SUE-t...in the news:
Sulliden places a modest bet on diamonds
Tue 26 Mar 2002
Street Wire
by Will Purcell
Jacques Trottier's Sulliden Exploration has joined two diamond plays,
although the company's new properties are hardly in the core regions that
are currently the focus of exploration activity in the northern regions of
Ontario and Quebec. Nevertheless, the properties have some promise as
possible kimberlite country, although whether there actually are any to be
found on Sulliden's small patches of ground is another matter entirely.
The pursuit of diamonds certainly has not been the prime focus for Mr.
Trottier, who has degrees in economic geology from the University of
Montreal. He was president of Coleraine Mining Resources in the mid-1990s,
when the company was pursuing a chromite project in Quebec, but the play
was put on hold a few months before Mr. Trottier stepped down as president.
Chromite was hardly a promotional success, as Coleraine hit a peak of just
59 cents in 1995, and had dipped below the 20-cent mark before Mr. Trottier
called it quits.
He was a bit closer to the diamond hunt during his two-year stint as a
director of Searchgold Resources, which came to an end late last year.
During his tenure, the company tried its hand at a West Africa diamond play
and picked up some Quebec ground that had some diamond potential, but the
new diamond projects were promotional non-events as well. The move toward
gems seemed to pick up steam after the departure of Mr. Trottier, although
the share price of Searchgold has continued to sag.
The move to diamonds is a recent one for Sulliden as well, which has been
pursuing metal plays in Peru, Quebec and Newfoundland over the past several
years, but without much success. Most of those projects had been written
off in recent years, leaving the Mario polymetallic project in Peru as the
company's key play. Last fall, Sulliden began a new drill program at Mario,
but the work was placed on hold late last year when the company ran short
of cash. Sulliden claims that it still has hope for Mario, citing the
partial results are inconclusive, but since the December announcement, the
company has picked up two diamond properties and come up with a bit of
cash, which is apparently earmarked for diamonds, not metals. That money,
about $400,000 in all, came from the sale of two million 15-cent shares
early this year, and another 500,000 shares at 20 cents. The shares came
with warrants, which could bring in another $330,000 if Sulliden's shares
trade above the 26-cent exercise price for a time this year.
The cash apparently will go to an initial exploration program at the
company's first diamond play, which is located in Northern Quebec. That
property, covering just over 6,000 hectares, is near Lac Bienville, about
350 kilometres to the west of Schefferville, or about 400 kilometres to the
north of the developing diamond play in the Otish Mountains region where
Ashton Mining of Canada discovered two diamond bearing kimberlites last
year.
The Superior craton covers a significant portion of Quebec and Northern
Ontario, and the region has long been known as potential diamond country.
Although most of the attention is directed at just one small area, the gems
have been hunted across an extensive stretch of Quebec for several decades,
including near Montreal, where a number of macrodiamonds were recovered
from a kimberlite. Activity picked up in the 1990s, after the discovery at
Lac de Gras in Canada's North brought diamond exploration to the fore.
The initial interest was centred in the Le Tac region, southeast of
Matagami, where De Beers recovered a tiny microdiamond from a small
kimberlite sample, and later, in the area just east of Lake Temiscamingue,
where a diamond play in Northeastern Ontario spilled across the border. The
Le Tac play attracted a bit of notice briefly, and a few companies were
sufficiently enticed by the microscopic diamond to make the trek to the
region, including Chris Jennings's SouthernEra Resources, never one to be
left out of a diamond play. Little more was found however, and the play
died out after a year or two. The Temiscamingue play was only a bit more
successful. Several diamondiferous kimberlites were discovered, but diamond
counts were modest at best.
Interest in Quebec diamonds died out for a time after the mid 1990s, but
that all changed last year, when Ashton Mining of Canada and Majescor
Resources stoked their promotional fires, touting their large properties in
the Otish Mountains region of the province, about 750 kilometres to the
northeast. Both companies had been poking around the region for a few
years, and they solidified their land positions in 2000. Speculative
attention in the region slowly grew last year, as Ashton's exploration
program turned up two kimberlitic bodies last fall.
In mid-December, Ashton revealed its initial diamond counts, and the Otish
play began for real. The first body was diamondiferous, but it was the
results from the second discovery that got the market excited. Ashton
recovered 145 diamonds from 163 kilograms of rock, including 29 macro-sized
stones. Five of the diamonds were large enough to be macros in tow
dimensions, and three of them were large enough to remain on a
one-millimetre screen. The largest stone measured 1.63 millimetres in
length, which provided hope that the Renard-2 kimberlitic body would
contain an array of commercial diamonds.
The results were encouraging, but it was the reaction of the market that
provided a Christmas bonus to the shareholders of several companies holding
land in the region. Ashton's stock jumped 50 cents on the diamond counts,
but it tacked on another $2.50 in the following weeks, as the mounting hype
created a market frenzy. Majescor's shares followed suit. The company was
still looking for its first kimberlite, but its stock jumped 20 cents on
Ashton's news, to 77 cents, and then it soared another $1.18, as
speculators tripped over each other, hopping onto the Otish bandwagon.
As a result of the attention bestowed upon the region, junior explorers
flocked to the region in droves, and the mere acquisition of an interest in
a tiny portion of the Otish region frequently a company's slumbering
shares, resulting in a hefty surge in the share price. Sirios Resources was
just one such company, as its shares jumped from nine cents to a high of 35
cents in just a few weeks, largely due to the Otish play.
