Sabina and Kennady Diamonds

The Fed spoke, dollar went up, nominal metal prices dropped… things are quiet today.  []


The drums have stopped..

The drums have stopped..

Sabina files a feasibility study on Back River. [Sabina Gold & Silver]  A great project waiting for its time.   Now at 5.3M oz Au (28Mt @ 5.87 g/t Au [M&I]) – mostly open pittable.  A resource is worthless without a promoter with the horsepower and skill to move it along; Bruce McLeod seems to have made a real difference since taking over last winter. Now – if he can just get the $!%@ stock back up to where I bought it….


Stockwatch’s Will Purcell on Kennady Diamonds…

“Patrick Evan’s Kennady Diamonds Inc. (KDI), up four cents to $2.89 on 80,000 shares is wrapping up its 2015 drill program at Kelvin and Faraday, 10 kilometres northeast of Gahcho Kue. The company has upped its tonnage target yet again, this time to between 13 million and 16 million tonnes, based on the results of the drilling to date. Most of the kimberlite lies within the Kelvin pipe, which produced another in a string of lengthy drill hits just before the company pulled out its drill ahead of the winter freeze. Drilling at Kelvin’s sister pipe, Faraday, continues to yield less substantial intervals; the latest hits running between 10 and 30 metres. Ice is not a concern at Faraday, so the drilling will continue until the days grow unworkably short around the end of November.

With a grade potentially topping two carats per tonne, Kennady could be looking at over 30 million carats in the two pipes. Unfortunately, the recently calculated diamond valuations raise questions about whether Kelvin and Faraday can support a mine on their own. The nearly 1,000 carats recovered from Kelvin so far have an average modelled value substantially less than the $118 (U.S.) per carat derived at Gahcho Kue. Kennady’s diamond appraisers, WWW International Diamond Consultants Ltd., say the value of the diamonds in Zone A of Kelvin are worth $56 (U.S.) per carat and those in Zone B are modelled at $70 (U.S.) per carat. For the tiny parcel of Zone C diamonds, WWW gave only an appraised value: $123 (U.S.) per carat. That appraisal was inflated by a few good gems.

Larger samples could bring higher valuations for the two other zones as well but proving the point will take larger samples — and that will take a lot of cash. Kennady’s sister company, Mountain Province Diamonds Inc. (MPV: $x.xx), and De Beers Canada collected several bulk tests of the Gahcho Kue pipes from the late 1990s until the mid-2000s before they found the two exceptional gems that boosted appraised parcel valuations by about 50 per cent. (That work took many millions of dollars and for a time De Beers’s faith in Gahcho Kue seemed wobbly at times.) Mr. Evans is already planning another mini-bulk test at Kelvin next year and his backers are undoubtedly hoping an exceptional gem turns up sooner rather than later. Unless the diamond values improve, Kelvin and Faraday may wind up as feed late in the life of Gahcho Kue — perhaps not until the 2030s.”

Rats, lithium and TerraX

Rat farming.  The OSC want to pay insiders to out sleazy deals by mining promoters. [Resource Clips]  There is rich and deep soil to plow here folks and it sounds a whole lot easier than trying to raise money in this market:

“The plan would encourage reporting of serious securities-related misconduct in Ontario by offering cash rewards, now up to a maximum of $5 million.  Informants might qualify for 5% to 15% of sanctions up to a maximum of $1.5 million, regardless of whether the OSC collects from the malefactor. But if the commission collects over $10 million, the informant’s share could reach as high as $5 million.

Insider trading, along with accounting and disclosure violations, would be among the targeted misdeeds. The OSC also expects the program “to entice companies to self-report wrongdoing.””

So … pick a director you don’t like, throw him under the bus, refinance without dilution and you’re back in business.  PDAC doesn’t like the idea:

The Prospectors and Developers Association of Canada argued against cash rewards. Saying they could encourage “bounty hunting behaviour and framing companies for financial gains,” PDAC warned that the OSC might lack the resources to handle tips. “Overly cautious issuers,” meanwhile, could face higher compliance costs for additional legal advice.

