Ashton Mining of Canada Inc - Street Wire
Ashton has grade hopes for Renard-4
Ashton Mining of Canada Inc ACA
Shares issued 49,062,149 Nov 29 2002 close $ 1.30
Monday December 2 2002 Street Wire
by Will Purcell
The Otish Mountains diamond play grew a bit more promising, when another small mini-bulk sample produced an encouraging result for Ashton Mining of Canada Ltd. and its partner, SOQUEM Inc. The Renard cluster of kimberlitic pipes in Northern Quebec has produced an unusual array of microdiamond counts, but at least a few of the bodies appear to have encouraging quantities of commercial diamonds. There are still many questions about the Otish Mountains project that have yet to be answered, but the grade of the more prospective pipes does not seem to be a major concern at this stage.
Speculators seemed at least modestly optimistic with the news, as Ashton' shares continued their slow recovery. The stock had traded as high as $4.65 early this year, but it slumped to a demoralizing low of 81 cents in mid-October, despite the advances in the Otish Mountains. The company's stock has bounced back a bit of late however, hitting an intraday high of $1.35 on Friday, after the news.
Ashton processed 4.81 tonnes of material from the Renard-4 kimberlitic body, which had been discovered earlier this year, recovering 3.11 carats of diamonds for an indicated grade of 0.65 carat per tonne. Two types of rock were encountered, but there was not a major difference in the diamond content of the samples. A 700-kilogram batch of brecciated country rock contained diamonds weighing 0.38 carats, suggesting a grade of 0.54 carat per tonne, while the remaining 4.11 tonnes of material was classified as kimberlitic breccia. That material contained 2.73 carats, for an indicated grade of 0.66 carat per tonne. The similarity between the diamond grades of the two rock types may have resulted from a bit of good luck however. A 0.28-carat diamond was recovered from the brecciated country rock, and that stone accounted for about three-quarters of the weight of the diamond parcel.
On the other hand, Ashton may have been a bit unlucky with the larger batch of kimberlitic breccia. The three largest diamonds recovered from that material weighed 0.32, 0.29 and 0.26 carat, and tiny samples frequently produce one or two diamonds that are outliers, significantly larger than the other largest stones in the parcel. For instance, De Beers recovered two five-carat diamonds from a mini-bulk test of its AK-5034 pipe in Canada's North in 1999, and the other large diamonds progressively decreased in size from there. The sample also included a 10-carat stone however, and a subsequent mini-bulk test produced a similar result in 2001, with a diamond weighing 9.9 carats in the mix, followed by a 4.5-carat stone. On the other hand, the company's Hearne kimberlite produced a significant array of diamonds that were larger than two carats, but the largest stone weighed just 3.4 carats. That seemed unlucky, and Hearne was certain to contain significantly larger diamonds. That proved to be the case this fall when De Beers recovered four stones weighing at least 3.4 carats, including diamonds weighing 8.7, 6.4 and 4.9 carats, from a sample of roughly the same size.
The promise of Ashton's Renard-4 was evident from the very first samples that were processed, and that should be good news for additional mini-bulk samples that are waiting in the wings. In June, Ashton processed 102.1 kilograms of kimberlite from the pipe, and another 50.6 kilograms was processed this fall. In all, 152.7 kilograms of rock had produced just 54 diamonds, but 25 of them were macro-sized stones. In all, there were 19 two-dimensional macrodiamonds, three of them exceeded one millimetre in two dimensions, and one was longer than two millimetres in two dimensions. Based on that, Renard-4 produced 350 diamonds per tonne, including 160 macros. As well, there were about 125 2-D macros per tonne, and 20 stones per tonne exceeded one millimetre in two dimensions.
All that remains significant because a number of additional Renard pipes produced similar diamond counts, and that would appear to be very hopeful news. Ashton processed 144 kilograms of rock from Renard-5, coming up with 53 diamonds, including 32 macros and 21 two-dimensional macrodiamonds. Two of the diamonds were longer than one millimetre in two dimensions, and one exceeded two millimetres. That worked out to about 370 diamonds per tonne, including 222 macros, of which about 145 were two-dimensional macrodiamonds. A total of 14 stones per tonne were longer than one millimetre in two dimensions. Those rates are quite similar to what Ashton obtained from Renard-4, and there can be no doubt that Renard-5 contains commercial diamonds. The company also ran a 364-kilogram batch of rock through its dense media separation plant, coming up with four macrodiamonds weighing 0.95 carat. Three of those stones were fairly small, but the fourth diamond is the largest stone recovered from the Otish Mountains to date, weighing 0.92 carat. Renard-5 would seem to be a great candidate for another of Ashton's mini-bulk tests, but that has to wait until early next year.
