SGF.V Shore adds to its diamond tally
2004-10-22 14:47 ET - Street Wire
by Will Purcell
Ken MacNeill's Shore Gold Inc. continues to produce promotable quantities of diamonds from its Star kimberlite. The latest batches of material delivered another healthy haul and the company remains on track to exceed its 3,000-carat goal by a significant sum. There were no gaudy grades among the latest six individual batches of rock and there were none of the particularly large diamonds that have graced earlier portions of kimberlite. As a result, Shore's shares continued to slip away from a recent high of $3.15, reached early this month. Nevertheless, there are a few encouraging developments in the latest data.
The latest samples
Shore Gold processed another 1,447 tonnes of kimberlite over the first half of October, coming up with 222 carats of diamonds. That tally suggests a grade of just over 0.15 carat per tonne for the latest five batches of rock, all of which came from the 235-metre level that lies within the promising early Joli Fou phase of kimberlite.
The latest material brings Shore's total tally to 14,576 tonnes and 1,813 carats. That works out to an average grade of 0.12 carat per tonne, although the count from the higher-grade phase is a more meaningful tally. Shore processed 10,022 tonnes of early Joli Fou kimberlite so far, recovering 1,617 carats. That cumulative sample suggests a grade of 0.16 carat per tonne.
The upper layers of Star contain the late Joli Fou kimberlite, which has a markedly lower grade. Shore encountered the material in its early samples and only 2,675 tonnes of rock can be fully attributed to the lower-grade region. That rock contained just 65 carats, suggesting a grade of 0.024 carat per tonne. That lower-grade material accounts for about 20 per cent of the Star kimberlite.
With all the remaining rock slated to come from the richer regions, Shore's 25,000-tonne test seems likely to exceed the original 3,000-carat target handily. At the current rates of recovery, the complete sample could deliver something close to 3,500 carats. That would imply a sample grade of about 0.14 carat per tonne, but such an average is unlikely to be representative. As a result, a detailed look at the various parts of the pipe offers a more meaningful assessment.
The southeastern drive
Three of the six individual samples originated along the southeastern drive, which is responsible for most of the better grades so far. The rock weighed about 717 tonnes and the diamond haul ran to 111.4 carats, good enough for a grade of 0.155 carat per tonne.
That was significantly below what came from the southeastern drive in previous lots. Shore processed over 3,800 tonnes from that zone in earlier batches, producing an average grade of a bit more than 0.21 carat per tonne. The cumulative tally for the southeastern drift now stands at 4,559 tonnes and 937 carats, still good for a 0.206-carat-per-tonne grade.
It is reasonable to dismiss the lower outcome as the normal statistical variation expected with smaller samples. The best of the individual sample grades this time out came from a 143-tonne batch that graded just 0.185 carat per tonne. In its earlier samples, Shore produced grades of about 0.30 carat per tonne from four individual samples and two others topped the one-quarter-carat-per-tonne mark. Shore's other individual batches from the southeastern region appeared comparable with what the company found in the current samples.
The latest three lots of material from the southeastern drift also had a somewhat less favourable diamond size distribution. The average diamond weighed about 0.11 carat, while the zone had previously been averaging nearly 0.15 carat per diamond.
The lower value might seem significant at first glance, but once again the results seem in line with what Shore produced from its comparable samples over the past few months. In fact, the healthy diamond size distribution within the richest samples from the southeastern samples is primarily responsible for inflating the average stone size. Those top six samples had an average grade of nearly 0.30 carat per tonne, combined with an average stone size of just over 0.20 carat.
The southeastern drive yielded another diamond weighing more than eight carats, even without the extra oomph added by a higher-grade sample. The 8.03-carat diamond lacked the promotability of some of the earlier gems however, because of its off-white colour classification.
The northern drive
If investors found cause for disappointment in the southeastern samples, there was reason for optimism in three batches of rock from the northern zone. Shore processed 730 tonnes in three batches from this area, and the 111 carats yielded a grade of 0.152 carat per tonne.