“Reporting of fraud should be a moral obligation and not driven by financial incentives,” stated PDAC’s submission.

Now you might ask where this bright idea came from.   The SEC of course: where else does the OSC look for inspiration?

They're after us boys...

They’re after us boys… 

I got it wrong!  [Financial Post]  FCU Oversight is a creation of dissident shareholders pissed off about the value destroyed in the Fission / Denison merger dance.  Sounds like they have an outside of chance of winning a proxy fight since 80% of the stock is held by retail investors.

David & Goliath

Tin has a supply problem. [Reuters]   Indonesia is cracking down on raw ore exports but until recently, China took up the slack.  Chinese authorities are now clamping down on unofficial suppliers skirting their export tax:

“Right now, though, they [unofficial exports] have stopped, ITRI citing a customs department investigation into local operators suspected of bypassing China’s 10 percent export tax.  “Some of the owners have been arrested,” according to ITRI, and “local sources reported that no-one would like to take the risk to export tin” in whatever form. This clampdown on unofficial Chinese exports has coincided with the more visible interruption to shipments from Indonesia, draining the international market of units.”

Which brings up talk of “Peak Tin”:

“But there is an underlying story of structural supply challenges. Simply put, the supercycle largely passed tiny tin by in terms of investment in new mines. Production from older mines in countries such as Peru and Brazil, meanwhile, is steadily falling, as it has been for some time. Indeed, the only reason tin has avoided a more serious supply crunch is the emergence of a totally new producing country in the form of Myanmar.”

But even Myanmar won’t save the day:

“But, according to ITRI, local operators are having to work ever harder to maintain such output levels. Actual production may have been declining this year but “the considerable expansion of processing capacity” has allowed the “treatment of previously stockpiled or discarded low-grade ore.””

Chile wants its very own Faro. [Bloomberg]  Codelco will get $600M from the Chilean government to prop up old producers:  Chuquicamata in particular.

Ready for taxpayer dollars

Ready for taxpayer dollars

Lithium – a metal with many uses. [Republic of Mining / Investor Intel]  including public health…

“Lithium was the word on everyone’s lips pre-1950 when it was a standard ingredient in 7-Up (the “up” being literal)… 
In 1990, a study in 27 counties in Texas found lower rates of not only suicide but also homicide and rape in those where the drinking water contained lithium. In 2009, research in Japan found lower suicide rates in areas with lithium in the water….
If mood enhancement is a side effect then I humbly suggest that they run some through the Toronto water supply just a little bit ahead of the next PDAC. It may not improve stock prices but fewer would care!”
Happy Santa

Agnico Eagle’s going strong. [Junior Mining Network]  Meadowbank’s making money at $646 / ounce and Amaruq will have a resource out by February.


TerraX finds a new zone at Yellowknife City Gold. [Junior Mining Network]  The Brent Shear of the Hebert Brent Shear Area in the Barney Lake Deformation Corridor runs 4.0m @ 13.89 g/t Au.  It’s getting kind of tough keeping up with all these new zones, sub-zones, sub-sub-zones…    Don’t know where this latest one is, but likely it isn’t too far away from the others.  Seems like every trench becomes a new zone, in an 80 m x 50 m area.

H-B area

There's pixie dust in my eyes...

There’s pixie dust in my eyes…

Frank, Fission and FN futility

Frank Callaghan gets his wings clipped. []  One year off from being a director, officer or IR guy and a $30K fine.  Greg Klein sums it all up nicely. [Resource Clips]  In June 2012, Frank found a pliant QP and Barkerville released an “outrageous” resource estimate for Cow Mountain which was subsequently retracted.  Frank couldn’t put a lid on it however:

“Two and a half months after Barkerville adopted the revised estimates and retracted the initial estimates, Callaghan publicly repeated, and attempted to justify, the initial estimates in an online article and at an investor presentation. Callaghan acknowledges that his statements in the article and at the presentation contravened provisions of NI 43-101.”

