Hello Letmebe Frank
For what its worth, what Mr. Kaiser has to say:
March 28, 2002
Freightrain results confirm North Baffin Island's diamond potential
On Wednesday morning March 27 Twin Mining Corp (TWG-T: $0.52) released
good mini bulk sample results for its Freightrain kimberlite system on
the Jackson Inlet project on the Brodeur Peninsula of north Baffin Island
that are consistent with expectations. A total of 228.19 tonnes of dry
weight kimberlite from six pit sample sites yielded 46.208 carats for an average
grade of 0.2 ct/t. This grade is consistent with the 0.2 ct/t average grade
obtained from the prior year's smaller mini bulk sample of 18.41 tonnes
that yielded 3.644 carats from two sample pits. The average grade is
also fairly consistent with the range implied by the size-frequency
distribution curve I have plotted using the square mesh micro diamond
results Twin released in early February. The market, however, which may have been
hoping for a miracle, reacted with subdued enthusiasm. The stock traded
614,200 shares within a fairly narrow range of $0.46-$0.58 to close up a
penny at $0.52. While the results are good in the sense that they
confirm expectations created by earlier results, they do not yet
signal the presence of a world class diamond resource. They do, however, justify
high hopes for a high grade discovery this summer on Brodeur Peninsula
Bulk sample grade cannot yet be matched with any Freightrain tonnage
First of all, it is impossible at this stage to assign tonnage to the
bulk sample grades. These mini bulk sample grades demonstrate little more
than the grade of the pits excavated last summer. Furthermore, there is
the strange 29% shrinkage of the original 320 tonne sample. If this were due
to water, whose specific gravity is 1, the volume of the bulk sample
would have shrunk 50% unless the material were extremely porous.
Alternatively, if country rock waste were removed after the sample
bags arrived at Lakefield, the question arises whether or not we should use a
larger tonnage as the sample size, which would translate into a lower
grade. The real issue, however, is the tonnage that this bulk sample is supposed
to represent. Although Twin management has proposed that the dozen or
so kimberlite surface showings at Freightrain are part of a very
large eruptive kimberlite rather than a complex system of dykes and
sills intruding the limestone country rock, drilling into the complex to
date has intersected far more limestone than kimberlite. It is possible that
the first hundred metres or so of Freightrain is dominated by a clutter
of giant limestone blocks, below which homogenous kimberlite prevails.
But Twin has not yet drilled any deep holes into the system and
demonstrated that the interbedded kimberlite-limestone sequences in the
upper hundred metres give way to continuous kimberlite at depth. Twin also
has not drilled any angle holes through Freightrain designed to test if
indeed a crater was excavated in the country rock by an erupting
kimberlite. On the plus side, Lakefield has once again confirmed that the material tested is crater facies. This implies an explosive aerial emplacement rather than
the sub-surface emplacement typical of hypabyssal textured dykes and sills.
How a kimberlite magma behaves depends on its energy and carbon dioxide
content as well as the presence of groundwater and the confining pressure
of the country rock at the surface. Depending on how these factors come
together in different climatic and cratonic settings the outcome can
be very strange. So the jury is still out on whether Freightrain is a
complex system with limited tonnage potential or if is a very large
kimberlite whose upper portion has been heavily diluted by country rock
but which at depth could host a substantial kimberlite resource.
Largest stone size is within the range of statistical expectations based
on grade and sample size
Twin has not yet decided what to do next at Freightrain, but very
likely the next stage will involve delineation drilling and petrography
designed to define the geometry and tonnage potential of the Freightrain
system. Twin already has a good idea of the grade, which is too low for
a small tonnage resource in this remote Arctic location even if the average
carat values turn out to be in excess of US $150 per carat as is the hope
for the Fort a la Corne project of Kensington Resources Ltd (KRT-V: $1.64) and
De Beers in Saskatchewan. Twin needs to prove that Freightrain has in
excess of 30 million tonnes before it can justify spending more money on
larger bulk samples in order to nail down the carat value. What impresses me
about the latest results is the coarse diamond distribution. The largest
stone weighed 1.557 carats, which trumps the one carat stone found in the
smaller bulk sample. While some Twin speculators may have been hoping for
bigger stones, the size range recovered is what you would expect from 228
tonnes of kimberlite grading 0.2 ct/t. Only people who were expecting a
much higher grade have a right to be unhappy, though they did not have a
sound basis to hold such expectations based on earlier results.
