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Post by Franko10 ™ on Nov 29, 2004 21:21:49 GMT -5
This news Item was provided by : Hexges
2004-11-29 13:15 ET - Street Wire
by Will Purcell
Shore Gold Inc. has its 10th batch of diamonds from a large bulk sample of its Star kimberlite. The latest parcel contained a slightly lower grade and fewer large stones than most of the recent batches, but speculators were bullish nevertheless. Although the latest result did not bring any particularly promotable surprises, the numbers still suggest a healthy grade and coarse diamond size distribution.
The 10th set of samples
Shore Gold processed another 1,721 tonnes of kimberlite in the six latest individual lots of material, all of it taken from the 235-metre level. The rock yielded 273.66 carats of diamonds, and that suggested a grade of 0.159 carat per tonne. George Read, Shore's vice-president of exploration since 2003, said the company found happiness in the latest results. "It is looking good," he stated.
Still, the latest grade ranks fourth among the last five sets of samples, narrowly beating a 0.154-carat-per-tonne grade that Shore received in its eighth set. The other three series of samples produced grades between 0.19 carat per tonne and 0.22 carat per tonne. Nevertheless, the average grade of the latest portion is on par with the average recoveries from the much richer early Joli Fou kimberlite.
The largest diamond in the latest set of samples weighed 5.4 carats, the only stone to top the five-carat mark. That was the poorest haul of large diamonds since Shore began working the prospective 235-metre level. Recovering large diamonds became routine for Shore. There were two diamonds weighing more than 10 carats in the ninth set of results and another two stones that exceeded 10 carats in the sixth batch of recoveries.
Despite the fewer numbers of large diamonds in the latest samples, Shore recovered a healthy number of diamonds weighing at least one-half carat. As well, the average stone size within the latest parcels is on par with Shore's long-term average.
The 10th set of samples produced an average diamond weight of 0.116 carat, compared with an average weight of 0.118 carat for all the early Joli Fou kimberlite. That suggests the lack of any large diamonds is simply a statistical oddity, otherwise known as bad luck.
The sample so far
In all, Shore processed 17,928 tonnes of kimberlite and has nearly 2,400 carats, indicating a grade of about 0.134 carat. A significant amount of low-grade rock at the top of the pipe contributed to that lower figure. The richer early Joli Fou phase now accounts for 13,374 tonnes of material, and that rock has an average grade of 0.165 carat.
Things are even better at the 235-metre level, where Shore processed nearly 10,000 tonnes of kimberlite. That material contained 1,774 carats, good for an average grade of 0.184 carat. The 235-metre level delivered a diamond population with a coarser size distribution, as the average stone weight is nearly 0.13 carat.
One curious twist in the latest samples was the slightly higher grade found in three individual lots from the northern drift. About 913 tonnes of kimberlite came from that region and the rock had an average grade of 0.162 carat per tonne. The 807 tonnes of material from the southeastern drift had an average grade of 0.156 carat per tonne. The northern material also produced a slightly greater average diamond weight. That could be a sign there may be richer zones scattered throughout the richer phase of rock.
So far, the 6,710 tonnes of material from the southeastern region has an average grade of nearly 0.20 carat per tonne and an average diamond weight of 0.135 carat. Meanwhile, the 2,960 tonnes of rock from the northern regions delivered an average grade of 0.151 carat per tonne and an average diamond size of 0.116 carat.
The value implications
Shore initially touted a target of about $100 (U.S.) per carat for its diamonds, but the steady stream of larger diamonds prompted Mr. Read to up his personal expectation. In September, Mr. Read boosted his estimate to about $125 (U.S.) per carat, a value he termed conservative, although speculative. Two months and 1,200 carats later, Mr. Read sees no reason to deviate from that rosy outlook.
"The key aspect is the percentage of white gems and the abundance of large stones," Mr. Read said, adding that those qualities enhanced the value of the Star diamonds. The most desirable shape for a diamond is an octahedral crystal, which is the classic shape attributed to diamonds by the public. The Star bulk test is delivering the typical array of diamond shapes, but Mr. Read said the sample contained a good proportion of octahedral diamonds.
