by Will Purcell
The diamond and specialty minerals stocks box score for Thursday was a positive 72-69-115. The TSX Venture Exchange rose fractionally to 801 while polished diamond prices edged lower. Ken MacNeill and George Read's Shore Gold Inc. (SGF), a silent Saskatchewan diamond explorer, gained one-half cent to 18 cents on 300,000 shares.
Lucas Lundin and Dr. William Lamb's Lucara Diamond Corp. (LUC) closed unchanged at $2.85 on 438,000 shares. The company will sell its latest batch of exceptional diamonds recovered from its Karowe mine in Botswana this year in a May auction. The parcel will include at least 13 diamonds, of which four or five will weigh more than 100 carats. The largest is expected to be a 374-carat Type IIa gem. The full parcel should top the 1,300-carat mark, making it comparable to most of the company's earlier sales of exceptional gems.
The company held two sales of its best diamonds in fiscal 2016, generating $90.0-million (U.S.) in revenue from 22 diamonds weighing a total of 2,623 carats. In its April sale, Lucara sold a 297-carat Type IIa gem for $12.2-million (U.S.) and in November, a 224.5-carat Type IIa went for $11.1-million (U.S.). The company also sold its second-largest diamond ever recovered from Karowe, an 812.77-carat rock called "the Constellation," in a special sale. That diamond, also a Type IIa gem, sold for $63.1-million (U.S.). Those diamonds accounted for $153.1-million (U.S.) of Lucara's $295-million (U.S.) in total revenue. Lucara's total sales were just under 350,000 carats, or a hefty $823 (U.S.) per carat, so the company's sales of Karowe's not-so-exceptional diamonds was $142-million (U.S.), or about $400 (U.S.) per carat.
That was comparable with the company's performance the year before, at least beyond the windfall from the Constellation. Lucara sold 27 exceptional gems that weighed 3,087 carats for $98.4-million (U.S.) in fiscal 2015. The company's 2015 revenue was $224-million (U.S.) from nearly 380,000 carats, or $593 (U.S.) per carat. Minus the exceptional gems, Lucara's run-of-mine production sold for $125.4-million (U.S.), or about $335 (U.S.) per carat. In 2014, Lucara sold 50 exceptional stones weighing 4,176 carats for $135.6-million (U.S.), padding its revenues for the year to $265-million (U.S.), with Karowe's run-of-mine production selling for $318 (U.S.) per carat.
Dr. Lamb, president and chief executive officer, is predicting another sparkling year at Karowe ahead of Lucara's first big sale of the year. The company is expecting total revenue of between $200-million (U.S.) and $220-million (U.S.) from the sale of up to 310,000 carats, or an average of $700 (U.S.) per carat. If the company again manages $90-million (U.S.) from its exceptional diamonds this year, Karowe's run-of-mine production would fetch about $120-million (U.S.), or roughly $400 (U.S.) per carat. Further, the company is still sitting on the 1,113-carat Lesedi La Rona diamond, recovered in the fall of 2015, around the time it also found the Constellation gem. Lucara tried auctioning the mammoth gem last year but was unhappy with the offers, which barely topped $60-million (U.S.). If Lucara does get an acceptable offer this year for Lesedi, it would top off another banner year at Karowe.
Paul Ogilvie's Saint Jean Carbon Inc. (SJL) lost another cent to 6.5 cents on 18.58 million shares. The regulatory concern surrounding the company intensified Wednesday, as the Alberta Securities Commission (ASC) got an interim order barring trading in the company's stock by any of its insiders, including Mr. Ogilvie, CEO, Dr. William Pfaffenberger, president, Barry Pearson, chief financial officer, Dick van Wyck, its in-house counsel, and several others. The ASC did not say in its request for the interim order what had raised its ire, but it logically is the result of Saint Jean's series of proclamations and clarifications regarding its dealings with Panasonic Corp.
Saint Jean's stock, which had been bumbling along at seven cents since late November, spiked to a 35.5-cent high on mammoth volumes after Mr. Ogilvie said his company had an order for graphite anode material from Panasonic that was "part of an off-take agreement to supply multiple tonnes of anode material monthly for a number of years." The news sparked a frenzy in which 142 million shares traded in a two-day period, thanks to what Mr. Ogilvie deemed to be his company's greatest accomplishment.
Mr. Ogilvie gushed that "to be recognized and awarded with an order to supply one of the world's best technology companies is a tremendous accomplishment for the team," but two clarifications later, he conceded that the tonnage multiple was actually just a tiny fraction and the number of years on the off-take deal was zero. (Panasonic said there was no such agreement, adding that any orders with Saint Jean would be done under its own standard purchasing agreement.) Another 63 million shares have traded in the past three days, sending Saint Jean's stock bumbling back to seven cents. Meanwhile, the regulatory attention is undoubtedly not the recognition that Mr. Ogilvie had in mind for his team.
Peter Wilson's Maxtech Ventures Inc. (MVT), up one cent to 60 cents on 45,000 shares, is another junior explorer that has splashed into regulatory hot water. Last week the company had to "clarify certain disclosure" regarding its letter of intent to develop the Buriturama manganese mine in Brazil through a joint venture. The regulators objected to Mr. Wilson, CEO, saying the joint venture intended to "put the asset into commercial production up to 10,000 tonnes per month." They were also not pleased that he compared the grade of the nearby Mina do Azul mine with that of Buriturama, since the latter does not have a compliant resource. They did let him say that Maxtech would begin due diligence immediately.
Guy Bourassa's Nemaska Lithium Inc. (NMX), down three cents to $1.32 on 654,000 shares, is expecting a $10-million (U.S.) payment from FMC Corp. by April 7. The payment was part of the off-take deal between Nemaska and FMC, through which Nemaska agreed to supply 8,000 tonnes of lithium carbonate per year from its Whabouchi project in Quebec, starting in mid-2018. Nemaska is behind schedule, so the two companies have extended the date of the first shipment to April 1, 2019. Mr. Bourassa, president and CEO, says the payment and the extension show that FMC has "continued confidence in our project." He says that Whabouchi should achieve production in the first half of 2018 and the company expects to have its processing facility at Shawinigan running later next year.