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Msg  66672 of 67069  at  1/21/2020 7:12:43 PM  by


Diamond & Specialty Minerals Summary - 21st

Diamond & Specialty Minerals Summary for Jan. 21, 2020

2020-01-21 17:55 ET - Market Summary

by Will Purcell

The diamond and specialty minerals stocks box score on Tuesday was a positive 84-64-162 as the TSX Venture Exchange lost three points to 582. Alberto Arias and Paulo Misk's Largo Resources Ltd. (LGO) continued its slow recovery, adding six cents to $1.14 on 406,000 shares. The company had been working wonders at its Maracas Menchen vanadium mine in Brazil until prices slumped last year. Prices are stabilizing, perhaps inching higher, so investors are hopeful that Largo's now expanded mine can take advantage of a recovery.

Leni Keough's Olivut Resources Ltd. (OLV), down one cent to four cents on 53,000 shares, has perhaps completed its earn-in requirements on the Seahorse diamond project, north of Great Bear Lake in the Northwest Territories, but whether the company will become the majority co-venturer on the project with Dr. Ray Davies and his Talmora Diamond Corp. (TAI: $0.02) is unclear. Ms. Keough, Olivut's founder, president and chief executive officer, says that her company has informed Talmora that $1.29-million "has been spent on the Seahorse project" to the end of October.

That figure differs from the $1.21-million laid out in the notes to Olivut's annual report, which covered the period to the end of October. Further, the figure in the annual report included the $200,000 cash payment that Olivut was to make to Talmora under the terms of the option agreement. Therefore, it is not entirely clear if Olivut has spent the full $1.2-million on exploration and made the $200,000 payment, or if there is still some spending required before the option expires in July. Ms. Keough suggested the latter, when she added, "Olivut must decide whether to exercise its option" before the expiry date.

Much of the exploration spending went to a drill program last year, in which Olivut and Talmora completed six holes and encountered "varying depths" of extremely fine-grained clays of an unknown origin. Ms. Keough says that the drilling conditions were extremely difficult, mainly because of the nature of the clay. The host rock that produced the clay could not be identified, but like any good geologist, she says that "the complex chemistry warrants further work."

Adding to the challenge, Ms. Keough says that the Seahorse area experienced periods of extreme warming and weathering over the ages -- perhaps the dinosaurs were emitting too much carbon dioxide -- and as a result, the silicate indicator minerals were destroyed while oxide indicators and diamonds survived. Heavy mineral analysis is therefore under way, and according to Ms. Keough this is "the obvious next cost-effective step."

While Olivut is pondering whether to exercise its option to acquire a 50-per-cent interest in the project, Ms. Keough still eagerly touts the project as having the potential to host diamondiferous kimberlites of significant size -- and perhaps other mineral deposits, in case diamonds do not pan out. She points to the favourable indicator minerals found at Seahorse and the 18 macrodiamonds that were found to the west and northwest, but which had never been traced to a kimberlite source. Ms. Keough reminds investors that diamond-bearing kimberlites were found north of Seahorse, and to the southeast, but the company's shoestring stock price is a reminder that those kimberlites were either barely diamondiferous or were too small to be of interest.

James Nelson's Cruz Cobalt Corp. (CRUZ), down one-half cent to 3.5 cents on 342,000 shares, has sold 4.83 million shares at 3.1 cents each, raising nearly $150,000. The cash is for working capital, says Mr. Nelson, president and CEO, although Cruz is comparatively well off financially, with $2-million in working capital at the end of October. Mr. Nelson touts Cruz as "the foremost cobalt project generator and developer in North America," but that is more than a bit of hyperbole when it comes to the developing.

Cruz did spend $325,000 on exploration in fiscal 2019, which ended July 31, and about the same the year before. Through the summer and early fall, however, it spent barely $6,500 on all its projects. The bulk of the company's effort for the past few years had been going to cobalt properties in Northeastern Ontario, but there has been little in the way of promotable news in the past year. The decline in Cruz's promotion coincides with the abrupt drop in cobalt prices, which were well above $40 (U.S.) per pound in the spring of 2018 but are now mired near $15 (U.S.) per pound.

Dr. Tony Harwood's Montero Mining and Exploration Ltd. (MON: $0.04) has filed paperwork stating that it intends to take the Tanzanian government to arbitration. Montero began working the Wigu Hill rare earth project in 2008 and the play was big news during the price bubble of 2011. The company applied for a mining licence from the Tanzanians and got a five-year one in 2015, but two years later the government abruptly cancelled the licence along with many others. A month ago, the bureaucrats put Wigu Hill up for public tender, implying that Montero has lost its investment.

Montero spent well over $10-million on Wigu Hill, most of in the late 2000s and early 2010s, although it never managed to produce a resource estimate or dream sheet. Dr. Harwood and his crew did the next best thing, promoting a "target resource" of 10 million tonnes that could grade between 3 per cent and 5 per cent total rare earth oxides. After that failed to inspire enthusiasm, suddenly the project had the potential to top 20 million tonnes, but the intervention of the Tanzanians killed any residual interest in the story.

Last summer, Dr. Harwood agreed to sell Wigu Hill to Australia-based Cheetah Resources Pty. Ltd. for $1.2-million and a 1-per-cent royalty, but the government's auction presumably put the end to that arrangement. The company and the government now have six months to hash out a deal, otherwise, it will presumably be off to international arbitration for Montoro.

Martin Perez de Solay's Orocobre Ltd. (ORL), down 11 cents to $3.25 on 17,000 shares, has signed long-term contracts with two "top-tier Chinese cathode manufacturers." One customer will buy 7,200 tonnes of battery-grade lithium carbonate over three years, the other 2,880 tonnes, also over three years. The deal includes price floors and caps as an incentive for Orocobre, which is muddling through a period of weak lithium prices. Mr. Perez de Solay, CEO, says that this is a welcome step as the company pursues its strategy of selling a greater proportion of its product from the Olaroz operation in Argentina through long-term sales agreements. Olaroz produced 12,600 tonnes of lithium carbonate last year and the operation is slated for a significant expansion.


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