Hello Frank
Sorry for the delay in responding but have been buried in work.
Yes, no question, “luck” is always a factor, but of course primarily as it pertains to future field or mid-term results, and while my selections were predicated to a considerable degree on anticipated 2005 field season results, they were more heavily prioritized because of a) extraneous factors, b) 2004 results or pending results c) management expertise/reputation d) irrational share under-valuations in comparison to pier plays exhibiting similar or lesser geologic potential, and e) geologic probability of potential success in comparison to their pier group.
Additionally, I probably should have included two other “issues” on my list, but as I thought most of this had been resolved last fall, I didn’t bother.
24. Amount of operating capital on-hand.
25. Likelihood management will be diluting float prior to or during 2005 field season.
Re: your SDM comments. Southernera of course still has claims in Ontario and are partnered on one NWT play with DDN south of Kennedy Lake and remain active at Margaret Lake. All three properties have excellent potential and I believe management is still committed to another season at Yamba Lake. However, it isn’t clear how aggressively HB et all are exploring these plays in comparison to their activities in Ghana, the RSA, and Namibia, etc. Based on SDM’s repeated failure to find economic Canadian, Australian or even Brazilian pipes, I believe its clear that the market isn’t prepared to award a premium until something good is found. Much of the game is after all, psychological. In the early to mid 90’s the market was prepared to award value on CJ’s reputation, however, that simply isn’t a factor any more. Diamond investors are now typically from Philadelphia and have clearly adopted the mantra of the “show-me” state. By comparison, there probably aren’t two clearer examples of plays rewarded with “management reputation premiums” than SWY and DSP as their share price is difficult to justify when one considers and compares field results and other extraneous factors to other plays in their pier group not so generously appreciated. Both have clear potential, but no more so than and perhaps even less than say SRM and MTX.
In that regard, over the last two years, I believe MTX was rewarded with a “management reputation premium” for CF, however, outside of the institutional/brokerage community, that appears to have since been discounted by the average speculator who is always less patient and probably less technically informed. In that regard, aside from his success finding what is now the Ekati mine, the average investor may not know, or even care what makes CF’s involvement (and heavy MTX investment) of such value, but here’s one point for those who care about such things. Over the past 15 years, Chuck secured and analyzed KIM’s from every producing ore body in the world developing a proprietary grading system in the process, specifically indicative of the highest grade and highest carat value ore bodies. Every play out there trumpets G10’s based on Gurney’s old pyrop garnet plots, however, Chuck has broken G10’s into 10 specific subgroups and as a consequence, in directing the staking and exploration activities of MTX and CD, only properties producing KIM’s plotting within his very narrow economic grading system are focused on. Whether any of that grading system is reflected in the geochemical discussion in WillP’s previously posted News Letters I couldn’t say, but unquestionably, diamond exploration is far more sophisticated than it was in 1990 and CF’s two diamond juniors (MTX & CD) appear to have at least one tool that allows them to increase the probability of success.
When I read point "5. Some plays are managed and/or significantly owned by well recognized names who have previously found economic Kimberlite (pipes)" DSP & MTX came to mind, but not SRM. Maybe you can fill me in on that one. I didn’t think I listed factor #5 under my SRM discussion. If I did, it was an error. Pam Strand is very knowledgeable and experienced, works very closely with Kennecott’s exploration experts in directing the activities of SRM’s crews and appears to work symbiotically with Eira Tomas (SWY & Aber), but I am unaware of any previous discovery reputation/acknowledgement in the investment community.
Re Point "7. Some plays have targets that do not appear to be on any previously identified craton (cool thick, undisturbed mantle root zones)" Other than DVV's exploration of targets in the states, nothing came to mind for me. You however had tied this poit to MTX. I wonder why? That was an error thank you. My reference should have stoped at factor #6.
I was certain point 8 was directed at TWG: "Some plays have interesting even exciting economic deposit potential, however management either has little to commend it and/or has its focus elsewhere". Quite right however, I believe this also applies to quite a number of the smallish plays out there which really seem to only be in the game to annually generate some promotable story in order to float another stock underwriting. Little substantial ever seems to be accomplished often after more than a decade at the well and one inevitably reads about management’s acquisition of some other flavour of the day commodity play within months of a share float, uranium, moly, copper, etc. etc...
My first thought for point 9 was it fit ACA, but you may have been thinking of DDN? "9. Some plays have dikes as their principal resource while others have one or more small pipes making economic deposit more difficult to establish". This really fits both of those plays and frankly, most others as well. To my knowledge, so far, only DB, SGF, GEM, TWG, SRM, DSP, MPV, DHK, MTX and (ACA – Alberta) appear to have above average sized targets and/or diamond bearing ore deposits.
