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Shear Minerals Ltd (C-SRM) - Street Wire
Shear's shares take premature tumble on rival's results
Shear Minerals Ltd SRM
Shares issued 26,920,727 Aug 5 2003 close $ 0.82
Tuesday August 5 2003 Street Wire
by Will Purcell
The shares off Pamela Strand's Shear Minerals Ltd. took a hit late last month, after a rival diamond play failed to produce more than a few microdiamonds from one of several kimberlite samples. The result was a disappointment for the fledgling diamond hunt of Comaplex Minerals Corporation and its partner, Cumberland Resources Ltd., but curiously, it was Shear's shareholders who seemed more concerned by the news, with worries that their company's recent pipe finds would prove to be barren as well. That could be a hasty conclusion however, as Shear believes the indicator mineral chemistry in the area surrounding its discoveries points toward some of its 11 pipes being diamondiferous, and it is very common to find barren pipes in close proximity to far richer bodies.
Shear wound up its drill program late last month, after putting 17 holes into 15 targets. Only two of the targets proved to be something other than kimberlites, while drilling problems at two others left the magnetic anomalies unexplained. As well, a second hole was drilled into two of the remaining 11 targets, apparently because not enough kimberlite had been recovered during the first attempt.
Kimberlite intersections varied from four metres to 96 metres, but most of the successful holes were terminated in kimberlite, once a reasonable amount of rock had been collected. The limited amount of drilling, combined with the large and circular shape of the magnetic anomalies allows Shear to classify all of its finds as pipes, but determining the actual size and shape of the bodies will require several more drill holes. Additional drilling on any of the pipes would presumably require an encouraging diamond count from the body.
The project will have to produce diamonds to sustain the interest, and diamond counts were a big worry with speculators after Comaplex revealed its meagre results. The company also had 11 kimberlite hits, and it sent representative samples from 10 of the bodies off for processing. Nine of the batches proved to be barren, and there were just three microdiamonds in the final sample, which weighed 32 kilograms. The individual samples weighed between 32 kilograms and 48 kilograms, so Comaplex recovered its three tiny stones from a total of about 400 kilograms of kimberlite.
Curiously, the bad news did little to slow investor interest in Comaplex or Cumberland. The two stocks have been on a tear of late, and they continued to post gains after the diamond setback. The barren samples had a significant impact on Shear however, which has no direct interest in the Meliadine property, which is just to the southwest of Shear's Churchill ground. Shear's shares had been hovering just above the $1 mark at the time, but the meagre counts of its rival peeled 21 cents from the stock, which closed at 82 cents immediately following the news.
The drill program has been Ms. Strand's best kimberlite success by far, since she left a government job as a district geologist in Yellowknife in 1997. Now 37, she moved to Edmonton when her husband was transferred, but most of her diamond projects are still in the Northwest Territories and Nunavut. Originally from Toronto, Ms. Strand followed a University of Toronto geology degree with a master's from the University of Western Ontario, but summer jobs began taking her to Canada's North in the mid-1980s.
Ms. Strand's business career got its start in 1996, with Pinnacle Resources (1996) Ltd. The mineral property broker sold some minor diamond properties as a major transaction for Bass Capital Corp., a Don Planche cash shell, and Ms. Strand hopped aboard as president. Renamed Shear, the company made a few minor kimberlite finds and retested an old pipe in recent years, but none of that attracted much notice from the market. Now, with a hopeful array of indicator minerals and nearly a dozen kimberlite pipes, the Churchill property has attracted speculators in droves.
Shear did not formally mention the Comaplex setback when it revealed its latest drilling results, although Ms. Strand did point out that the company was aware that there had been barren kimberlites found in the region in the past. Ms. Strand said that Shear picked its Churchill ground on the basis of its mineral chemistry. "We have not changed our view," she added. That reminder had little impact on investors however, as Shear's shares dipped to an intraday low of just 75 cents on Friday.
Comaplex and Cumberland did complete their own indicator mineral sampling program at Meliadine East, but to a significantly lesser extent that has Shear and its partners. In 2001, Comaplex turned up a number of circular magnetic anomalies with a regional aeromagnetic survey, and the following year, they devoted a small sum of cash to a till sampling program the following summer.
The partners collected and processed 82 till samples that were collected in fences in the down-ice direction from the best of the anomalies. There were kimberlite indicator minerals in 64 of the samples, although just 19 of them contained more than one type of mineral. There were just eight pyrope garnets recovered, and two of them were classified as G-10s. G-10 garnets are considered a hopeful sign that the source kimberlite sampled the diamond stability field. As well, there were 18 chromite grains recovered, and 11 of them were considered to be kimberlitic, although just one of them had a composition favourable for diamonds.
The till sampling program was followed last fall by a high-resolution aeromagnetic survey over the area, and as a result of the two programs, Comaplex and Cumberland had over 25 circular magnetic anomalies that they deemed worthy of a closer look, including drilling of 11 of them. The two companies ultimately drilled 16 holes into 12 of the targets, and they seemed to have great success, as all but one proved to be kimberlitic.