Excellent coarse diamond distribution for Freightrain kimberlite
Lakefield used a bottom cutoff sieve of 0.85 mm to recover a total of
869 diamonds. Of these 30 stones weighed 0.25 to 1.557 carats. Twin's
Herman Derbuch deserves congratulations for the unprecedented degree of
disclosure he provided in the form of stone counts, sizes and weight.
Using the six size fractions provided by Twin one can plot the size distribution
curves for the macro diamonds. If you take only stones caught by a 1.7 mm
screen, which is larger than the 1.5 mm commercial cutoff used by De
Beers, Twin recovered 190 stones weighing 31.111 carats for a calculated grade of
0.14 ct/t. If we had the stones caught by a 1.18 mm screen we end up with
515 stones weighing 41.78 carats for a grade of 0.18 ct/t. The distribution
of the stones and sizes among the sample pits on initial examination is
such that there are no obvious distortions due to luck or tampering. I
suspect that if modeling experts like Johan Ferreira and Stan Deakin got
hold of the data their modeled grades for Freightrain would be higher than
the measured grade. The diamonds were described as high quality white
and transparent, though 4.376 carats were described as transparent stones
of yellow, pink and amber colour up to 0.87 carats in size. I am not sure
if these qualify as prized fancy colours rather than lower value
tinted stones, but it is nice to see that the majority of stones are the
colour that most people want their diamonds to be. The parcel is large
enough to be valued, though Twin has not yet indicated if it will submit the
parcel for valuation and disclose the results.
Twin's upside lies with the discovery of richer kimberlites
The real importance of the Freightrain bulk sample results is that
they confirm that the northern part of Baffin Island, in particular
Brodeur Peninsula, is underlain by a fertile, diamond friendly mantle that
cooked up some pretty good diamonds. Because we do not have a handle
on the tonnage potential of the Freightrain kimberlite it is hard to assess
the economic implications of the results. In any case, the grade
is sufficiently low that determination of economic feasibility is out of
the reach of armchair number crunchers. The proximity to the Nanisivik Mine
and deep seawater makes development of a diamond mine on Brodeur Peninsula
less daunting than on the Slave craton, provided all those proposed
wildlife sanctuaries do not become an obstacle. But developing of a diamond
deposit at Jackson Inlet would be definitely more of a challenge than
developing the same deposit in Saskatchewan. In the case of Freightrain
there could be a similarity with Fort a la Corne in that both deposits may prove to
be buried underneath a hundred metres of waste rock. However, while at Fort
a la Corne the thick overburden is an unavoidable fact of life,
other kimberlites on the Jackson Inlet project such as Cargo 1 may have
most of their tonnage close to surface. As I argued in Kaiser Express 2002-03
(Feb 8, 2001: An Emerging Hotspot in Canada's Far North), the real
upside potential for Twin's Jackson Inlet project lies with the dozen or
so other magnetic anomalies that could prove to be higher grade kimberlites.
The Freightrain system has received all the attention to date not because
it was the best kimberlite found by Twin, but because it is the first one
that came to Twin's attention. In a sense Twin jumped the gun in bulk
sampling Freightrain rather than focusing its efforts on identifying
as many kimberlites as possible and then prioritizing them for bulk sampling on
the basis of tonnage estimates and micro diamond results. The micro
diamonds reported in late December for a 5 metre section from Cargo 1
weighing 18.65 kg yield a size distribution curve that compares very well with the
1.5-2.0 ct/t Kennady Lake and Snap Lake kimberlites from the South Slave
region. The size of the reported Cargo 1 sample is too small to be
statistically meaningful, but if caustic fusion results for the rest of
the 148 metre interval are similar, then Twin has a potential winner on its hands
that will spur strong speculative market action. Micro diamond results for
the balance of the Cargo 1 sample are now long overdue, so it may be unwise
at this stage to bet in advance on good numbers.
Wait for the rest of the Cargo 1 micro diamond results
At current prices the 100% owned Jackson Inlet project has an
implied project value of only $40 million based on Twin's 76.4
million fully diluted capitalization. The latest news release from Twin reads
very differently from earlier news releases in terms of technical
coherence, perhaps reflecting management's realization that Twin's treasury
is running low and that the latest results demand attention from serious
diamond investors. I think the stock's recent downtrend is in the
process of reversing itself, but to build upside momentum the stock will need
either good Cargo 1 micro diamond results or a clear indication from
Twin management how it plans to proceed with exploration of the Jackson
Inlet project and how it plans to finance such work.
Regards
Vaughn |