With most of the prospective (promotional) ground already claimed, Sulliden
looked further north. The company's small properties are a long way from
the Otish region, but it could well be prospective for diamonds. Geologists
with the government of Quebec have been scouring their province for new
diamond prospects in recent years, and the area around Lac Bienville has
been proclaimed one of the latest areas of interest.
Sulliden apparently used an aeromagnetic survey to pick its 25 small
properties, and each one is believed to be centred on a geophysical anomaly
that resembles a kimberlite intrusive. As well, there apparently are
kimberlite indicator minerals on the property. The government of Quebec
conducted a reconnaissance sampling survey in the region and came up with
chromium picroilmenite grains.
That has helped trigger interest in the region to the north of the Otish
Mountains, but some companies have been poking around the region for some
time. Ashton has long been a believer in the region. The company collected
a significant number of till and stream samples in the district, and it
came up with its own array of kimberlite indicator minerals that were
sufficient to spur the company to pick up a block of ground in the
Caniapiscau area, roughly 350 kilometres to the north of its Otish project.
As well, a number of smaller explorers are hopping onto what they hope will
become a bandwagon. Golden Temple Mining has also picked up ground in the
area, acquiring about 27,000 hectares of ground about 275 kilometres to the
north of the Otish play. Guy Bedard's Plexmar Resources has also moved into
the Caniapiscau region, picking up ground that is about 175 kilometres to
the north of Ashton's Otish discoveries.
The Quebec play is just one of Sulliden's two recent cracks at diamonds.
The second play is located in Northern Ontario, but again, not in a region
that has seen an extensive amount of diamond exploration. The small,
2,688-hectare Coral Rapids property is about 200 kilometres to the north of
Timmins, or about 250 kilometres to the northwest of Kirkland Lake, which
was one of the centres of the earlier Northeastern Ontario diamond play.
The ground is also about 270 kilometres to the southeast of the Victor
kimberlite, which was recently bulk sampled by De Beers.
The Victor project certainly has been the best of the Ontario kimberlites,
but the project has been slow to progress since its discovery in the late
1980s. De Beers ultimately found more than a dozen kimberlites in the
Attawapiskat region, but it was the large, 18-hectare Victor pipe that
returned the most promising results. Based on the initial numbers, the
company took a mini-bulk sample in the mid-1990s, but let things sit for
several years, until it decided to take a closer look.
That look was a 10,000-tonne bulk sample that was taken from surface pits
and by drilling. The typically tight-lipped De Beers never formally
revealed the results of the sample, but the company is believed to have
recovered about 3,000 carats from the sample, for an indicated grade of
about 0.3 carat per tonne. Whatever the grade, a De Beers desktop study
deemed it to be insufficient, given the value of the diamonds and the costs
associated with a potential mine, but the numbers were apparently good
enough that De Beers has not called it quits, advancing the project to the
prefeasibility stage, in the hopes of finding ways to lower costs and
increase potential revenue.
Victor still remains the best shot for an Ontario diamond mine, for now at
least, but the province has yielded many diamondiferous kimberlites through
the years, although none of them measured up to Victor. Some of those
discoveries were made to the west of the De Beers pipe, notably the Kyle
pipes that were found about 100 kilometres further west by Spider Resources
and KWG resources in the mid-1990s. Many of the diamondiferous kimberlites
were discovered along the Timiskaming rift, from Lake Temiscamingue to the
north of Kirkland Lake and southeast of Timmins.
Several of those kimberlites were mini-bulk sampled in the heyday of the
play in the early 1990s, but none of them produced a toutable grade. The
Clifford pipe has been sampled a number of times, and it has produced a
number of commercial diamonds weighing up to 0.204 carat, but also a
minuscule grade of about 0.004 carat per tonne. KWG Resources managed to
come up with a similar grade when the company took a mini-bulk sample from
the Bucke pipe, near Lake Temiscamingue.
One of the more interesting kimberlites in the region was never bulk
sampled. Sudbury Contact Mines discovered the 95-2 pipe in 1995, and
recovered 52 diamonds from 1.1 tonnes of kimberlite. That was a modest
haul, but 19 of the stones were macros, with four of them longer than one
millimetre and two longer than two millimetres, including one that is
believed to have weighed 0.14 carat. The pipe would seem to have a lower
grade, but it could well contain a sufficient number of commercial diamonds
to make things interesting. Sudbury Contact seemed to lose interest in the
diamond hunt, but 95-2 still has a few glimmers of life, although it seems
unlikely that the current operator, troubled Hucamp Mines, will be doing
anything soon.
The diamondiferous finds in Ontario offer hope that the province will
ultimately produce a mine, and the hunt goes on, but it remains to be seen
whether the area north of Timmins will attract much attention. Sulliden
made its usual utterances about circular geophysical anomalies and an array
of promising indicator minerals, but it will likely take a discovery to
actually attract the degree of speculative interest that the company is
undoubtedly hoping for.
Sulliden's modest diamond plays succeeded in generating a bit of interest
of late. The stock doubled earlier this year, hitting a high of 30 cents in
early March, before falling back of late. Sulliden closed down two cents
Monday, at 20 cents. |
