StreetWire by WillP
Diamonds North carves some toutable gems from Sculptor
Diamonds North Resources Ltd DDN
Shares issued 22,903,688 Mar 1 close $1.52
Tue 2 Mar 2004 Street Wire
by Will Purcell
Diamonds North Resources received some promising diamond counts from one of its Victoria Island kimberlites. The Sculptor body delivered a promotable tally of microdiamonds, along with a toutable number of larger stones that suggested the body could be worth a larger test this year. The latest result was especially encouraging because it confirmed the numbers that had been obtained from a smaller sample processed last year, and that would seem to rule out statistical luck as a reason for the initial diamond haul. At this stage, a mini-bulk test on Sculptor and a few of the other toutable kimberlites along the Galaxy structure would seem the next logical step, but decisions about work in the coming months now rest with Teck Cominco, not its junior partner. Teck can earn an initial 30-per-cent stake in the play by spending $12.5-million by the end of 2006, and up to 70 per cent by carrying Diamonds North to production. Diamonds North spokesperson, Nancy Curry, said that Teck was still waiting for the data, adding no firm plans have been made as yet. Nevertheless, it seems likely that Teck will keep going on the Blue Ice project, based on the latest numbers from Sculptor, and Diamonds North would clearly forge ahead on its own if it had to. Diamonds North and Teck Cominco processed 514 kilograms of material from Sculptor, and the rock revealed 724 diamonds larger than a 0.10-millimetre cutoff, or about 1,400 diamonds per tonne. The latest haul was a bit of an improvement over a result obtained late in 2002, when Diamonds North recovered 254 diamonds from a 209-kilogram batch of rock. That worked out to about 1,200 diamonds per tonne. Toutable tallies of microdiamonds mean little, if the results are not supported by signs of a coarse size distribution curve, but there were plenty of signs in the latest test to provide encouragement. The proportion of the diamond parcel that was larger than a 0.30-millimetre mesh was greater than 21 per cent, although it was down slightly from the 26 per cent that had clung to a similar sieve in 2002. The proportion of diamonds larger than a 0.425-millimetre screen was also a bit larger in the earlier test than in the recent sample, but things were different with the larger sieve classes. The initial sample had just four diamonds that were large enough to remain on a 0.85-millimetre screen, or about 1.5 per cent, while there were 25 such stones in the rock that had been collected last year, and that worked out to nearly 3.5 per cent of the latest parcel. Adding to the promise were some larger macrodiamonds. There were just two diamonds larger than a 1.18-millimetre sieve in the 2002 lot, compared with eight stones in the recent batch, and two of them had also been recovered by a 1.70-millimetre screen. In all, Diamonds North and its partner on the Blue Ice property have now recovered 29 diamonds larger than a 0.85-millimetre sieve from about 723 kilograms of Sculptor kimberlite, and all of those diamonds would typically be recovered during a small mini-bulk test. Ten of the diamonds were large enough to be recovered by a 1.18-millimetre sieve, which is a typical cutoff used during a larger mini-bulk test. The partners did not reveal the weight of any of its diamonds, or the parcel as a whole, but it seems likely that the larger stones provided enough weight to produce at least a modest sample grade. Such calculations
are relatively meaningless at this stage, but the combination of
microdiamond numbers and the apparent coarse size distribution curve continues to provide hope that Sculptor could have a significant grade. In fact, the Sculptor numbers seem comparable with the tallies from the AV-1 kimberlite outcrop on Melville Peninsula, which has turned into a promotable find for Stornoway Diamond Corporation and triggered a prominent area play that has attracted some diamond majors. Stornoway and its partners on the Aviat play have come up with 2,306 diamonds from 1.67 tonnes of material, and that works out to just a bit less than 1,400 stones per tonne, which is close to the number from the cumulative Sculptor sample. About 26 per cent of the AV-1 diamonds were also recovered by the 0.30-millimetre sieve, contrasted with a rate of about 23 per cent for the combined Sculptor sample, but at the larger sieve sizes, Sculptor that had an equal or even superior proportion. For instance, 69 of the AV-1 stones had been recovered on a 0.85-millimetre mesh, or about 3 per cent of the parcel, while the Sculptor tally of 29 was produced a similar rate. In fact, the stone size distribution of AV-1 and Sculptor are quite similar across the range of sieve sizes, and that should increase the likelihood that the partners will complete a larger test of the Victoria Island kimberlite at some point. The geometry of the body is a concern, as Sculptor appears to be a relatively