Pele's Genesis helps Wawa play
Pele Mountain Resources Inc YPN
Shares issued 28,239,354 Sep 12 close $0.29
Fri 13 Sept 2002 Street Wire
by Will Purcell
Al Shefsky's Pele Mountain Resources Inc. has come up with something to
crow about at its Wawa diamond project, with the results from a small
sample of rock taken from the company's Genesis outcrop. The diamond grade
was modest, but it was several times better than the company's other tests,
and it is the best indicated sample grade of any mini-bulk tests completed
in the region so far. The Wawa diamond play has long been known as a
prolific producer of microdiamonds, but macro-sized stones were harder to
come by, and as a result, none of the mini-bulk samples managed to produce
a grade in excess of 0.05 carat per tonne. That is no longer the case, as
the first sample run through Pele Mountain's produced a toutable result for
the old tout.
The 4.5-tonne sample produced 53 diamonds large enough to remain on a
0.6-millimetre square mesh, and those stones weighed 0.52 carat, which
indicated a sample grade of 0.116 carat per tonne. That grade is several
times higher than any of the company's earlier samples and more than double
the 0.05-carat-per-tonne grade obtained last year by Band-Ore Resources,
which had been the previous best from the region. Pele Mountain's largest
diamond recovered from the Genesis rock weighed 0.085 carat, and the
average stone size was just a bit less than 0.01 carat. That seems very
small, but it is depressed by the size of the minimum cutoff and the
limited amount of rock that was processed.
The Genesis sample was the first real batch of rock run through Pele
Mountain's own plant, although the company had been tuning up its equipment
for a number of days before that. All told, it took less than a week for
Pele Mountain to blast out the sample, crush and process the rock, recover
the diamonds and have Lakefield Research and the company's consultants
verify and model the results.
Although the grade was significantly higher than any others from the Wawa
region, Pele Mountain saved most of its enthusiasm for the diamond grade
that had been modelled, based on the complete suite of results from
Genesis. The company's consultants, AMEC, arrived at a modelled grade of
0.30 carat per tonne, for diamonds large enough to remain on a
one-millimetre mesh. If that lofty figure were to hold up, the Wawa play
would attract serious notice, but for now AMEC is hedging its bets,
describing its modelled estimate as indicative, not absolute, due to the
small size of the Genesis samples.
That is clearly a concern, but on the other hand, there is a question of
just how efficient Pele Mountain's low-tech plant was at recovering the
Genesis diamonds. Mr. Shefsky, in fine form, said that there was "room to
imagine that there would have been more diamonds in the sample," and that
seems reasonable. It is unlikely that all of the diamonds were recovered,
as all processing plants are inefficient at recovering small diamonds, and
there may have been some problems with larger stones as well. Pele Mountain
used tracers, and the recovery of those tracers was very good, but that is
only one piece of the equation. The plant recovered diamonds by separating
magnetic rock from nonmagnetic material, and the diamonds would normally
report to the nonmagnetic portion. Some could slip through however, if a
piece of magnetic rock was attached to the diamonds. To what extent that
happened is unknown. Mr. Shefsky said that Pele Mountain had not sorted
through the tailings, looking for missed diamonds, although that will
likely happen soon. The Genesis sample was processed without using a grease
table. Mr. Shefsky said that the company still had plans to use a grease
table with its later samples, but it still had not been brought to the
site.
With the Genesis result in hand, Pele Mountain resumed the construction of
a road connecting the outcrop to the main highway. The 4.5-tonne sample had
been flown to the processing site by helicopter, and it would have been
much cheaper to truck the material instead. The road work would suggest
that the company plans to take a significantly larger sample from the site.
With the encouraging results to date, that seems a near certainty, but the
best that Mr. Shefsky could offer was to suggest that it was not beyond the
realm of possibility that Pele Mountain might take larger samples, maybe
something bigger.
It is also possible that the company could do both. The first small sample
produced an encouraging grade, and although there is the risk that the
result is unrepresentatively high, there is also the chance that there are
other spots at the large Genesis site that will have even better grades. In
fact, it would seem a stroke of bad luck if the first site tested proved to
have the best grade. As a result, Pele Mountain has the luxury of being
able to quickly complete a number of similar samples at Genesis, before
committing itself to a single, larger test.
The encouraging result at Genesis was telegraphed by the microdiamond
recoveries that Pele had completed earlier this summer, although there was
a risk that the sample was not representative, due to the tiny sample size.
