met the definition of a two-dimensional macrodiamond. Three of the stones remained on a 0.425-millimetre mesh, and all of that seemed at odds with the initial De Beers sample. Diamonds North has now processed an additional 217.7 kilograms of material from Snow Bunting, coming up with 88 diamonds, or about 400 stones per tonne. The haul included 17 diamonds that clung to the 0.30-millimetre sieve, or about 19 per cent of the parcel, and seven stones sat on a 0.425-millimetre mesh, or about 8 per cent of the recovered diamonds. There were still larger diamonds recovered. Three stones had clung to the 0.85-millimetre screen, and one of them sat on the 1.18-millimetre mesh. That diamond probably weighed in excess of 0.01 carat. Those recoveries are not as impressive as some of the other results from the Galaxy structure, but there was a big difference in the samples taken from two separate locations. Diamonds North and Teck collected 13 samples, 10 from the northern portion of the body, and three from the southern region. The southern three samples produced just 11 diamonds from 54.64 kilograms of rock, or about 200 stones per tonne, and just one of the diamonds had remained on the 0.30-millimetre sieve. That result is comparable with the earlier De Beers sample, while the 10 more northerly batches produced a result more in line with the tiny test completed last year by Diamonds North. This year, 163 kilograms of northern kimberlite yielded 77 diamonds, or about 475 stones per tonne, and that parcel included nearly all of the larger stones. There were 16 diamonds, or nearly 21 per cent of the parcel, that remained on the 0.30-millimetre mesh, and the three largest stones had all come from the northern portion of the body. There now appear to be at least two distinct types of kimberlite present within Snow bunting, like many of the Victoria Island bodies. The more northerly portion contains macrocrystic hypabyssal material, while the rock in the southern region is described as an altered macrocrystic kimberlite. At this stage, there clearly appears to be a difference in the diamond contents of the two rock types. Finding higher-grade portions of kimberlites is never bad news, but the bodies would have to be sufficiently large to make things interesting. Most of the Victoria Island kimberlites are rather small, but there are many finds within a rather small area, which could add up if the diamond values and grades were to be of economic interest. As a result, determining the size of the richest features will become important, should larger samples demonstrate potentially economic values. Snow Bunting was initially described as a magnetic low that was about 25 metres in diameter, but Diamonds North subsequently altered its notion of Snow Bunting's geometry to a 10-metre-wide feature that appeared to be about 250 metres long. After the latest drill program, the company now says that the body has a true width of about eight metres in the northern portion, although the body could widen with depth. Mr. Kolebaba said that they did not truly understand the actual geometry of Snow Bunting yet, as there were not enough holes into the complex body. Diamonds North also provided a detailed breakdown of the colour and clarity of its Snow Bunting diamonds. In all, 77 per cent of the 88 diamonds were classified as white, with another 11 per cent described as off white. In all, about 81 per cent of the Snow Bunting diamonds were transparent, with just 3 per cent classified as opaque. All that left 66 per cent of the diamonds with a description of white colour and transparent clarity. Most observers believe that indications of colour and clarity of tiny diamonds can be misleading, as there can be big variations in those quantities across different size classes. For instance, Ashton Mining of Canada says that speculating on the colour, clarity, value and grade of microdiamonds is meaningless, since diamonds in this size range have negligible commercial value. Such realistic cautions notwithstanding, the values offered by Diamonds North stack up well against those from some other deposits. In 1997, Winspear Resources revealed the details of its first diamond hauls from Snap Lake. Of the company's first 383 diamonds taken from 137 kilograms of drill core, about 88 per cent were described as transparent, and just 0.5 per cent of them were opaque. Just 44 per cent of the Snap Lake diamonds were classified as white, with 39 per cent termed yellow. Based on those numbers, it would seem that about 38 per cent of the Snap Lake diamonds were white and transparent. Twin Mining has long touted the top quality of its Torngat diamonds. In 1999 and early 2000, the company revealed that of the 273 diamonds taken from its AD-1 and AD-2 sites, about 88 per cent were classified as white, and about 83 per cent were deemed transparent. Those portions would suggest that something close to about 73 per cent of the Torngat diamonds were white and transparent, roughly comparable with the Snow Bunting result. In fact, the owners of a number of diamond deposits have touted gaudy percentages their microdiamonds as being white and transparent, in some cases to perhaps deflect the eyes of investors from modest diamond contents and poor size distribution curves. Nevertheless, the high proportion of white and transparent diamonds at this stage is not bad news, and although the data can potentially be quite misleading when it is applied to commercial sizes, it is all that speculators have to go on at this stage. Combined with indications of a
coarse size distribution curve, and earlier suggestions of good
preservation and favourable crystal structure of the Blue Ice gems, there are reasons to hope that the value of the Victoria Island diamonds will not be a big stumbling block, if some of the richer bodies can make the grade. It was not the colour white that was on the minds of some speculators however. Diamonds North also found four pink diamonds in the mix, and that had visions of valuable fancy diamonds dancing in the minds of some investors. Mr. Kolebaba said that pink diamonds were quite rare, but he added that the real value of a diamond deposit was carried by the white and transparent stones. In fact, finding potentially fancy colours has not been that uncommon in Canada, although there has not been any real word of any valuable fancy stones being recovered at the bulk sampling stage. Winspear reported that it had recovered four tiny pink diamonds in its initial Snap Lake drill program, along with 10 green stones. The main diamond hunters in the Wawa region have also reported finding pink and green diamonds in their initial samples, Trade Winds Resources found pink diamonds in the Drybones kimberlite, southeast of Yellowknife, and pink stones were recovered in the Attawapiskat region of Northwestern Ontario. Indeed, many of the explorers providing details of the colour and clarity of their finds have reported pink, green, or red diamonds in the mix. As a result, it seems that it is not the colours alone that are particularly rare; rather it is the intense colour and special clarity of fancy diamonds that make them such an uncommon and valuable commodity. Meanwhile, Mr. Kolebaba said that there was another reason for hope at Snow Bunting. He stated that the kimberlite had "a really nice geochemical signature, both peridotitic and eclogitic." That would imply that the kimberlite sampled two distinctly different mantle sources of diamonds, which could have an intriguing influence on the diamond content and size distribution of the body. Presumably, with two separate sources, each would produce a different diamond content and size distribution, and possibly stone value, making an accurate assessment of the body a tougher, but potentially rewarding task. The diamonds in the Diavik pipes apparently have both an eclogitic and peridotitic origin, and although the bodies have a fairly consistent grade and value, that is likely due to the far richer grades present at Diavik, which would tend to negate the full nugget effect that is especially present in eclogitic bodies. With its apparently far more modest grades, Snow Bunting and the other Victoria Island bodies would be much more heavily influenced by the rich nodules that could well be present within the kimberlite, making larger samples a requirement to accurately determine the grade of the bodies. Taking a larger sample from at least a few bodies seems likely, but they will probably be put off until the partners have a better idea of just which of the Galaxy kimberlites have the best shots at delivering the top results. A better idea of that will be known by next spring, as Diamonds North and Teck will continue to receive diamond counts from their busy season throughout the fall and winter months. That could help sustain Diamonds North's promotion through the long off-season. Speculators remain hopeful. Diamonds North hit a new high at 97 cents in intraday trading Friday, before closing up 16 cents on the day, at 95 cents.
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