One unusual aspect about the Star diamonds is their healthy diamond size distribution. Shore revealed that 20 per cent of the weight of its 2,395-carat parcel came from stones weighing at least two carats, and one-carat diamonds accounted for 31 per cent of the weight. Stones weighing at least one-half carat produced 43 per cent of the diamond weight. Those figures include the lower-grade late Joli Fou kimberlite at the top of Star. Discounting that material makes Shore's sample even more promotable.
The company does not reveal a breakdown by weight for the richer rock, but two-carat stones accounted for about 22 per cent of the diamond parcel form the early Joli Fou phase. With one-carat stones, the proportion climbs to about 34 per cent, while one-half-carat diamonds contribute about 46 per cent of the diamond weight. About 10 per cent of the diamond weight in the early Joli Fou kimberlite comes from diamonds weighing at least five carats. That is a particularly promising fraction.
The closest match for that is the Jericho pipe in Nunavut, where a 9,400-tonne bulk sample produced a 10,540-carat parcel in the mid-1990s. About 32 per cent of the diamond weight came from one-carat stones, and five-carat diamonds contributed about 7 per cent of the total weight.
The Star size distribution handily outperforms the Snap Lake d**e that De Beers Canada Corp. hopes to mine in the next few years. A 6,000-tonne test by Winspear Diamonds Inc. in 1999 produced an 11,000-carat parcel. A bit less than one-quarter of the weight came from one-carat diamonds. Five-carat diamonds accounted for about 4 per cent of the Snap diamonds.
Shore's Star shaft
Shore recently finished extracting its 25,000-tonne sample. Nevertheless, the company plans to keep its underground workings dry, although that was a bit of a challenge for a time. There is no doubt the presence of large diamonds intrigues Shore and that could lead to further use. Mr. Read said the company might go back and take more samples next year. He stated that a case could be made to take a larger sample that would produce a truly representative sample of larger diamonds.
As well, Shore will use the shaft and its workings for a busy drill program. Mr. Read said there were eight drill stations at various points within the excavations. Shore will drill from those sites, delineating the vent area of Star in particular.
Furthermore, the company will drill many holes from the surface to get a better idea of the variations within the mammoth pipe. Mr. Read said there were 37 holes completed previously, adding the company would need at least double that number to get a satisfactory handle on the geological variations within the huge kimberlite.
The road ahead
That drilling will form a key part of a desktop engineering study that Shore plans for Star over the next year. That work will include a good examination of the potential capital and operating costs of a Star diamond mine, including the engineering challenges of a big open pit in the Fort a la Corne area. That is key, as the cost side of the economic equation will be as important as the potential rock value.
Before that, Shore will produce the appraisals for what is shaping up to be a diamond parcel of at least 3,500 carats. Mr. Read said that Shore sent about 2,000 carats to Antwerp for acid washing. He added that the cleaning made a world of difference in the appearance of the stones.
Mr. Read said Shore would appraise those diamonds first, probably just before Christmas, and the company will reveal the partial result. "We are not shy about talking about a 2,000-carat parcel," he added. The remaining diamonds would be washed and appraised when the processing is complete, followed by an appraisal early next year.
That timetable depends on how fast Shore can process the remaining 7,000 tonnes of rock. Mr. Read said that if everything went perfectly, the processing might wind up by Christmas. Perfection is a tough goal, as minor difficulties and breakdowns are common events with processing plants.
Mr. Read said that Shore's plant is running very well, but minor annoyances such as a pump breakdown could occasionally delay things by a few hours or a day. "In a plant there are many pumps," he added. Fortunately, there are a few big pumps in Shore's shaft as well.
Shore's bulk sample continues to excite speculators. A Shore share cost just $1.03 in late June, after the tallies from the first batch of lower-grade material delivered a modest result. Improving grades brought better days through the summer and fall. The stock crested at $3.15 in late September and after a minor decline, Shore's shares are again testing the $3 mark.
Some of that enthusiasm is because of Shore's migration from the TSX Venture Exchange to the main Toronto Stock Exchange board, which took place Nov. 26, 2004. Shore added three cents on its last day on the TSX-V and added another penny on Friday, ending its first day on the main exchange at $2.94.
