Interesting one for Vaughn and some other old timers that will remember this play in connection with the Tli Kwi Cho disaster....
Ten years ago, Dentonia Resources and Kettle River Resources, and their shareholders,
were robbed.
Robbed of knowing whether or not their DO-27 diamond pipe was commercial.
If you were involved with the junior mining market ten years ago, you will probably
remember "DHK", a group of junior mining companies which had a large interest in the
DO-27 pipe. The value of the shares of these companies jumped significantly as a bulk
test was being done on the pipe by Kennecott Canada..... Dentonia shares were over $10
and Kettle River went to $19.
Then the results of the bulk sample came out .... "sub-economic" was what Kennecott said.
With that result, the whole group of stocks collapsed.... hundreds of millions of dollars
were lost.
Why do I say robbed? Because the bulk sample test that Kennecott did was flawed....
messed up.... incomplete..... screwed up..... take your pick.
The reason the stocks soared.... and the reason that Kennecott went underground at a
reported $11 million cost for the bulk sample.... was because of drill results....
the drill results from the south lobe of the pipe.
This pipe is very large and is made up of two lobes, a north and a south lobe which
slightly overlap each other. If you were to look at the drilling results from 10 years
ago, you would see why everyone was so excited.... there were indications of 1, 2, and
3 carats per ton.... in the south lobe.
But when Kennecott went underground for the bulk sample, they ran into caving problems
on the south lobe and never got more than 15 to 20 meters into the edge of that part of
the pipe.... as a matter of fact, most of the so-called bulk sample came from the north lobe
of the pipe.
So, the more prospective south lobe was never really bulk sampled.
The DO-27 pipe was huge..... it is still one of the largest ever found in the Lac de Gras
area. The number used by Kennecott for the tonnage of the south lobe is in the range of
20+ million tons.
So, with those fantastic drill results and the size of the pipe, you can understand why
the stock prices were so high at that time.
But when Kennecott came out with the statement that the pipe was "sub-economic",
that killed the play and not much has happened with the pipe and surrounding ground
since.
However.... that is about to change.
A new private diamond exploration company, Peregrine Diamonds, run by Eric Friedland
and a number of other market savvy people, is going to go back to the DO-27 pipe and
test the pipe properly.
They are going to take a large drill rig, when the ground is frozen solid in late January,
and drill a series of wide diameter (12.5 inches across) holes down into the pipe from the
surface. By drilling down approximately 200 to 300 meters and drilling these holes across
the width of the south lobe of the pipe, they will be able to use the core to gather a fairly
representative mini-bulk sample.
So, after 10 years, Dentonia and Kettle River shareholders will finally get to know whether
the DO-27 diamond pipe is commercial or not.
Keep in mind that if it is commercial, then the value to Dentonia and Kettle River would be
substantial.... in the range of $70 - $140 million or more for each company.... depending on
the size and grade of the diamonds.
Dentonia Resources - DTA - 30 million shares outstanding - trading at .15 /share
dentonia.net
Kettle River - KRR - 7.5 million shares outstanding - trading at .20 /share
kettleriver.com
THE PHILIP JAMES LETTER
Philip James & Associates
(604) 687-1149 |
