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Msg  65845 of 66665  at  9/20/2019 7:39:45 PM  by


Diamond & Specialty Minerals Summary -20th

Diamond & Specialty Minerals Summary for Sept. 20, 2019

2019-09-20 19:35 ET - Market Summary

by Will Purcell

The diamond and specialty minerals stocks box score on Friday was a so-so 68-71-161 as the TSX Venture Exchange rose six points to 590 while polished diamond prices inched lower. Dermot Desmond's Mountain Province Diamonds Inc. (MPVD) had a good day, adding eight cents to $1.16 on 328,000 shares. The stock got as low as 91 cents last week, a nine-year low, but a few days later it rebounded to $1.31. None of the gyrations were accompanied by news from the company's Gahcho Kue mine in the Northwest Territories. The mine is profitable, just not as much as had been expected.

Dean Taylor's Diamcor Mining Inc. (DMI), down one-half cent to 12.5 cents on 239,000 shares, has sold another batch of diamonds from its Krone-Endora at Venetia project in South Africa. The company sold nearly 3,760 carats in the current quarter for just under $570,000 (U.S.), about $151 (U.S.) per carat. The average price is a bit of a disappointment, as the company has averaged about $170 (U.S.) per carat over the past six years of "current exercises being performed" at Krone-Endora. (Mr. Taylor, president and chief executive officer, has diligently avoided calling Krone-Endora a mine, or referring to the "exercises being performed" as mining, having had his knuckles rapped by the regulators several years ago.)

The Kelowna-based Mr. Taylor says that the slightly lower than historical average dollar per carat value had been anticipated, at least by the company, based on the expectation of a higher percentage of smaller, lower-quality rough diamonds cropping up on occasion. (If that is the story, he probably means that the lower value was not a surprise given the statistical variations expected in alluvial mining, but it had not been expected in advance. No matter: Based on that same statistical variance, he expects the average price will return to historical levels -- at least if the rough diamond market bounces back as well.)

Diamcor also has 4,825 more carats that it "exercised" out of the Krone-Endora gravels during the quarter and now has ready for sale. The increased haul leaves Mr. Taylor "very pleased" with the results being delivered by the company's new operational management that, he cheers, has confirmed their ability to identify and rectify past inefficiencies in the company's facilities and its operations. "We believe the current efforts, focus and results will benefit the project in a meaningful way moving forward," he enthuses.

Diamcor said in early July that it would borrow $1-million for further upgrades, and late last month it upped the amount to $1.18-million. The cash is for general corporate purposes, although Mr. Taylor points to the acquisition and deployment of additional equipment to support increased processing volumes as one purpose, with continuing advancement of improvements already under way at Krone-Endora as another. As well, Diamcor hopes to use cash as working capital to offset the delays associated with the tendering and sale of the rough diamonds.

Diamcor has sold nearly 140,000 carats for over $23-million (U.S.) since it began trial mining in 2013 on the project, which it pried away from De Beers in 2011 for just $2-million. (The deal was clearly a bargain, although the price had been set in 2009. That was at the depth of the Great Recession that savaged the rough diamond sector, leaving De Beers happy to get whatever it could for the non-core property.)

Mr. Taylor, who once toiled away in the reputational shadow of Kelowna's other diamond hunter, Chuck Fipke, has closed the gap. Indeed, he is now the only Kelownan regularly producing diamond news. He is also well compensated, pulling in $300,000 per year for the past few years and just over $310,000 last year. (Mr. Fipke draws not a cent as chairman of Metalex Ventures Ltd. (MTX: $0.06), but then he does not need a paycheque, having made a fortune from his discovery of the Ekati mine in Canada's North.)

Jim Cambon's Hudson Resources Inc. (HUD), a 43-cent stock a month ago, rebounded 1.5 cents to 36 cents on 6,000 shares. Mr. Cambon, who replaced the company's founder, Jamie Tuer, as president early this year, has been uncharacteristically silent about his company's first shipment of product from the White Mountain anorthosite mine in western Greenland. He had been chatting up the location of the shipment at every stage, at least until the cargo and Hurricane Dorian arrived off the coast of Charleston at roughly the same time.

Hudson did get 56 tonnes of dust product offloaded, but the 14,400 tonnes of bulk anorthosite had to put back to sea before Dorian's brush-by forced the port to close and the ship, the (not so) Happy Dragon to ride out the storm at sea. Dorian is long-gone now, but so is the plan to offload the product at Charleston. Hudson says that the unloading facility it planned to use was unable to handle the product, so it is looking elsewhere -- probably Savannah on a temporary basis -- to handle the anorthosite.

The delays have had an impact on the company's financial situation. Mr. Cambon says that working capital is being depleted faster than expected and Hudson is now "reviewing its business strategy." He points to the "exceptional interest" in Hudson's product expressed by many companies in the industrial minerals sector as a reason to "consider strategic alternatives to help advance the product lines and product base." Unfortunately, when a promoter strings together talk of delays, reviews and alternatives, it usually bodes ill for his company's share price.

Mark Jarvis's Giga Metals Corp. (GIGA), up one-half cent to 40 cents on 355,000 shares, has an updated resource for the Turnagain nickel and cobalt project in north-central British Columbia. It now lists 1.07 billion tonnes measured and indicated at 0.22 per cent nickel and 0.013 per cent cobalt, plus another 1.14 billion tonnes inferred at comparable grades. The grades are puny, but the tonnages are huge, resulting in a total resource of 10.68 billion tonnes of nickel and 640 million tonnes of cobalt -- an increase of about 20 per cent from eight years ago.

Mr. Jarvis, president and CEO, says the updated resource is an important milestone in the path toward advancing the engineering studies of Turnagain. (He hints about prefeasibility and feasibility studies as a result of that coming work, although he offers no timetable or guarantee of either.) The last study, a 2011 preliminary economic assessment, has now slipped into history. That plan called for a $1.32-billion (U.S.) mine that would start at 43,000 tonnes per day and double to 86,000 tonnes per day in year five of a 21-year run, enough to support a discounted net present value of $725-million (U.S.) after taxes.

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