That was marginally higher than what the company found earlier. The earlier portions of rock from the northern zone produced a grade of about 0.138 carat per tonne from 1,028 tonnes of rock. The latest samples have boosted the count to 254 carats from 1,758 tonnes, for a grade of 0.145 carat per tonne.
A consistent average diamond size accompanied the somewhat healthier grade. The latest three batches contained 991 diamonds averaging about 0.112 carat, matching almost exactly while the earlier samples delivered. The northern area yielded a 6.28-carat diamond, although much of the promotability of that stone disappeared with its off-white colour classification. The northern samples did produce a 3.07-carat white diamond, to go with a 3.12-carat white stone found in a southeastern sample.
The encouragement
As the Star sample progresses at the 235-metre level, the results offer increasing confidence that the average grade of much of the kimberlite in that area approaches 0.15 carat per tonne. The average grade of the sample at that level is inflated significantly by the presence of several higher-grade zones. The average grade of all the batches at the 235-metre level is about 0.19 carat per tonne, and if that value holds up, Shore's sample could net about 3,750 carats from 25,000 tonnes.
George Read, Shore's vice-president of exploration since 2003, believes the results from the 235-metre level will prove representative of the early Joli Fou kimberlite in general. That might seem a bit optimistic, as the company has processed about 3,700 tonnes from other levels when it dug its shaft.
That material yielded 426 carats, or about 0.115 carat per tonne, with an average stone size of 0.086 carat. Those values lag behind what the 235-metre dig is producing. It is too soon to read much of anything into that, as it would take just a few richer samples to rapidly inflate the averages elsewhere.
Mr. Read expected the variations in the grades of the Star samples. Shore anticipated that its individual tests would deliver grades between 0.10 and 0.30 carat per tonne, with a few possibly straying beyond those values. Such variations are normal for any kimberlite body, but it is often the comparatively small richer zones that contribute much of the promotability of a diamond deposit. That seems the case at Star.
The players
Mr. Read came to Shore from Canabrava Diamond Corp., where he had been president until the company laid plans to merge with Superior Diamonds Inc. last year. A diamond explorer for two decades, Mr. Read worked on several gem projects in Canada with De Beers. He emigrated from South Africa in 1996, setting up shop in Canada as a consultant.
Mr. Read has been a determined diamond hunter, occasionally outlasting the patience of his employers. He worked on Victoria Island with De Beers, and he picked up a project in the area for Canabrava after the diamond giant had abandoned the region. As well, Mr. Read's belief in a Brazilian project outlived the patience of two employers. SouthernEra Resources Ltd. was first to abandon the play, while Mr. Read was its project manager. He made the jump to Canabrava, which unloaded the Brazil play in the summer of 2003.
Mr. Read was just one of several appointments made by Shore during a busy 2003. The company added two directors of Bill MacNeill's Claude Resources Ltd. to its board. The move was not a shock, as Claude's Mr. MacNeill is the father of Shore's president, Ken MacNeill. Claude's vice-chairman, Arnie Hillier, joined the board of Shore, along with Neal McMillan, who has been Claude's president since 1996.
An accountant by trade, the Saskatoon-based Mr. Hillier is the chief executive officer and chief financial officer of Claude. He has been with the elder Mr. MacNeill at Claude since 1991. Before that, he handled financial matters for Cameco Corp. Cameco was one of the first companies to hop aboard the Fort a la Corne diamond bandwagon back in the late 1980s, although the project never had a top billing with the big company.
Shore's other Claude director also has a financial past. A resident of Furdale, just south of Saskatoon, Mr. McMillan spent 16 years with RBC Dominion Securities Inc. before he jumped to become president of Claude in 1995. In 1975, Mr. McMillan was elected as the Liberal member for Kindersley in the Saskatchewan legislature. An opposition role did not appeal to him and his stint as a politician lasted just three years. Mr. McMillan is also a director of Cameco.
Harvey Bay was another 2003 appointment to Shore's board. The Saskatoon-based Mr. Bay is another accountant who has specialized in the mining sector for more than 20 years. The chief financial officer of Shore since late in 2002, Mr. Bay also has a link to Cameco. He counted beans for the company back in the 1980s. |
