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Canadian Blue-chip Industrial Forum
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Diamond & Specialty Minerals Summary - 20thDiamond & Specialty Minerals Summary for Nov. 20, 2017 2017-11-20 20:42 ET - Market Summary by Will Purcell The diamond and specialty minerals stocks box score for Monday was a so-so 71-75-132. The TSX Venture Exchange fell five points to 794 while polished diamond prices edged lower. Dermot Desmond's Kennady Diamonds Inc. (KDI), $2.48 at one point today, dropped 10 cents to $2.80 on 28,000 shares. The company filed its technical report today that detailed previously revealed resource estimates for two Faraday pipes at its Kennady North project in the Northwest Territories. Samer Khalaf and Terry Tucker's Tango Mining Ltd. (TGV), unchanged at four cents on 215,000 shares, has resumed production at its Oena alluvial diamond mine in South Africa. The mining is being performed by Bluedust 7 Proprietary Ltd., which is providing and maintaining the required equipment to mine the alluvial gravels in exchange for a 75-per-cent share of the gross income of net diamond sales, less commission, over the five-year term of the contract. (Bluedust will get a bit less -- 70 per cent of gross income -- for any diamonds worth more than $500,000 (U.S.).) Tango and Bluedust have now expanded that one-month-old arrangement to cover diamond recovery from pan tailings and bantam (small) material left behind by previous operators. Bluedust will again provide the required equipment -- presumably the same gear that will be used for the primary gravel -- and it will get 60 per cent of the gross income, less commission, for the five-year duration of the agreement. Because of the upgraded deal with Bluedust 7, Mr. Khalaf, president and chief executive officer of Tango, and Mr. Tucker, executive chairman, say that they have "deferred their decision" -- Howe-Street-speak for shelved -- their strategy of partnering with GZA Group to run their own processing equipment at Oena. When the strategy was revealed in July, Tango said it would have a 25-per-cent interest in a joint-venture subsidiary that was to get a $1.18-million (U.S.) capital investment, presumably in the form of processing equipment. Mr. Tucker, who was interim CEO before Mr. Khalaf took the job in July, touts the 8,800-hectare Oena property on the Orange River as lying within a "well-established alluvial diamond mining province" known to produce high-quality and large-sized diamonds. While there is no doubt that the large and high-quality diamonds command premium prices, the low grades of most of the deposits in the area left their owners foundering in red ink. (The latest to go under is Rockwell Diamonds Inc. (RDI: halted), which is in the throes of bankruptcy thanks to a decade of mining losses along the Middle Orange River.) Tango has been test mining at Oena this year. The company recovered 28 diamonds during July and it sold 53.4 carats of them for nearly $80,000 (U.S.), almost $1,500 (U.S.) per carat. The month before, Tango recovered 311 diamonds weighing 465 carats. It sold those, and some that it had recovered earlier, for $812 (U.S.) per carat. In April, the company sold 250 carats for just over $1,150 (U.S.) per carat. Based on those sales, Oena appears to average about $1,200 (U.S.) per carat, although Mr. Khalaf and his crew undoubtedly expect that larger and more valuable diamonds will turn up once Oena achieves a higher mining rate. Of course, the size of the carat crop will depend on the grade at Oena, which is yet to be determined. A bulk test in the early 2000s managed a promotable 0.41 carat per hundred tonnes, but a second test in the mid-2000s yielded just 0.16 carat per hundred tonnes. Tango's current estimate tends toward the lower result, listing Oena at 2.8 million tonnes of gravel inferred at 0.12 carat per hundred tonnes. Blair Way's Leading Edge Materials Corp. (LEM), down one cent to 56 cents on 172,000 shares, has received assays from the first five of 15 holes drilled in its second round of tests at the Bergby lithium project in central Sweden. One hole averaged 1.12 per cent lithium oxide and 184 parts per million tantalum oxide across 19.5 metres. A second yielded 0.83 per cent lithium oxide across 12.6 metres. The other three managed low grades or narrow intervals. Mr. Way, president and CEO, says that Bergby continues to deliver "very promising results," adding that the high grade and thickness displayed in the best hole "provides us with a lot of optimism." The first round of drilling, spanning 18 holes completed earlier this year at Bergby, produced hits including 2.63 per cent lithium oxide across 8.75 metres and 1.62 per cent across 10.5 metres, results that Mr. Way deemed "excellent" and "impressive." He is now looking forward to sharing the upcoming assays; his pleasure will of course be greatly enhanced if the next assays are more like those obtained earlier this year. Peter Swistak's Cavan Ventures Inc. (CVN.H), down 1.5 cents to 11.5 cents on 15,000 shares, is now offering just under 4.88 million flow-through shares at 10 cents, not the eight million shares it had proposed to sell in mid-October, because of "restrictions under NEX policies." The cash is for exploration at the company's St. Onge wollastonite project in the Lac St. Jean area of Quebec that it agreed to acquire in August. (That arrangement requires Cavan to pay $750,000 in cash, issue eight million shares and spend $2-million on exploration over a three-year period, in exchange for a 100-per-cent interest.) St. Onge hosts a historical resource of 27.54 million tonnes averaging 37 per cent wollastonite. That estimate was produced in the early 1990s by Orleans Resources Inc., which pushed the project to feasibility before giving up. (Feasibility, a stage reached by a minority of promising exploration plays, is often the end of the line, as the next stages involve raising the cash and getting the approvals needed to build a mine.) Wollastonite, mainly a mix of calcium oxide and silicon oxide, is useful in enhancing plastics, paints and coatings. It is also used in construction materials and ceramics, but naturally, Mr. Swistak president and CEO, is thinking more about electric car batteries. He touts wollastonite as "a major and new commodity" offering Cavan an "exciting advancement" in the company's growth. Paul Gill's Lomiko Metals Inc. (LMR), unchanged at 10.5 cents on 130,000 shares, is closing a second tranche of its private placement, selling another 5.33 million shares at 14 cents and 645,000 flow-through shares at 16 cents. The company sold two million of the 14-centers a week ago. Lomiko hopes to sell 10 million regular shares and 2.19 million flow-through shares to raise a total of $1.75-million for more drilling in the Refractory zone at its La Loutre graphite project in Quebec. |
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