He talked up the original effort even though “BCSC staff cautioned him that attempting [to] justify, validate or compare the initial estimates to the revised estimates is misleading and likely contrary to NI 43-101, his disclosure contradicted Barkerville’s previous disclosure adopting the revised estimates as the only current estimate and he understood disclosing combined inferred and indicated resource estimates was prohibited.”

If you’re gonna be a promoter, you’ve gotta be a believer.   This isn’t a bad time for a Howe Street promoter to have to take a one year siesta; watch for his return as a harbinger of better times ahead.

He'll be back.

He’ll be back.

Modern treaties have been a benefit to Canadian mining companies and First Nations. []  Yessiree fat cats on both sides of this deal have done very well thanks.  From the cheap seats, we have seen land open for exploration vanish; a proliferation of useless review boards stacked with place holders; permitting and mind-numbing project assessments down to the fly camp and outhouse level; law suits; petty graft; outright corruption; racial tension; and hypocrisy at all levels.  A hundred years from now this will be a well-documented disaster.

No country for old prospectors.

No country for old prospectors.

Dev on the hotseat. []  Looks like Lucas Lundin and Dev Randhawa’s excellent idea to merge Fission and Dennison for paper pissed off a lot of shareholders.  They recently had to have a “town hall meeting” in Hogtown to put a lid on it.  And just to make sure this doesn’t happen again, they’ve also set up something called FCU Oversight Incorporated to smooth troubled waters.  Doesn’t sound like they’re off to a good start:

“Given the Company’s Trajectory since July 6th, recent events, and statements made by the CEO, we would like to hear your thoughts directly. The Board of Directors voted unanimously in favour of the proposed arrangement with DML. Shareholders voted against. We don’t see a lot of harmony in that.”

We're here to listen..

We’re here to listen..

Capstone’s in trouble. [Marketwired]  Costs have been moved around a bit since spring so that Minto’s cost of production ($2.47 last quarter) is … ta da … $2.33 /lb and thus less than spot.  Like their other two operations.  They took a $200M write-down and allocated $9.4M  to “restructuring” and “stand by fees for reduced open pit mining rates”.  IKN’s summary of the bottom line:.


Kennady Diamonds reports a long (127 m) intercept at Kelvin and 30 m at Faraday 2. [CNW]   The tonnage guidance has been increased to 13 – 16 million tonnes.

Ascot’s lunchroom zone continues to deliver. [Marketwired]  443 g/t Au over 1.0 m at Premier.   Didn’t anyone bother looking at the walls while munching on sandwiches down there?

Ethos Gold on the move:  Last seen in the Yukon,  Ethos Gold’s “Coffee East” property didn’t pan out   The company sat on the sidelines with a whack of cash but is now making a strategic move into…  moving. [Stockwatch]

Gary Freeman’s shell, Ethos Gold Corp. (ECC), plans to acquire Rudy Callegari’s New York company, Zootly LLC, which has designed an app for people who are moving.

Ethos will roll back 1:3, leaving it with 14,486,304 postconsolidated shares, after which it will issue 35,120,388 postconsolidated shares to the shareholders of Zootly. The shell will then change its name to Zootly Holdings Corp. Mr. Callegari is Zootly’s founder, president and largest shareholder with about 58 per cent of the company, which he established last year. Zootly has an app that enables migrating New Yorkers to schedule a move with movers. After downloading the app, you can fill out your address and details related to your move, including when, where and the number of floors that the movers have to climb (in Manhattan, many residential buildings have no elevators). The app then asks for more details, including the size of your current residence, after which it gives you an estimated total.

For any New Yorkers concerned that a lazy or unhygienic mover might show up on moving day, or that their stuff shows up damaged on arrival, Zootly says it conducts a “rigorous screening” of any movers before asking them to join its service. This includes examining ratings of movers on Google, Yelp, Angie’s List and so on, plus the company talks to the Department of Transportation, which records complaints against movers. Zootly says on its website, “You tell us what and where, Zootly does the rest.” It is unclear who is responsible for damages or lost items from the move. So far, Zootly has 25 moving companies with a combined total of 250 trucks available through the app.

