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Post by Franko10 ™ on Mar 17, 2005 17:19:30 GMT -5
Date: March 18, 2005 Kensington Resources May Be On The Winning Side When De Beers Makes Its Move In Saskatchewan.
For many a long year the potential to have a kimberlite diamond mine in Saskatchewan has been poo-pooed by diamond analysts on the grounds that the stones would be too small and uncommercial. Nonetheless the two main participants in the junior sector, Kensington Resources and Shore Gold, have soldiered on and suddenly there is light on the horizon. Quite a revelation for their critics to find that both are coming up with results that indicate that economic mining is a possibility as they have huge cost advantages over their peers who are struggling away against the odds in the arctic wastes of the NorthWest Territories and Nunavut.
The latest news from Kensington Resources is that it has recovered a 10.53 carat clear, colourless diamond from kimberlite 140/141 during diamond recovery procedures at the De Beers diamond laboratory in Johannesburg. And it was not alone. A total of 135 macrodiamonds weighing 15.445 carats were recovered from a large diameter drillhole over an interval of 96.7 metres and sixteen of these stones were greater than 0.25 carats. Five other macrodiamonds, in addition to the big one were recovered in an interval from 118 to 130 metres in depth and this brings up the other point beloved by critics. The kimberlites have a cover of around 100 metres as this interval was only 18 metres below the glacial overburden. Nothing new in this and it has not deterred Kensington and its partners who have been working away there for around 15 years.
At this stage it is as well to understand the size of Kensington’s Fort a la Corne joint venture property. At 500 million tonnes (using a 30 metre cutoff) the Star kimberlite alone is one of the largest in the world. The whole field of 71 known kimberlite bodies rivals the De Beers Group’s 75 per cent owned Williamson Diamonds mine in Tanzania and its 50 per cent owned Orapa mine in Botswana. Fort a la Corne lies on the western part of the kimberlite cluster and is a joint venture held 42.25 per cent by Kensington Resources, an equal amount by De Beers Canada, 5.5 per cent by Cameco and UEM has a carried 10 per cent stake. The eastern portion of the body lies on Shore Gold’s 100 per cent owned 98 sq km project, so the stakes are very high.
The recent bulk sampling programme by Shore Gold has confirmed that the diamonds from the Star kimberlite are valued at between US$110 and US$162/carat and this puts De Beers under immense pressure as these two large tonnage, low grade Saskatchewan projects could - and the word could is worth repeating - have a major impact on world gold production at an annual combined rate of 8 million carats. As a result it has just announced a 2005 budget for the Fort A La Corne project of US$26.5 million. This is a mile ahead of the modest US$7.6 million spent last year, but raised no sweat in the Kensington camp as it would have done in the old days when there was a constant fight against dilution. In fact during last year and this the partners will spend more than the total accumulated exploration expenditure since the project started back in 1989.
Robert McCallum, an old De Beers hand who took over as president of Kensington last year, reckons the recovery of significant numbers of diamonds in the coarser size fractions from the 2004 large diameter drilling programme will improve confidence levels in the grade estimate and modelled value of the breccia beds of the southern 140/141 kimberlite body. Even more encouraging, the initial results support the previously forecast potential of this kimberlite by De Beers. The whole programme involved ten minibulk holes drilled into known high grade zones in kimberlites 140/141 and 122. Five of these targets were on the south breccia beds of 140/141 and related kimberlite units specifically to collect additional diamonds to increase the level of confidence in grade forecasts, so it worked out well. The results will also be used for revenue modelling by experts from De Beers.
Even so the winning post is still well out of sight. The advanced exploration and evaluation phase over the next three years is planned to produce a decision on whether to go for a pre-feasibility study in 2008 so production could not start before 2010. In the meantime Shore Gold is also driving on towards pre-feasibility and has just raised C$116.6 million by a bought deal which gives an idea of the attention being given to Saskatchewan diamonds. The presence of Newmont now on its share register with a 9.9 per cent holding will give De Beers something to think about. Is Newmont there for a punt, or has it got ambitions in diamonds? Memories go back to when Rio Tinto outbid it for the Argyle diamond mine in Australia. The safe bet is that De Beers will make its move to control the Saskatchewan diamond fields sooner rather than later and this can do no harm to the share prices of Kensington or Shore Gold.
ksbradley
For many a long year the potential to have a kimberlite diamond mine in Saskatchewan has been poo-pooed by diamond analysts on the grounds that the stones would be too small and uncommercial. Nonetheless the two main participants in the junior sector, Kensington Resources and Shore Gold, have soldiered on and suddenly there is light on the horizon. Quite a revelation for their critics to find that both are coming up with results that indicate that economic mining is a possibility as they have huge cost advantages over their peers who are struggling away against the odds in the arctic wastes of the NorthWest Territories and Nunavut.
