Silicon Investor (SI) -- The First Internet Community

STOCKTALK

We've detected that you're using an ad content blocking browser plug-in or feature. Ads provide a critical source of revenue to the continued operation of Silicon Investor. We ask that you disable ad blocking while on Silicon Investor in the best interests of our community. If you are not using an ad blocker but are still receiving this message, make sure your browser's tracking protection is set to the 'standard' level.

Gold/Mining/Energy : A CANADIAN DIAMOND HUNT -- Ignore unavailable to you. Want to Upgrade?

To: Famularo who wrote (536)	10/4/2000 9:34:53 AM
From: Letmebe Frank	Read Replies (1) \| Respond to of 930

Frank: Thought I would post your info from Stockhouse: stockhouse.com (Note that follow up posts have good comments, like, why no mention of TAH, SUF, etc...) Das Kaiser Speaks: I have to talk about the diamond sector, which I think is ready for a new round of investor interest. The De Beers takeover bid for Winspear signalled that De Beers is serious about securing control of bedrock diamond resources outside of Africa. This was confirmed by its bid for Ashton Australia. De Beers is abandoning its traditional role as a diamond supply cartel. It is letting the diamond market float freely like any commodity. At the same time De Beers is preparing to turn itself into a luxury goods retailer whose flagship product is the De Beers branded diamond. De Beers is exploiting the controversy over blood diamonds to promote diamonds whose source can be proven. That means trouble for the alluvial diamond market as well as the after-market for cut diamonds. All this makes Canadian diamond mines so much more valuable. The permitting process in Canada is so tough that environmental objections to Canadian sourced diamonds will not hold water. Canada does not have a human rights problem. Nor does Canada have the corruption problems that would make source branding a dubious concept in third world countries. Revenue Canada wants its pound of flesh, and in grabbing that pound of flesh, it will effectively guarantee the authenticity of Canadian diamonds. There are only three juniors that I still regard as active diamond explorers in the NWT. They are Ashton, GGL and Diamondex. At the moment GGL is my favorite NWT diamond junior because it is cheap, it holds the keys to making Mountain Province’s Kennady Lake pipes economic, and it has several 100% owned grassroots prospects that were generated through eight years of systematic evaluation. GGL’s shareholder base has also grown to include a number of influential investors who will solve GGL’s chronic funding problem once GGL delivers trigger news. GGL will surprise people early next year. Diamondex is the replacement vehicle for Randy Turner’s Winspear team, which shot up the learning curve during the past couple years thanks to the Snap Lake experience. Diamondex is too expensive to qualify as a bottom-fish. I think it will take at least half a year for the Diamondex team to refocus from dyke delineation to grassroots exploration. I had just about given up on Ashton’s NWT initiative until last week when it reported the recovery of micro diamonds from till and kimberlite float on the 85% owned Ric property in Nunavut. A dyke like structure called Perseus has been discovered. About 5 holes have been drilled into this target, with results expected early November. This discovery resembles that of Snap Lake in 1997 and may prove to be a magnet for former Winspear shareholders. Ashton has a booth here and will have information on display not previously published. I haven’t yet given up on the Alberta diamond play. I do believe Ashton controls all the important ground in the Buffalo Hills area. It is presently extracting 3-5 tonnes of kimberlite from a new pipe called B252 discovered earlier this year. Preliminary microdiamond results suggest that this may be the best pipe yet. Ashton hopes to know by Christmas whether a mini bulk sample in early 2001 is justified. Owning Ashton as a bottom-fish is somewhat problematic because of the bidding war between De Beers and Rio Tinto for Ashton’s Australian parent. If De Beers wins, I think Ashton Canada’s upside is limited. If Rio Tinto wins, I would not be surprised to see Kennecott Canada transfer its non-Diavik diamond projects into Ashton Canada. That would be a big plus for Ashton. Among the diamond asset plays, I think Mountain Province is a good buy at current prices. Shareholders voted down a 4:1 rollback proposal intended to help Mountain Province preserve its NASDAQ listing. I think it is only a matter of time before De Beers comes up with the additional tonnage it needs to make Kennady Lake economic. As for the next diamond takeover bid, I predict that it will be by De Beers for Dia Met at $30 or higher. That’s a 50% premium to current levels. In three years Dia Met will be debt free and receiving 29% of Ekati production in kind. De Beers wants Canadian diamonds, and Dia Met is the best way to get a foothold in the Ekati project. I do not think De Beers will bid for Aber because, one, Diavik is not yet in production, and two, Tiffany gets the cream of Aber’s 40% share of Diavik production. Tiffany is a competitor to De Beers in the luxury goods market. Unless De Beers is confident it can break the Tiffany marketing deal, it will steer clear of Aber, at least in the near term. When to expect De Beers next move? I would suggest the second quarter of 2001.