Zootly charges a premium for its purportedly convenient service. The first hour is $149 (U.S.), which includes two movers (hopefully sober) and a truck (which hopefully does not break down), and each additional hour is $99 (U.S.). The company earns a 25-per-cent commission for each transaction, so chances are New Yorkers can find a cheaper mover on their own. Zootly launched its service earlier this month, so it is too early to pay attention to the company’s negligible revenue, but it does have 22 employees. It lost $4.6-million (U.S.) in the nine-month period ended Sept. 30, 2015. In connection with closing this deal, Zootly plans to sell a non-brokered $1.1-million (U.S.) private placement of units priced at $1.02 (U.S.), as well as a brokered $5-million (U.S.) private placement of subscription receipts priced at $1.20 (U.S.). The receipts will convert into shares of Zootly when it goes public.

Metal prices, Klondike Gold and Northquest

Time to check in on the minor metals of occasional interest to northern prospectors:  moly, tin & tungsten.


Down 54%, 21% and 34% year on year.

Naked gun

Michael Berry’s presentation to the AQME. [Discovery Investing]  The big picture part seems spot on: we are stuck in a deflationary cycle a la 1938 and nobody has a clue how to get out of it.  Not so sure about the specifics; he’s a big fan of lithium and copper.  Likes Yerington (?!)

Arctic diamonds don’t sparkle like they used to. [Globe & Mail]  The all-seeing eye of central Canada turns it’s somnolent gaze north..   Guess what?  Things are crummy in the NWT with diamond exploration down 53% .  The big culprit?  Unsettled land claims and a large block of ground near Yellowknife removed from staking.   The rest of the story is a summary of the same old grid lock with everybody talking past each other.

Moody’s thinks weak metal prices will slam miners through 2016. []  Brought to you by the guys who predicted the 2007 sub-prime collapse in 2008.  All this means is the credit door is slamming shut after the cow has left the barn.

So why bother coming:  De Beers will allow its sightholders to “defer” buying anything  at the November sale.  [Rappaport]

Kabuki auction

Kabuki auction

Zimtu is getting jaded: 

“People who have a failed company, they’ll run into it and try to make a go of it,” Fulp said. “Ninety-five per cent will fail.”

Scratch another name off the Zimtu Christmas Party list.

Klondike Gold reports their remaining drill results. [Klondike Gold]  The headline hit was 2.8 m @ 75.6 g/t Au  (or – if you like – 0.5 m @ 420 g/t & 2.3 m @ 0.73 g/t).  All of the other reported holes hit from 1 to 12 g/t over 0.2 to 5.4 m .   They drilled 19 holes and reported 13; presumably the rest were duds.  Technical success.  Hopefully they can raise some more cash with this for next year.


Northquest report 7 holes from Pistol Bay. [North Quest]  Headline hole was 24 m @ 2.95 g/t Au.  Looks like the first 7 holes hit with the best being 5.0 m @ 5.11 g/t Au.  They are the masters of full disclosure; you can download drill logs if you like.

Iron, diamonds and drilling

Grief in the iron ore biz..

Prices slumping again with demand as producers stand pat. [Bloomberg]    Back down below $50 / tonne.

“The downtrend in seaborne iron ore prices is accelerating,” according to a report from Australia & New Zealand Banking Group Ltd. on Friday. “Chinese steel mills are tightening their spending on the back of weak steel prices.”

And the Chinese government steps in to prevent one of its biggest steel importers from defaulting on its bonds. []

“Sinosteel is primarily a trading company, but also operates steel mills and owns chrome operations in South Africa and iron ore projects in West Africa and Australia. The company has been on life-support for more than a year, hurt by the combination of low iron ore prices and weak domestic steel demand.”


and dismal diamond news…

Polished diamond prices hit a 5 year low. []


But rough diamond prices don’t look so bad by comparison. []  … because De Beers or Alrosa are setting floor prices.


But here’s a work-around for small polishers caught in the price squeeze….