The latest news from Kensington Resources is that it has recovered a 10.53 carat clear, colourless diamond from kimberlite 140/141 during diamond recovery procedures at the De Beers diamond laboratory in Johannesburg. And it was not alone. A total of 135 macrodiamonds weighing 15.445 carats were recovered from a large diameter drillhole over an interval of 96.7 metres and sixteen of these stones were greater than 0.25 carats. Five other macrodiamonds, in addition to the big one were recovered in an interval from 118 to 130 metres in depth and this brings up the other point beloved by critics. The kimberlites have a cover of around 100 metres as this interval was only 18 metres below the glacial overburden. Nothing new in this and it has not deterred Kensington and its partners who have been working away there for around 15 years.
At this stage it is as well to understand the size of Kensington’s Fort a la Corne joint venture property. At 500 million tonnes (using a 30 metre cutoff) the Star kimberlite alone is one of the largest in the world. The whole field of 71 known kimberlite bodies rivals the De Beers Group’s 75 per cent owned Williamson Diamonds mine in Tanzania and its 50 per cent owned Orapa mine in Botswana. Fort a la Corne lies on the western part of the kimberlite cluster and is a joint venture held 42.25 per cent by Kensington Resources, an equal amount by De Beers Canada, 5.5 per cent by Cameco and UEM has a carried 10 per cent stake. The eastern portion of the body lies on Shore Gold’s 100 per cent owned 98 sq km project, so the stakes are very high.
The recent bulk sampling programme by Shore Gold has confirmed that the diamonds from the Star kimberlite are valued at between US$110 and US$162/carat and this puts De Beers under immense pressure as these two large tonnage, low grade Saskatchewan projects could - and the word could is worth repeating - have a major impact on world gold production at an annual combined rate of 8 million carats. As a result it has just announced a 2005 budget for the Fort A La Corne project of US$26.5 million. This is a mile ahead of the modest US$7.6 million spent last year, but raised no sweat in the Kensington camp as it would have done in the old days when there was a constant fight against dilution. In fact during last year and this the partners will spend more than the total accumulated exploration expenditure since the project started back in 1989.
Robert McCallum, an old De Beers hand who took over as president of Kensington last year, reckons the recovery of significant numbers of diamonds in the coarser size fractions from the 2004 large diameter drilling programme will improve confidence levels in the grade estimate and modelled value of the breccia beds of the southern 140/141 kimberlite body. Even more encouraging, the initial results support the previously forecast potential of this kimberlite by De Beers. The whole programme involved ten minibulk holes drilled into known high grade zones in kimberlites 140/141 and 122. Five of these targets were on the south breccia beds of 140/141 and related kimberlite units specifically to collect additional diamonds to increase the level of confidence in grade forecasts, so it worked out well. The results will also be used for revenue modelling by experts from De Beers.
Even so the winning post is still well out of sight. The advanced exploration and evaluation phase over the next three years is planned to produce a decision on whether to go for a pre-feasibility study in 2008 so production could not start before 2010. In the meantime Shore Gold is also driving on towards pre-feasibility and has just raised C$116.6 million by a bought deal which gives an idea of the attention being given to Saskatchewan diamonds. The presence of Newmont now on its share register with a 9.9 per cent holding will give De Beers something to think about. Is Newmont there for a punt, or has it got ambitions in diamonds? Memories go back to when Rio Tinto outbid it for the Argyle diamond mine in Australia. The safe bet is that De Beers will make its move to control the Saskatchewan diamond fields sooner rather than later and this can do no harm to the share prices of Kensington or Shore Gold.
ksbradley