narrow dike. The two samples collected last year came from trenches that indicated a true thickness that ranged between 1.2 metres and 1.5 metres, but much more work will be required to accurately determine the thickness and orientation of the body, which is one of three offset, parallel dikes in the central part of the Galaxy structure that hosts several diamondiferous bodies. Teck and Diamonds North did not come up with as much promise from the neighbouring Pegasus dike, but that was no great surprise, based on the 2002 sample. That year, Diamonds North processed 337 kilograms of material from the kimberlite dike and recovered 52 diamonds, or about 150 stones per tonne. The latest test delivered another 30 diamonds from 221 kilograms, which worked out to about 135 stones per tonne. In all, the Pegasus dike has produced just 82 diamonds from just under 560 kilograms of kimberlite, and the rate of about 145 diamonds per tonne is nearly an order of magnitude less than at Sculptor. As well, the cumulative sample does not appear to have as a coarse diamond size distribution curve as its richer sister. Of the 82 diamonds larger than a 0.10-millimetre cutoff at Pegasus, just 10 were large enough to be recovered by a 0.30-millimetre screen, or about 12 per cent. Nevertheless, there was one diamond in the Pegasus parcel that did remain on a 1.18-millimetre screen. As a result, it might take a larger test to better define the size distribution curve, but the modest diamond haul is a discouraging sign. Teck and Diamonds North also have their first set of diamond counts from a new find in the vicinity of Pegasus and Sculptor. The numbers from Orion unfortunately bear a much closer resemblance with those from Pegasus than the more toutable tally from Sculptor, but the tiny sample could be misleadingly low. In all, about 16.4 kilograms of Orion kimberlite produced just five diamonds, or about 300 stones per tonne. None of the stones were large enough to be recovered even by a 0.30-millimetre screen, but the minuscule parcel is far too small to reveal anything about the diamond size distribution at Orion. Meanwhile, there have been signs of encouragement from a geophysical survey completed by Diamonds North and Teck that would seem to have expanded the area of promise. Ms. Curry said that there appeared to be a third structural zone that could contain kimberlites, lying between the Galaxy structure and the King Eider zone, about 25 kilometres to the north. As well, there is a fourth zone, based on some intriguing geophysical targets to the southwest of Galaxy. Ms. Curry said that the southwestern targets were not trending like Galaxy and the two zones to the north, appearing to be circular targets instead. Such targets could be pipes, unlike the majority of the features along the Galaxy zone, which are dikes. Ms. Curry is no stranger to a hectic diamond promotion, as she got her start with Mountain Province Diamonds in the mid-1990s, in the early days of that company's potentially economic project at Kennady Lake. The play provided several roller coaster rides for investors through the years, but things settled down somewhat as the project reached the advanced stages, and Ms. Curry decided to move on. She has been kept busy since she joined Diamonds North in the late summer of 2002, just a few days before the company's slumbering stock sprang to life with the first batch of promotable diamond counts from Victoria Island. The company's shares had been trading for less than 40 cents at the time, and the recovery of over 100 diamonds from less than seven kilograms of Sand Piper East kimberlite kicked off a promotion that has gathered momentum over the past 18 months. Despite an active role in the promotional end of things with two active diamond hunters, Ms. Curry arrived at gems by chance. She studied political science and history at university, but took up a career in the financial sector in the late 1980s, starting with Midland Walwyn in Toronto. The history student ultimately became a futures trader with Midland, a role she continued when she moved over to Marleau Lemire Securities. Ms. Curry moved to Vancouver when Marleau Lemire was opening up a futures operation, but she did not last long, taking the Mountain Province job just months later. The good news from Sculptor carried Diamonds North's shares to a new high, as the company's shares peaked at $1.79 in intraday trading on Monday, then settled back to spend the remainder of the week near the $1.50 mark. Curiously, most of the volume increase preceded the news by a few days, although much of that interest may have been due to the acquisition of a promising play to the east, much closer to Stornoway's Aviat project. Diamonds North is still waiting for diamond counts from a number of its Victoria Island samples, including a few batches that could deliver some toutable numbers, and that should keep Ms. Curry busy in the coming months. Diamonds North lost a penny on Monday, closing at $1.52.
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