If you don’t like the answer, fake a better one:  Gemological Institute of America  gets hacked. [Rappaport]  Take a report on a so-so diamond, upgrade the color and clarity a bit, and voila – the same crummy diamond is worth more.   In response, GIA suspends the clients who received the 1,042 grading reports, primarily from its Indian centre.

Usibelli Coal sticks to its knitting. [Petroleum News of Alaska]  In 1943, Joe Usibelli took an old CAT and a dump truck and set himself up in the coal business; 72 years later they’re mining 1M tonnes annually, in Alaska, despite some heavy handed restrictions on end use.

Joe Usibelli Sr

Collapsing commodity prices are being felt in America’s heartland. [New York Times]  The Gray Lady sheds crocodile tears for the rubes who toil at grubby jobs in the boonies.

ATAC finishes up work at Tiger (YT). [Marketwired]  They drilled 18 holes (1400 m) and trenched.  They’re now looking at year-round processing instead of a seasonal heap leach project.

Damn the weather: Full steam ahead.   Copper North resumes drilling at Carmacks Copper (YT). [Markedwired]  Hope things stay warm or this might not turn out to be the cheapest way to do this.  Besides… what’s the rush?


Auryn identifies a +20 km long gold-in-till anomaly at Committee Bay (NU). [Marketwired]

Nighthawk Gold finishes up an 8 hole drill program at Indin Lake (NT). [Marketwired]  Here’s the headline hole:

NH grades #1

Pick the answer you like..

Pick any answer you like..

Nutty NWT and Sage Grouse

Gold miners sue Oregon over dredging ban. [Reuters]  Their point is that the state is trying to apply state law on Federal lands.

Everybody out of the water...

Everybody out of the water…

U.S. Bureau of Reclamation says the EPA was responsible for the Gold King spill. [Reuters]  Of course, it’s more complicated than that with the chain of responsibility naturally extending back to the miners.  So it really isn’t their fault after all.

Gold king

Making up with the “twerp”:  David Suzuki’s missive to Justin Trudeau. [Huffington Post]  One of the CBC’s most famous celebrity creations back tracks on his rhetoric during the federal election campaign.


And those pesky sage grouse…

Meanwhile ... the daily bag limit is still 6

Meanwhile … the daily bag limit is 6

NWT’s new Protected Areas plan is nuts. [Mining North]  Here’s a great idea; lets ban mining in 40% of a territory with an economy based on mining.

Miltenberger's militia

Miltenberger’s militia

Commodities and SMD

Enough already:  BHP CEO wants rivals to cut money losing output – fast! [Bloomberg]   Of course, what’s good for the goose should be good for the gander, n’est-ce pas?

finger pointing

Hedge funds are happy to lend cash to struggling miners. [Bloomberg]  They’re doing streaming deals in the belief that the bottom is in.

Toss an anchor

(Caution: Being early is the same as being wrong.)

And yet another reason for miners to keep on digging despite crappy (US$) prices: Currency weakness cushions the blow. [WSJ] []

The hope for recovery in commodities markets rests with the prospect that producers will run out of money or tire of losses and shut their facilities, bringing supply back into balance with weakened demand. But for the world’s top miners, which operate mostly outside the U.S., currency declines have dulled the pain of lower commodity prices. Over the last year, the dollar has gained 58% against the Brazilian real, 22% against the South African rand, 21% against the Australian dollar and 16% against the Canadian dollar.

Since labour, power, food, etc. are priced in local dollars, voila – you’re still making money.  Cheap oil sure helps too.

Gold in $CDN

Stockwatch on Strategic’s property swap with Silver Range.

“Douglas Eaton and Bruce Youngman’s Strategic Metals Ltd. (SMD) lost one-half cent to 28.5 cents on 80,000 shares after it swapped properties with a sister company, Silver Range Resources Ltd. (SNG: $0.035). Strategic gets a 100-per-cent interest in the Mint gold-copper property in southwest Yukon; Silver Range gets the Michelle and BP 4 base metal properties, also in Yukon. The swap was first proposed in mid-2014 and it was a great deal according to Mr. Eaton, president and chief executive officer of both companies. It was not so great a few months later when he cancelled the swap because the property values were less than the cost of gaining regulatory approval for the transaction.

