Here is a new one which lately not only caught Will's but also a bit of Mr. Market's attention ...
Tsodilo hopes big kimberlites bring big diamond counts
Tsodilo Resources Ltd TSD
Shares issued 7,644,917 Dec 23 close $0.70
Wed 24 Dec 2003 Street Wire
by Will Purcell
James Bruchs's Tsodilo Resources has come up with what it thinks is a huge kimberlite complex on its Ngamiland diamond play, in the northwestern corner of Botswana. If Tsodilo is right, the A-37 target will be the second kimberlite find in on its 75-per-cent-owned project that it shares with its
former parent company, Trans Hex Group. The Ngamiland project had
previously been explored for diamonds, but Reunion Mining and Ashton Mining called off their hunt a few years ago after finding many kimberlites, but very few diamonds. Nevertheless, Tsodilo thinks that the play is worth a closer look, and it has a few reasons to believe that new kimberlite finds in the area will offer much more diamond hope than the earlier discoveries. Tsodilo drilled six holes into the A-37 target, including five that were targeted along a line about 1,600 metres long. All of the holes encountered a highly altered material, but kimberlite fragments in one of the holes, the presence of a clayish material resembling altered olivine in the others, along with the presence of what appears to be a peridotitic garnet all suggests that A-37 is a large kimberlitic complex that covers perhaps as much as 100 hectares at the surface. That would make it one of the largest kimberlites in Botswana, conjuring up images of Orapa in the minds of speculators.
Even if Tsodilo's A-37 is similar in size to that lucrative Botswana diamond mine, about 200 kilometres southeast of the Ngamiland project, there is no guarantee that it contains anything remotely close to an Orapa-like diamond grade. Nevertheless, even a remote possibility of turning up a similar find has caught the notice of investors. Two pipes coalesce at surface to form the Orapa complex, which covers nearly 120 hectares at surface. It is currently producing diamonds at a grade of about 0.8 carat per tonne and a value of about $50 (U.S.) per carat. The Orapa mine has produced more than 120 million carats of diamonds since it began running more than 30 years ago, ant it still has several hundreds of millions of tonnes of kimberlite available.
In contrast, the size and diamond content of the Ngamiland kimberlites discovered near Nxau Nxau by Reunion and Ashton in the late 1990s offered little to warrant the recent speculative attention that the play has been getting of late. In all, the earlier partners had come up with 19 kimberlite finds that ranged in size up to 10 hectares, although most of them covered just a few hectares.
Only four of those bodies yielded any diamonds. The largest find, NK-8, produced a single microdiamond, from kimberlite samples believed to weight about 400 kilograms. That meagre haul was typical of the three other
marginally diamondiferous pipes, and the best of the lot was the
two-hectare NK-14 pipe, which delivered a single microdiamond per 40 kilograms of rock.
Based on that, there seemed little to keep Reunion and Ashton interested, and they called it quits, citing reasons that went beyond the meagre diamond haul. Orapa may have been on the minds of the partners, as they were less than impressed with the size of most of their Nxau Nxau cluster of kimberlite targets. Adding to the disappointment was the poor mineral chemistry within the kimberlites, and Reunion described the geochemical results from its kimberlite finds as consistently discouraging. As well, the chemical work suggested that conditions in the mantle were unfavourable for the presence of economic quantities of diamonds. Finally, Reunion did not see the any potential for kimberlite finds outside of the Nxau Nxau area.
That would seem a compelling argument against Tsodilo taking up the Ngamiland hunt, but Mr. Bruchs and his company have other ideas. There are unexplained kimberlite indicator mineral anomalies in northeastern Namibia that Tsodilo thinks may have originated across the border, within the company's Ngamiland project area. Tsodilo also disagrees with Reunion's conclusion about the mantle conditions, suggesting that its ground lies about a reasonably cool, thick mantle, citing a geotherm of about 40 milliwatts per square metre, which is typical of a number of economic diamond deposits.
Tsodilo also thinks that Reunion may have relied too heavily upon geophysics, selecting its drill targets primarily using airborne magnetic surveys. If so, the company has a point, as many rich kimberlites in Canada, Botswana and other locales have not offered much of a response to magnetic surveys, and it took electromagnetic or gravity surveys, along with a considerable amount of geochemical work to turn up finds such as Canada's small but very rich Diavik pipes, or even the 44-hectare Jwaneng pipe in Botswana.
Tsodilo also believes that Reunion was too quick to write off the remainder of the region as kimberlite poor. Mr. Bruchs and his company suspect that a regional indicator mineral anomaly in the Guma region was not adequately checked out, and Tsodilo points to a number of large bulls-eye anomalies in the vicinity of the mineral anomaly that had not been drilled by Reunion. That remains an unknown, but Tsodilo managed to find one new kimberlite earlier this fall, in the Nxau Nxau area. The A-12 kimberlite may not be as large as first thought, but is seems likely that it is significantly larger than any of the Reunion discoveries. The magnetic anomaly was estimated to be up to 750 metres in diameter, with a surface area of about 45 hectares, but based on ground gravity and magnetic surveys, the company now pegs the find at roughly 400 metres in diameter and covering approximately 15 hectares at surface.