Renard-3 also appears to have promise. Ashton has processed 206.6 kilograms of rock from the pipe, recovering 81 diamonds, including 33 macros, of which 17 were two-dimensional macrodiamonds. As well, six of the stones were longer than one millimetre in two dimensions. That amounts to 390 diamonds per tonne, including 160 macros, and just over 80 of them were 2-D macrodiamonds. About 30 stones per tonne were longer than one millimetre in two dimensions. Again, that seems comparable with the haul from Renard-4, which suggests that Renard-3 might have a roughly similar grade. There was even more in the way of hope from Renard-3. Not included in the diamond haul were about 2,500 fragments that are believed to have originated from two three-millimetre diamonds that had accidentally been crushed during the recovery process. Ashton has also taken a mini-bulk sample from Renard-3, and results are expected soon.
Another Renard kimberlite with glimmers of hope is Renard-6, although its diamond counts are not quite the match of the other bodies. The company processed 152 kilograms of kimberlitic material from the body, coming up with 37 stones, including eight macros. Only three diamonds were large enough to be considered two-dimensional macros, but one was longer than one millimetre in two dimensions. Based on that, Renard-6 has nearly 250 stones per tonne, but just 50 of them were macro-sized stones. About 20 stones per tonne were 2-D macros, with about seven of them exceeding one millimetre in two dimensions. Despite the mote modest numbers, Renard-6 also managed to cough up a larger macrodiamond. Ashton subsequently processed 457 kilograms of material for macros, and it found one. That diamond weighed an impressive 0.26 carat. As a result, it might well be worth Ashton's while to process a larger batch of material from Renard-6 as well.
The mini-bulk sample from Renard-4 has a similar grade to that obtained from Renard-2 earlier this year, but there are no real similarities in the diamond counts of the two bodies. Late last year, Ashton kicked off Otish Mountain fever with the diamond counts from 163 kilograms of Renard-2 rock. The sample contained 145 diamonds, including 29 macros. Just five of the stones were two-dimensional macros, but at least three of them measured one millimetre in at least two dimensions. That worked out to about 900 stones per tonne, about 2.5 times the number at Renard-4, but with just 175 macros per tonne, the Renard-2 macro count was comparable with its sister pipe. There were only 30 two-dimensional macros per tonne at Renard-2, far less than what Renard-4 had produced, although the numbers of one-millimetre stones were roughly similar. All of that suggests that Renard-4 has a much more favourable diamond size distribution than does Renard-2. Nevertheless, when Ashton processed a 2.44-tonne sample from Renard-2 earlier this year, it came up with diamonds weighing 1.69 carats, suggesting a grade of about 0.69 carat per tonne. Included in that haul were five diamonds weighing between 0.10 carat and 0.16 carat, which again seems to be a bit on the unlucky side.
Nevertheless, the similar grades for the two pipes, contrasted with the significantly different size distributions suggested by the diamond counts, is an interesting result. It is possible that the grade of the tiny Renard-2 sample was the result of good luck, and larger, subsequent samples will return lower grades, but it is equally possible that the grade of the Renard-4 sample is on the low side, and larger samples from it will produce better results. Ashton undoubtedly has a decent notion of what the grades of its pipes might be, based on the detailed microdiamond and macrodiamond recoveries to date, but the market will have to wait until the company trots out the results of an additional 1.8-tonne test of Renard-2, which will likely be available soon. As well, the 4.5-tonne mini-bulk test from Renard-3 will also provide a few additional clues about the grade of both it and Renard-4, due to the similar diamond counts of the two bodies.
If history is any indication, the market will likely have a much longer wait to find out anything about the value of the Otish Mountains diamonds however, as Ashton has never been in a rush to provide valuations from any of its mini-bulk tests from the Buffalo Hills play in Alberta. So far, there are only vague hints contained in Ashton's results. Of the four largest diamonds recovered from Renard-4, only two were described as colourless, with the two others listed as pale brown. Meanwhile, just two of the six largest diamonds at Renard-2 were colourless, with the other four being pale yellow or pale brown. As well, some of the Renard diamonds were composite crystals. As well, the 0.95-carat stone from Renard-5 was described as a grey composite crystal, while the larger macro in Renard-6 was a clear but translucent single crystal. All of that does not sound as favourable as some other deposits that have their promoters oohing and aahing over the exceptional quality of the stones, but it will take much larger samples to actually provide a reasonable inkling as to what the average value of the Otish Mountain diamonds is likely to be. Furthermore, if some of the Renard bodies do have a very healthy diamond size distribution; it would give that average value a boost.
The size of the kimberlites is another question that will not be answered quickly. Ashton will have to complete additional drilling on all of the finds to come up with more than a guess as to just how much kimberlitic material is present in each pipe, and that information will also be a key ingredient in determining whether Ashton can make a mine on its Foxtrot property. At this stage, something between five million and 10 million tonnes seems reasonable, but that guess is subject to a considerable amount of error.
The few answers that Ashton has obtained seem hopeful so far, and the Otish Mountains play seems certain to be a busy spot again next year. Nevertheless, the company will likely need some more encouraging results from its mini-bulk tests over the coming weeks to sustain its revived promotion. Ashton closed up 11 cents Friday, at $1.30. |