Mr. Eaton resurrected the swap this summer, but he was not at his promotional best in explaining why. Strategic’s business model is to find projects and then option or sell them, not to swap them. Nevertheless he says the Michelle and BP 4 properties did not have any direct synergies with Strategic’s 100 other prospects, but — here comes his attempt at positive spin — under certain market conditions, a gold-copper porphyry target like Mint “may complement other porphyry prospects” Strategic holds in the area.

Finding, optioning, selling and swapping properties is apparently a rewarding profession. Mr. Eaton does not draw a salary from either Strategic Metals or Silver Range but his consulting company, Archer, Cathro and Associates, collects substantial sums from Strategic and its sister company. Of those payments $180,000 from Strategic and nearly $70,000 from Silver Range are attributable to Mr. Eaton.”

Mostly Alaska news

Swallowing their medicine:  Teck takes a  $2.2B write-down, mostly on their coal assets. [Financial Post]  Hidden in the bad news is a respectable adjusted profit of $29M.  In recent months, their debt has been downgraded to junk by two agencies based on their commitment to fund the Fort Hills oil sands project.   Anyone who bought TCK in the dark days of spring 2009 did well and there may be another opportunity if the herd stampedes out.


Good summary of the nickel market by Chris Berry. [Rockstone Research]   Nice to see an analyst who isn’t afraid to be bearish when the facts are clear.   Bottom line: nickel prices are going to stay low because of the US$ and slack Chinese demand.

While on the subject of predictions:  Cut forecasters some slack, but don’t bet on their accuracy either. [Mineweb]   If there’s anyone out there interested in the question of forecasting and just how accurate it is, you might want to check out Superforecasting: The Art and Science of Prediction.  [Penguin]  Philip Tetlock is the guy who famously demonstrated that experts are no more accurate than dart-throwing monkeys.  Turns out that isn’t the whole story and there is a very small number of people who consistently can forecast events, prices, etc. with a surprising degree of accuracy.   Don’t expect to find them at big conferences however; a key characteristic they share is humility.   Anyway – a really interesting read if your business depends on forecasting trends and developments.

The Silent Rise of the Prospect Generator. [Global Mining Observer]  The “Prospect Generator” is a great idea in theory but tough to execute in practice.  The current downturn is or will shortly (when claims expire!) create opportunities for saavy cashed-up groups to get good assets on the cheap.  The tough part – as always – is selling them and getting enough cash to repeat the trick.  While a good summary of the “model”, the thesis seems flawed.  Prospect generators like everybody else are running out of cash and some of the stars cited in the article are moving away from the “model” (viz. Miranda Gold).   Also missing from the analysis is the prospect generator par excellenceStrategic Metals.

Glencore redux:  Zinc giant Nyrstar is now in trouble. [Bloomberg]  Shares plummetted 27% in recent days despite cutbacks including closing Myra Falls (BC).  The hedgies must be shorting the hell out of them.


Icahn starts to shake up Freeport.  FCX slashes production at Sierrita in Arizona and mulls shutting it down completely. [Reuters]

“In combination with sharp cuts announced in August, Freeport said it has reduced annual production by 250 million pounds of copper and 20 million pounds of molybdenum.”

More bad diamond news…

De Beers is saying it’s business as usual; it’s not,” said Guy Harari, co-founder of rough-diamond trading platform Bluedax to Bloomberg. “The market is much weaker than what De Beers tries to show the world.”

Northern Empire announces results from Hilltop (AK). [Junior Mining Network]  … and they’re not much to write home about.  The big news seems to be they re-sampled a trench they sampled earlier in the season (“Phase I”) and the grade jumped from 2.3 to 9.7 g/t Au.   Not a peep about anything new.  Mr. Market says….


Coventry announces further results from Caribou Dome (AK). [Coventry Resources]  Best intersection was 7.0 m @ 6.8% Cu (z=35m).