Pele Mountain had processed 17 kilograms of rock, recovering 308 diamonds
larger than a 0.10-millimetre screen. A majority of the stones were very
small, but 96 were large enough to remain on a 0.212-millimetre mesh. A
total of 36 stones remained on a 0.3-millimetre screen, and seven were
found on the 0.6-millimetre screen.
Last year, Pele Mountain had processed 171 kilograms of rock from its
Cristal showing. That material yielded 327 diamonds, including 93 that were
large enough to remain on a 0.212-millimetre screen. There were 43 stones
on the 0.3-millimetre screen and 13 on a 0.425-millimetre mesh. Those
recoveries are quite similar to what had been obtained from the Genesis
rock, despite the fact that the Cristal sample was 10 times larger. The
Genesis microdiamonds were an encouraging sign that the larger sample might
produce a grade significantly better than Cristal, and Pele's haul of
macro-sized stones has done nothing to throw a damper on the result.
Later last year, Pele extracted a 100-tonne sample from Cristal, which was
processed for free by De Beers. The sample produced 96 diamonds that
weighed a total of 2.31 carats, indicating a grade of 0.023 carat per
tonne, about one-fifth of what was obtained at Genesis, although the
Cristal sample used a one-millimetre square mesh as a minimum cutoff. The
largest diamond in the sample weighed 0.18 carat, and the average stone
size was about 0.024 carat, which was significantly larger than at Genesis.
Using a smaller cutoff would have increased the grade at Genesis
significantly, but the larger size of the Cristal sample would have
increased the grade at that site as well. Nevertheless, the modelled data
would suggest that Genesis is the cream of Pele Mountain's crop to date, as
De Beers arrived at a modelled grade of 0.06 carat per tonne for Cristal,
down to a one-millimetre cutoff, which would be about one-fifth of what
AMEC arrived at for Genesis.
Pele processed a second, smaller sample from Cristal last year, and that
produced a similar result, although the sample used a significantly smaller
cutoff. The 10-tonne sample produced 49 two-dimensional macrodiamonds that
weighed a total of 0.25 carat, which indicated a grade of 0.025 carat per
tonne. The largest diamond in that sample, which was about double the
amount of rock in the Genesis test, weighed just 0.04 carat.
The largest diamond from the Wawa area was found in a 12.5-tonne mini-bulk
test that was processed by Band-Ore in 2001. The rock, taken from the
company's Engagement zone, yielded 30 stones larger than a 0.85-millimetre
screen. The diamonds weighed a total of 0.607 carat, which indicated a
grade of 0.05 carat per tonne. Included in the parcel was one larger stone
that weighed 0.254 carat, and that diamond is still the largest found in a
Wawa rock sample.
Although Genesis is likely to take a high priority in Pele Mountain's
exploration plans in the coming months, the company still has a
considerable amount of work to do on other fronts. Mr. Shefsky said that
the company had only explored about 10 per cent of the Festival property,
and the hunt for additional showings will continue as a result. Pele
Mountain has already come up with about 25 of what it calls "volcanic
units" in the southwestern corner of the property, and it seems likely that
additional finds will be made. The company continues to get a better notion
of what kind of rock it is looking for, and that should help it zero in on
the best diamond grades. Mr. Shefsky said that the Genesis rock was
distinct from other outcrops that had been tested. The material is
apparently softer and has a higher ultramafic content. As well, it has a
different appearance and apparently contains a different suite of
fragments, Mr. Shefsky said. Fortunately, it also seems to have a
significantly higher diamond content.
Although the company will spend much of its effort running mini-bulk
samples through its processing plant, Pele Mountain will continue to
process smaller samples from any new outcrops for microdiamonds. Should any
of those batches produce an encouraging array of microdiamonds, the company
will likely jump at running a larger sample through its plant. There are a
few sites already identified that could be tested as well, although Genesis
seemed to be the best of the lot. Some current sites that could be tested
include Mumm, a number of Dom Perignon outcrops, Veuve Cliquot and Moet.
Pele Mountain could have a busy year ahead of it, but the company is in no
rush to sign a joint venture partner to an option deal at this stage. The
company can process its mini-bulk samples quite cheaply, and with many of
the diamondiferous occurrences outcropping on the surface, the company has
not had to spend vast sums of cash on exploration. As a result, Pele may
elect to proceed on its own for a time.
Speculative interest in Pele's Wawa play was rekindled with the Genesis
result. The stock had traded for 35 cents in late May, when Mr. Shefsky
blew the dust off his gold promotion, but since then, Pele Mountain has
been mired in a slump that carried its shares to a low of just 15 cents
late last month. Thursday was a different story however, as Pele Mountain
gained 12 cents, closing at 28 cents.
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