For point 11 "Some plays are nearer to well developed infrastructure than others and/or are able to be explored/developed over more than just a few months of supportive weather". My first thought was GEM, but in retrospect I guess SRM might fit the bill somewhat. But from what I have read of the Victor pipe, infrastructure is a big concern, as there are no roads into the JBL's. Last year I had posted the feasability study for the victor pipe, and it was discussed at length in the report. I did a quick look for it and I didn't find it, but I did find these references: www.dumontnickel.com/PDF/MetVen_TechRep.pdf
debeerscanada.com; I believe ACA’s Renard and some Alberta pipes + SGF’s Star Kimberlite and GEM’s utramafic flow deposit are not too far from power. In the latter two cases, I believe water, labour, roads, fuel and municipal infrastructure, are all reasonably close. In relative terms, SRM’s claims are reasonably close to Rankin Inlet and tidewater, while TWG’s Jackson Inlet claims lie near Arctic Bay and tidewater, SWY’s AV pipes near Repulse Bay and tidewater, DNN Victoria Island dike/blows near Cambridge Bay and tidewater and I believe DSP’s targets are less than 80km’s from what used to be known as Arctic Red River on the Dempster just south of Inuvik and Ft. Good Hope along the Mackenzie Valley pipeline and road in about five years. Finally, my understanding is that because Ontario’s winter is less harsh than the NWT’s and the days longer, and because the local Loon s…t is only accessible when frozen, unlike NWT plays, the field season offering MTX crews the greatest transportation and operating/exploration flexibility is the winter meaning MTX will have 2005 drilling, sampling and ground geophysics news to distribute in the next few months, long before most other plays.
Point 13 was likely refering to SRM, and maybe DSP - I don't think MTX could qualify. "Multiple coincident mag/EM (and/or gravity) +2 to +8 hectre pipe targets immediately up-ice of outstanding mineral geochemistry trains, will be drilled later this spring or summer" As my post indicated, MTX management apparently see some large but extremely feint geophysical targets, those three KIM green clay fans/horizons are quite wide suggestive of a wide or long source and of course the Victor pipe is large by Canadian standards. Beyond that however, MTX struggles with complex glaciation, noisy geophysics, no outcropping targets and reasonably thick and in the spring/summer/fall waterlogged overburden. Like SDM’s Margaret Lake, Yamba Lake claims, and DB’s Kennedy Lake exploration efforts, potential pipe size can only be inferred by the aforementioned more vague evidence than is typically available say in and around the Ekati mine or what appears to be discernable from geophysics by DSP and SRM on their respective claims..
Who is currently drilling "Multiple coincident mag/EM (and/or gravity) +2 to +8 hectre pipe targets are currently being drilled immediately up-ice of outstanding mineral geo chemistry trains" As noted, it is my understanding MTX is currently drilling targets on their Ontario claims near DB’s Victor pipe.
"15. Kimberlite fragments and/or boulders have been found and proven to contain outstanding G10’s and/or high micro and/or macro diamond counts" - Does this apply to SRM and DDN?Yes, but it is my understanding that it also applies to MTX, DSP and SWY.
16. is clearly MTX, but you tied it to SRM - slipup? "Near large circular mag/EM targets, RC cores have been pulled containing thick green Kimberlitic clays, Kimberlite fragments, Illmenites and/or excellent quality G10 pyrops exhibiting kelphitic(sp?) rims and several micro or macro diamonds" Yes, sorry, it should have been MTX, however, excepting the green clay’s, I believe it also applies to DSP, SWY, TWG and SDM (Margaret Lake & Kidme claims).
Vaughn, I didn't know who has "17. From several large circular targets, deep Kimberlite cores have been pulled exhibiting numerous large eclogitic nodules, little country rock and numerous obvious large pyropes (and/or diamonds :-)" Care to share? DDN on VI? This was intended as more of a generic milestone factor but come to think of it, I suppose you could say that it applies to MPV, SGF & TWG and excepting the “large circular targets” characterization, it would also apply to DDN, SWY, TAH and possibly ACA (Renard)
DDN?: "18. Ten to fifty kilogram RC Kimberlite samples have been tested and found to contain micro/macro diamond count ratios suggestive of potential for diamond grades similar to operating and/or developing Canadian mines" Also SWY, TWG, TAH and MPV.
DDN for sure: "19. Ten to fifty kilogram Kimberlite samples have been tested and found to contain the occasional or more than occasional yellow, pink or blue fancy macros…" Yes DDN and if I recall, there was some discussion of fancies cropping up in TWG’s Jackson Inlet pipes, albeit far less frequently.