Canada Zinc hits high grade at Cardiac Creek. [FSC Wire]  11 m @ 17.2 % Zn+Pb (z= 460m).   The 5,350 m drill program ended in last September; four holes reported and four to come.

Miranda buys royalty on Willow Creek. [FSC Wire]  Fed up with the “prospect generator” model, Miranda Gold has been trying to get some cash flow by digging it out of the ground themselves.  This easy-in installment purchase appears to be an asymmetric bet that production might be better than planned, or, a way to maximize cash flow if the high grade is limited.

State of Alaska to commence EIS on a road to the Ambler District.  [Junior Mining Network]   Good news for NovaCopper.

African Queen gets a mining permit for Yellowjacket. [Junior Mining Network]  The Eagle Plains crew were the last to take a whack at this high grade but spotty gold “deposit” near Atlin.  Good luck.  If they’re smart, they’ll treat it like the old timers did: take what’s in sight and quit when it stops.

Overproduction and diamonds

Miner’s keep on digging despite crappy prices. [Reuters]  …which only prolongs the misery.  Seems that low commodity prices aren’t a deterrent when:

  1. Production is hedged
  2. Closure costs are high
  3. You’re a state-owned job that has to keep employees working regardless
  4. You can borrow cheap cash and….
  5. You have debt to service anyway.

The reasons might be different but this has probably happened in every bust since Gronk chipped flint.  The bottom line seems to be prices won’t rebound  until (1) more big producers give up and shut down and / or (2) general economic growth and metal demand rebounds.   Neither seems imminent….

Ancient miners

And here’s a great example:  Alrosa sold only 42% of its diamond production in the last quarter, “reflection a collapse in global demand”.   Can’t give ’em away.  [Bloomberg]

Howe Street shifts its diamond focus. []  Kelvin’s results were viewed as underwhelming and now Peregrine is the center of attention.

Stockwatch’s Will Purcell on Kennady Diamonds and Kelvin.

“Patrick Evans’s Kennady Diamonds Inc. (KDI) lost eight cents to $2.87 on 85,000 shares today on diamond valuations for Kelvin, the most important of two kimberlite pipes at Kennady North, 10 kilometres northeast of Gahcho Kue in the Northwest Territories. The company’s consultants, WWW International Diamond Consultants Ltd., modelled the value of the Zone A gems at just $56 (U.S.) per carat, based on a 443-carat parcel, and the value of the Zone B gems at $70 (U.S.) per carat based on a similar amount of gems. WWW did not model the Zone C gems as the 80 carats available were too few to yield a meaningful estimate. Instead, it reported the actual appraised value: $123 (U.S.) per carat.

Because WWW could not model the Zone C gems, it declined to provide a composite modelled value for Kelvin as a whole. That probably is a promotional godsend — although some investors decided that the value would be disappointing even if the appraised value is used. In fact, since two of the three best gems came from the Zone C parcel — a 2.58-carat stone worth $1,366 (U.S.) per carat and a 2.38-carat gem worth $1,196 (U.S.) per carat — the modelled value would probably be lower, unless larger samples prove those two gems were not flukes.

Mr. Evans, Kennady’s chief executive officer since 2012, called the earlier grade estimate of between 2.0 and 2.5 carats per tonne and the current valuation “positive results.” As a result the company will proceed with a 500-tonne mini-bulk test of the northern lobe of Kelvin next year. With more carats comes the possibility that Kennady will recover larger and higher-quality gems that could increase the average diamond values significantly, if not during the bulk sampling, then during production.

That phenomenon was particularly apparent at Gahcho Kue, where Mr. Evans’s main diamond company, Mountain Province Diamonds Inc. (MPV), is building a billion-dollar mine with De Beers Canada. The co-venturers collected repeated mini-bulk tests of their top three pipes and two of them produced a single gem with sufficient size and quality to skew the appraised values significantly higher than the modelled values — mainly because the modellers took a conservative view to the proportion of those exceptional gems in the Gahcho Kue pipes.