Most of the Comaplex material was determined to be macrocrystic hypabyssal kimberlite, which contained the same types and abundances of indicator minerals that were found in the sampling program, although the Meliadine partners are still waiting for the results of petrographic and indicator mineral analysis of the kimberlite. Comaplex said it would wait for the results of that work before it decides its next step, and it is likely that any new move will also depend upon jut how much success Shear has with its diamond counts.
Comaplex and Cumberland originally hit kimberlite on their Meliadine property in the mid-1990s, while they were drilling for gold. The partners turned up seven narrow kimberlite dikes at depths that varied from 19 metres to 120 metres. The widest intersection measured just 1.91 metres wide, so it seems likely that there was not much kimberlite available for processing, and initially at least, none of the material was sent for microdiamond recovery, although recent reports suggest that the samples were barren. Nevertheless, the barren bodies at Meliadine likely mean little to Shear's chances on its Churchill play.
Most of the individual kimberlite pipes that are at least potentially economic occur in small clusters. The four Diavik pipes, and the Misery, Point Lake and Jay pipes at Ekati occur along a 20-kilometre line running northeastward from the A-21 pipe. The remaining Ekati pipes that are part of the current mine plan also lie along a line that is about 25 kilometres long. That makes hunting diamonds in the vicinity of a diamond mine a good strategy.
Based on the reverse of that axiom, it might seem that the lack of diamonds in the latest Meliadine discoveries is a bad omen for the Shear finds, but it is very common to find barren or marginally diamondiferous pipes in close proximity with bodies that have a potentially economic grade. For instance, there are about 30 kimberlite finds within 25 kilometres of the four rich pipes that are part of the Diavik mine plan, and most of them are just marginally diamondiferous, or are barren.
Immediately west of the tiny Diavik cluster is the A-2 kimberlite, which had diamond counts comparable with the one diamondiferous Comaplex sample. There are five kimberlites within 10 kilometres to the south of the four Diavik pipes that were either barren, or just marginally diamondiferous. A similar situation exists to the east of Diavik. A larger cluster of pipes on the Commonwealth and Tenby claims proved to be barren or marginally diamondiferous, although a few pipes just a bit further north, on the Aber claims, did contain elevated quantities of micros and macrodiamonds. As a result, the Comaplex diamond counts likely tell very little about the potential of the discoveries made by Shear, which are spread across an area about 30 kilometres long and 15 kilometres wide, and lie at least five to 35 kilometres from the border with the Meliadine property.
Ms. Strand said that there was a lot of scientific evidence that the diamond content of kimberlites varied considerably with the age of the eruptions. As a result, a younger or older eruptive event in immediate proximity to a barren pipe could produce a far different result. "You have to test them all," she added.
Ms. Strand and Shear also believe that their more promising mineral chemistry results increase the company's chances of coming up with some much better diamond counts than Comaplex. In 2001, 64 samples were collected from the Churchill property, and 21 of them produced diamond indicator minerals. A broad suite of indicators was recovered, including both pyrope and eclogitic garnets, and of the 14 pyrope garnets recovered, six were classified as G-10s. That prompted a larger program the following year.
Shear collected 130 more samples in 2002, and although just 27 of them produced indicator minerals, some of the samples contained a significant number of them, with one batch containing 45 pyrope and two eclogitic garnets. In all, more than 100 pyropes were recovered, and 46 per cent of them were classified as G-10s. Shear continues to put more effort into its surface sampling program on the Churchill property. The company collected over 500 new samples this summer, which are still to be processed.
As well, the company is flying more geophysics across parts of the property that have not yet been covered, and that will undoubtedly add to the more than 200 geophysical targets that have been found so far. Shear and its partners may well decide to do some additional drilling later this year, but it will be the diamond counts from the current crop of pipes that will be the big news in the coming months.
The hunt for diamonds on the Churchill property should continue for quite some time, regardless of how many diamonds tumble out of Shears current kimberlite samples, but the story will be an increasingly tough sell if at least one of the 11 pipes does not deliver a significant array of stones.
There are three other directors on Shear's board, in addition to Ms. Strand. The Calgary-based Don Planche is still active with the company. Since 1989 he has been president of Flagship Investments Ltd., a private company. Frank Agar, a 1952 geological engineering graduate of the University of Saskatchewan, has well over 40 years of experience in the resource sector, although diamonds are a very recent pursuit for the Calgary resident. He arrived late in 1997, with Ms. Strand.
The final director, David Mullen, was appointed in 2000. He is a senior vice-president Mullen Transportation and vice-president of Mullen Trucking. In addition to his trucking interests, Mr. Mullen is a director and a big shareholder of Shulin Lake Mining Inc., which has been a partner of Shear's on a diamond play in Alaska.
Shear closed up four cents on Tuesday, at 82 cents.
(c) Copyright 2003 Canjex Publishing Ltd. stockwatch.com
Regards
Vaughn |