MPV: "20. A mini-bulk sample produced 1,000 to 25,000 carats examined by an established firm of diamontaires(sp?) who assigned a preliminary generalized value of approximately $75/carrat or better"? Again, this was principally intended as more of a generic milestone factor but it does apply to MPV and TAH.
TAH? "21. A Feasibility Study is near completion and/or a Water Licence and other permitting has been issued" and MPV.
RE: "22. A major will be making a takeover offer for a junior or a buyout of one of its properties that has proven to offer excellent economic potential…:-)" Do you think it will happen before completion of a prefeasability study? If so who, or just wishfull thinking? Again, this was principally intended as more of a generic milestone factor but a practical probability for MPV.
SWY, SRM, DDN, GEM - more? "23. And some plays are managed and/or partnered with major diamond miners who don’t make a habit of speculating in lost causes…" Until TWG inexplicably terminated it, Kennecott had a one year arrangement for JI exploration assistance. Its now with SWY, however, no one is going to confuse SWY with Kennecott. MPV with DB’s of course and I believe BHP is partnered with Archon if memory serves.
So your short list is MPV, MTX, SRM, DDN and A gamble on CD (which I will add to my list). Yes
It's great that you took the time to clearly explain your reasoning for your choices, and I agree with it. I have a positionin SRM & DDN, and would like to add some MTX, but without some real results it will hover under a buck. In that regard, I am afraid I don’t agree. Firstly, MTX like all junior Canadian diamond plays will appreciate over the next few months. Take a look at the annual charts on these plays. Second, the RSP season is approaching. For a diamond junior with no pipes, MTX is remarkably popular amongst mutual funds and institutions. Look at the spreads between Bid and Ask… if a fund/institution steps in for more you will see a very quick pop. Third, as previously noted, unlike almost all Canadian diamond juniors, MTX is currently on site actually conducting exploration/drilling activities. If more macros are found in even thicker green clay and/or kimberlite is intersected, MTX will pop… probably before the PDAC and possibly this month… who knows? This is not a play that the little guy can jump in on news at a cheep price. Shares are simply too tightly held and too heavily leveraged to news.
I would add GEM to a short list of undervalued plays for its diamond and gold potential. Even TWG is likely got more upside than downside. Its Atlanta property should slowly add to its cap. As I said, almost all Canadian diamond juniors appear to bump between January and March/May but unless TWG announces a major new initiative for JI, I don’t see anything that is going to drive speculation. Regarding GEM, until the results of that sampling program are near to being reported, like MPV, why would it pop significantly?
I hope I answered you questions satisfactorily.
Now, I’ve spent way too much time on this thread and have got to get back to the grind stone.
Good luck.
Vaughn
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Hello kidl
Long time no chat.
Regarding, MTX underwriting, how often do you see a principal in a Canadian junior accumulating such a significant number of shares (while drilling is going on!!!)? Certainly builds my confidence…
How long will it last? Well, PG indicated they’d be active on at least four fronts this year, all in fairly remote locations (Northern Ontario, Greenland, Angola and Morocco or Mali I believe) so, lets assume the year for now. Having said that, one of MTX’s initiatives this summer involves the alluvial mining of an Angolan concession immediately down river from one of Angola’s most prolific/richest pipes. Based on reported recoveries from nearby operations, I imagine MTX will be able to replenish and perhaps top up its coffers from the proceeds of that low cost operation once the rainy season ends in a month or so. As an aside, about eight years ago, CJ was here speaking about SUF’s Angolan alluvial operations and had samples and showed slides of the diamonds SUF was recovering from its alluvial operations. You never saw such beautifully consistent large, perfect crystals averaging about $250/c if I recall, … even a few fantastic pinks. If memory serves, the largest pink (once cut), was purchased by the Sultan Of Brunei for around $6million.
My point being, for perhaps two to four years, MTX should be able to generate actual cash flow and possibly avoid any further dilution. That aside, I simply can’t imagine that shareholders won’t have Ontario exploration news, one way or the other, long before then which if positive, I’m sure will drive speculation about the eventual development/structuring of a similar deal to what CF spearheaded with BHP eight years ago. What did Diamet eventually get taken out at?
What the hell, let your imagination wander… one or more pipes like Victor would certainly get the market’s attention and I’ll warrant DB’s, BHP’s and RTZ’s What's the share float now 31m? Several large economic pipes - say a conservative offer of $1.5billion... whats that... +/-$48/s?
Best Regards
Vaughn |