Tsodilo developed high hopes for A-12 after a few surface samples produced quite a number of ilmenites, a kimberlite indicator mineral that has been associated with the presence of kimberlites in the Kalahari region. Adding to the company's enthusiasm is the location of A-12, which makes it a possible source for a number of garnet finds made by De Beers in the early 1980s, in the Omatako River region of northeastern Namibia.
That garnet anomaly is thought to include a number of G-10 pyropes, and that adds to Tsodilo's diamond hopes, as no G-10 had been recovered from the Reunion kimberlites. Also adding to the company's expectations is the size of A-12. In South Africa, most of the pipes prove to be barren, or just marginally diamondiferous, and the richer bodies tend to be the largest pipes within the clusters. That makes the A-37 body a potentially more intriguing find.
There is at least one other area of indicator mineral promise that Mr. Bruchs and Tsodilo think could ultimately spell good news for their Ngamiland diamond property. The garnet train covers an area about 40 kilometres long and 15 kilometres wide, near Tsumkwe, and a significant proportion of the pyrope garnets are believed to be G-10s. As well, there have been a number of macrodiamonds discovered during the surface sampling programs in this region, adding to the possibility of a significantly diamondiferous source in the region.
Although some of the garnets display signs of relatively little transport, many others are well worn, indicating that they may have originated on Tsodilo's property. There is a three-hectare kimberlite about 10 kilometres east of the main part of the Tsumkwe mineral swath that could account for the local source, but the bulk of the garnets are believed to be too heavily worn to have come from that body, leaving the Tsumkwe garnets an unexplained anomaly.
Now living in Gaborone, Botswana, Mr. Bruchs became president of Tsodilo last year when the company transformed itself from Trans Hex International, in a restructuring move brought on when its former largest shareholder, Trans Hex Group, decided not to invest in the company's exploration efforts further and applied to have the company wound up. Mr. Bruchs apparently had other ideas, and Tsodilo emerged from the process, along with its 75-per-cent stake in the Ngamiland project as its main project.
A lawyer by trade, Mr. Bruchs spent more than a decade practising commodity futures law with the United States government, a commodity futures exchange and a brokerage firm. In the early 1990s, he took up the mineral hunt in the western and central parts of Africa, through a number of private companies, including Madaket Resources International. Mr. Bruchs's Madaket had acquired a minority stake in Trans Hex International, and the company emerged as its largest shareholder after Trans Hex Group decided to shed its Canadian listing in what is believed to have been a cost cutting move. Mr. Bruchs, the commodities lawyer turned diamond hunter, added a second lawyer to Tsodilo's board through the appointment of the Washington-based Patrick McGinley. Mr. McGinley has been running his own law firm since the mid-1980s, specializing in business matters.
The two lawyers might seem unlikely diamond hunters, but Mr. Bruchs added two additional directors that know a few things about the intricacies of diamond exploration. Educated in South Africa and now a resident of Toronto, Chris Jennings has been hunting gems for about 30 years. He was one of the early believers in Canada's Lac de Gras play, where he staked large land positions for his SouthernEra Resources, as well as a number of other explorers, including Aber Diamond Corporation.
Dr. Jennings has also had success with gems in Africa. SouthernEra Resources discovered a number of small but economic diamond deposits on its Marsfontein and Klipspringer properties in South Africa. The Marsfontein find was an economic and promotional success for Mr. Jennings, carrying SouthernEra's share price to a peak of $20.80 in the fall of 1997, up from less than a dollar in early 1995. Meanwhile, Mr. Jennings was gradually nudged to the sidelines through 1999 and early 2000, as investors subsequently soured on SouthernEra and increasingly grumbled about Mr. Jennings's ability to promote his far-flung projects.
New management did not help matters. SouthernEra's stock dipped below $1 for a time, just before the Messina platinum project, another of Dr. Jennings's acquisitions, became a market favourite. Dr. Jennings has since reappeared as chairman of SouthernEra, and Messina helped carry the company's shares to a peak of $8.10 early this year.
Dr. Jennings has not had a great deal of luck with SouthernEra's Canadian diamond hunts so far, but his work has produced hundreds of kimberlite finds through the years, and he did have a key role in the acquisition of Aber's Diavik ground. The lack of a quick success has not deterred Dr. Jennings, who has doggedly clung to faltering projects, based on the results of his geochemical work.
That could be good news for Tsodilo and its shareholders, as Dr. Jennings should be quite familiar with the company's Ngamiland project. Much of his diamond exploration efforts took place in Africa, and he served as deputy
director of the Botswana Geological Survey. As well, Tsodilo and
SouthernEra are also partners on a Botswana project, immediately south of the Ngamiland project.
Tsodilo's fourth director is Andrew Moore. Also a resident of Gaborone, Dr. Moore has been working in the Kalahari region since the early 1980s, and he has had kimberlite success in the region, discovering three new pipe clusters. In 1985, Dr. Moore took up consulting, but he continued to focus on the Kalahari region and Botswana. As a result, it was no surprise that Trans Hex picked Dr. Moore to lead its Ngamiland exploration program in the late 1990s, and that role continued when Mr. Bruchs appointed him vice-president of exploration for Tsodilo last summer. |
