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Msg  65652 of 67706  at  8/23/2019 8:59:57 PM  by


Diamond & Specialty Minerals Summary - 23rd

Diamond & Specialty Minerals Summary for Aug. 23, 2019

2019-08-23 18:52 ET - Market Summary

by Will Purcell

The diamond and specialty minerals stocks box score on Friday was a positive 73-66-161 as the TSX Venture Exchange gained three points to 581 while polished diamond prices were flat. Stornoway Diamond Corp. (SWY) dipped to its lifetime low, ending the day down one-half cent to 1.5 cents on 11.12 million shares. The TSX said today that the company's stock is under delisting review.

Claudia Tornquist and Christopher Taylor's Dunnedin Ventures Inc. (DVI) closed unchanged at nine cents on 60,000 shares. The company said this week that it trenched 46 metres of rock averaging 0.89 per cent copper at its MPD porphyry project in British Columbia. What it did not say was anything about its Kahuna diamond project, northeast of Rankin Inlet in Nunavut. That is disappointing to diamond investors who had been hoping to hear this year that the company has finally cracked the secret of Kahuna, which has produced big but nearly barren kimberlite pipes and small but rich dikes over the past 15 years.

While disappointing, it comes as no surprise given the shifting theme of Dunnedin's boilerplate. The company began the year reminding investors that it was "focused on its 100-per-cent-owned, advanced-stage Kahuna diamond project," aided by the guidance (and cash) provided by Chuck Fipke, who helped trigger Canada's diamond hunt in 1990. Dunnedin's focus blurred this spring, when the company altered its end-of-news summary to say that it was "advancing copper porphyry projects in Canada and the United States, and the Kahuna diamond project in Nunavut."

Ms. Tornquist, president and chief executive officer, and Mr. Taylor, executive chairman, last touted plans for Kahuna in March, when they said that the company had defined a potential diamond source target area at Kahuna. Their work constrained the area of interest to a 300-hectare zone at the northwestern, up-ice end of the Josephine target area. They said that priority targets would be tested with a core drilling program, with the budget to be determined in early 2019.

That may well still be the plan but the time for determining the budget has long passed. Investors eager for news of Kahuna have to slog through 18 slides of the company's 24-slide summer presentation to hear mention of the project, only to learn near the end of the pitch that the only work planned for 2019 -- till sample processing -- wrapped up months ago.

Mr. Taylor and Ms. Tornquist like reminding investors that Kahuna has $30-million of work under its belt, but nearly all that expenditure incurred years ago, when the now defunct Shear Diamonds Ltd. owned the project and had the likes of BHP Billiton Inc. and Stornoway Diamonds Inc. (SWY: $0.015) helping out. Shear found a few dozen worthless pipes and several high-grade kimberlite dikes that it mini-bulk tested in the mid-2000s. Shear was contemplating a big test of the Kahuna dike just as the recession hit in 2008.

Shear dropped the project to chase another project, one that pushed the company into bankruptcy in the early 2010s. Once its Kahuna claims came open, Dunnedin pounced and used Shear's old data to roll out a resource estimate of about four million carats for the Kahuna and Notch dikes. Making mines out of smaller dikes is a challenge, but the data suggest that the dikes have a coarse size distribution profile and potentially a worthwhile diamond value. If those qualities occur in any pipe discoveries, it would give new life to the old project. Dunnedin still has interest in proving the point -- just not this year, it appears.

Douglas Fulcher's One World Lithium Inc. (OWLI), unchanged at 11 cents on 47,000 shares, has hired a driller for its Salar del Diablo lithium brine project in the Baja California region of Mexico. (One World currently holds a 60-per-cent interest in the 103,000-hectare project and can increase its interest to 90 per cent.) The company's plan calls for four holes drilled to about 600 metres to collect groundwater samples at specified depths. Mr. Fulcher, CEO, says that the drilling should start in late September or early October.

One World said in mid-July that it had assays of up to 273 parts per million lithium, with an average of 67.76 ppm over 194 metres in one of five holes completed earlier this year. While disappointing, those holes failed to get deep enough to test the geophysical, geochemical and geological targets identified in advance. As a result, Mr. Fulcher has been seeking a drill and crew that can reach the targeted depths, and he apparently has found one.

Jim McKenzie and Pat Ryan's Ucore Rare Metals Inc. (UCU), up one-half cent to 19 cents on 54,000 shares, is schmoozing the United States government, seeking support for its Bokan-Dotson Ridge rare earth project in southeastern Alaska. The company recently entertained Alaska's two senators, both Republicans, on separate visits to discuss "Ucore's promise as a secure domestic supply source" of rare earth elements crucial to United States defense, manufacturing and industrial needs.

As well, Mr. McKenzie says that Ucore has responded to a request for information from the Defense Production Act Title III Office, in which the company proposes advancing the Bokan-Dotson Ridge deposit and a rare earth processing and separation facility. The government program, Mr. McKenzie says, authorizes the government to buy and install equipment within plants, factories and other facilities that are owned by private companies. He also reminds investors that the Alaskan government has already tentatively agreed to issue up to $145-million (U.S.) in bonds to help build the mine.

Bokan-Dotson Ridge has been stalled for the past five years, thanks to Chinese supply driving down global rare earth prices that had surged when the same suppliers tightened the market, a trend that has gone on for decades. In the 2011 price runup, Ucore delineated a resource of 4.8 million tonnes indicated and 1.05 million tonnes inferred at 0.6 per cent total rare earth oxides. The modest resource supported a discounted net present value of $577-million for a $221-million mine, as delineated in a now nine-year-old dream sheet.

Alex Holmes's Plateau Energy Metals Inc. (PLU), unchanged at 26 cents on 59,000 shares, is offering four million shares at 25 cents. The $1-million to be raised is for work on the Falchani lithium deposit and the Macusani uranium deposit -- both in Peru and both facing uncertainty, thanks to the Peruvian government moving to cancel the validity of 32 of the project concessions. Mr. Holmes, CEO, is putting up a fight.

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