Diamond & Specialty Minerals Summary for June 30 2017

2017-06-30 19:43 ET - Market Summary

by Will Purcell

The diamond and specialty minerals stocks box score for Friday was a negative 57-70-130. The TSX Venture Exchange gained four points to 766 while polished diamond prices fell 0.1 per cent. Eric Friedland and Tom Peregoodoff's Peregrine Diamonds Ltd. (PGD) lost one-half cent to 16 cents on 20,000 shares. Peregrine, rumoured to be chirping about a possible deal at Chidliak, will continue exploring the project alone this year.

Mark Bristow and Tjaart Willemse's Rockwell Diamonds Inc. (RDI: $0.06) will have to wait until Oct. 31, 2017, for its day in a South African court against C-Rock Mining Ltd., its former mining contractor that has been trying to force the company into bankruptcy. The hearing had been scheduled for last week, but Mr. Willemse, who replaced James Campbell as chief executive officer late last summer, says that the hearing to consider the merits of the liquidation application has been delayed "with the consent of all parties."

If so, this is a change in Rockwell's position. In early May the company had been seeking to advance the case as much as possible. When the court declined to do so, Mr. Willemse said the judgement was "not what the company sought," although he acknowledged there was no pressing reason to advance the case since the powers of the provisional liquidators had been suspended by Rockwell's filing for business rescue. Mr. Willemse now says that Rockwell's application for business rescue, if accepted, would be "compelling with respect to the liquidation application" and the accepted plan would also lay out the appropriate way to deal with the liquidation application.

The delayed proceedings will apparently outlast Mr. Willemse. Rockwell now says that he "was contracted to lead the turnaround plan" and his "scheduled departure" is set for the end of September. That will be news for Rockwell's shareholders, who were not told his appointment had an expiry date. The company now says that Stephen Le Roux has been hired to run Rockwell's mining operations on the Middle Orange River and Mr. Willemse will ensure that the company "is equipped with the appropriate management resources" to carry on when he leaves.

There is not as much to manage these days, as Rockwell gave up on its Remhoogte-Holsloot and Saxendrift mines last year, leaving it with just the refurbished Wouterspan mine to generate cash. The company is pushing to get Wouterspan operating at about 200,000 cubic metres of gravel per month -- it has been a tough slog so far -- and it still touts an "ultimate target" of processing 500,000 cubic metres of gravel from various sites along the Middle Orange River.

Rockwell began mining along the Middle Orange River over a decade ago and while its mines have consistently produced valuable diamonds, there have not been enough of them to generate sustained profits. The company has been though a series of reorganizations, austerity programs, mine overhauls and other optimization efforts, invariably with the same pessimistic outcome. When he arrived last year, Mr. Willemse said the company found itself in a state of despair; it is not yet clear if his mood will be any brighter upon his departure.

Martin Kepman's Manganese X Energy Corp. (MN), unchanged at 11 cents on 73,000 shares, has completed its latest drilling at its Houlton-Woodstock manganese project in western New Brunswick. The nine-hole, 1,600-metre drill program tested the Sharpe and Moody Hill areas, where drilling last year produced assays of up to 16.73 per cent manganese oxide over 32.85 metres and 13.87 per cent over 52.6 metres. (The company said earlier this year that it would henceforth be referring to Sharpe and Moody Hill as its Battery Hill deposit. Mr. Kepman may have changed his mind about the more promotable name but he is still touting manganese as a component in batteries, solar panels and backup storage units.)

Manganese X Energy is planning to deliver a resource estimate for Houlton-Woodstock later this year, but historical work offers a good idea of what to expect. The Sharpe Farm deposit hosted a historical resource of 7.26 million tonnes at 9 per cent manganese, Moody Hill held 9.07 million tonnes at 9.5 per cent and Iron Ore Hill contained 22.68 million tonnes at 10 per cent manganese. In all, the 60-year-old estimate credited Houlton-Woodstock with about 40 million tonnes averaging about 9.5 per cent manganese.

Guy Bourassa's Nemaska Lithium Inc. (NMX), down three cents to 98 cents on 2.18 million shares, has closed its $50-million public offering, selling 47.62 million shares at $1.05. (The underwriters, led by National Bank Financial Inc., apparently declined to exercise their 15-per-cent overallotment option.) The cash is for continuing development of the company's Whabouchi lithium mine and spodumene concentrator in north-central Quebec, as well as a hydrometallurgical plant in Shawinigan. As well, Mr. Bourassa, president and CEO, says that Nemaska continues to be "actively engaged in discussions" with prospective lenders regarding debt financing for the project.

Mr. Bourassa will have a lot of discussing to do, as a feasibility study last year pegged the cost of the project at a hefty $549-million. Whabouchi hosts 36.6 million tonnes measured and indicated at 1.48 per cent lithium oxide and another 7.1 million tonnes inferred at 1.37 per cent, although the mine plan is based on an open-pit reserve of just 20 million tonnes at 1.53 per cent and an underground reserve of 7.3 million tonnes averaging 1.28 per cent.

Martin Stephan's Rock Tech Lithium Inc. (RCK), up four cents to 95 cents on 8,000 shares, has received assays from its first phase of drilling in the Parole Lake area of its Georgia Lake lithium project in Northwestern Ontario. Of the seven holes drilled, assays from five were apparently worth mentioning. The best averaged 1.53 per cent lithium oxide over 11.65 metres. Another averaged 1.58 per cent over seven metres and a third produced 1.3 per cent lithium oxide over 6.93 metres. Mr. Stephan, CEO, says he was excited to announce the results from one of six known pegmatites on the property. (He was presumably less thrilled with the two holes that went unmentioned.)

The Parole Lake pegmatite has a historical estimate of 1.5 million tonnes averaging 1.3 per cent lithium oxide, but it needs more work to become a compliant resource. Rock Tech does have a regulatory compliant resource estimate elsewhere on Georgia Lake, including 3.19 million tonnes indicated at 1.10 per cent lithium oxide and 6.31 million tonnes inferred at 1.00 per cent.