Mountain Province, which lost two cents to $4.15 on 49,000 shares, has based its promotion to retail investors at least on an appraised diamond value of $182 (U.S.) per carat, not the $118 (U.S.) per carat modelled value that formed the basis for the company’s feasibility study. (Usually the numbers go the other way: Shore Gold Inc. (SGF: $0.16) has a modelled diamond value of $210 (U.S.) per carat for its Star-Orion South project, but the appraised value was much lower, about $135 (U.S.) per carat.) Mr. Evans says the Kelvin prices are comparable to those reported from Gahcho Kue “when the rough diamond price index was at a comparable level.” He sees this as encouraging for Kennady North and Kelvin, but investors could easily interpret it as bad news for Gahcho Kue’s current prices.”

NovaCopper reports infill drill results. []  No big surprises; the holes were very good:  9 to 32 m intercepts running 3% to 7% Cu with Ag, Pb and Zn.

Kelvin, zinc and deals

Canuckistan votes….



Best line heard last night (from a Millennial):   “Under a Liberal government, even the Prime Minister will be moving back into his parent’s home”.

Kennady Diamonds reports Kelvin valuation results. [Kennady Diamonds]   The only definitive results are for the first two of the three zones.  Stones from Zones A and B were valued at US$56 / ct and US$70 / ct respectively – lets say US$63 / ct for an average.

“Kennady Diamonds President and CEO Patrick Evans commented: “We are very pleased with the results which confirm that Kelvin hosts a population of high value gem quality white diamonds. These good results were achieved despite the valuation being done at a challenging time with the rough diamond price index at multi-year lows.””

Betcha he’s not.

“Mr. Evans added: “The Kelvin diamond prices reported are comparable to those reported from the neighboring Gahcho Kué diamond mine when the rough diamond price index was at a comparable level.  This is very encouraging, particularly as Gahcho Kué is widely recognized as the world’s highest margin new diamond mine. Based on these positive results, we are now proceeding with preparations to take a further 500 tonne bulk sample from the Kelvin North Lobe during the winter of 2016.””
This is an elastic use of “comparable”.   Mountain Province valued Gahcho Kue’s diamonds at US$118 in February 2014. [Mountain Province Diamonds].   Average diamond prices have declined 11% since then, suggesting a “comparable” price of  somewhere nearer US$104 / ct.  []
There were some nice, 2.4 to 4.2 carat, high value stones in the parcels from Zones B and C with valuations ranging from US$1,196 / ct to US$1,603 / ct.  The proportion of larger stones at Kelvin is now going to be of great interest.  The next important data points will be the bulk sample and valuation results from the deeper portions of  Kelvin (Zone C).   To put things in context, this is the first disappointing news out of KDI since they started and it isn’t a show stopper.  They also couldn’t have picked a better time to release the news; on election day afternoon.   Howe Street chatterers and insta-pundits were not impressed and Mr. Market shrugged.

But diamonds are where you want to be…   Dwight Anderson of Ospraie Management says diamond stocks will double within a year. [Bloomberg]   Never heard of them but I’ll listen to their music.

Which will be welcome news to Canterra…   After giving investors another month in August to “fill out their subscriptions”, Randy Turner has closed the first  tranche of his planned $1.0 M raise. [Junior Mining Network]  …and given them another extension until mid-November.

Bring in the experts:  The EPA brings in Alexco Environmental Group to clean up their self-inflicted mess at the Gold King Mine near Silverton, Colorado.  The job is done thanks to quick, capable work by a Yukon company.
Phone Alexco

Phone Alexco

Group Ten Metals buys the Spy Property near Destruction Bay. [Stockwatch]  All stock (& NSR) deal for this PGE showing.  Kudos to Tom Morgan and Bill Karman.

Almaden to purchase the Rock Creek (AK) mill. [Stockwatch]  This NovaGold project didn’t work out and looks like it won’t restart; the mill is bound for Ixtaca, Mexico.
It was only used for several months in 2008; now a steal at US$6.5M.

Rackla Metals raises $250K. [Marketwired]  Simon keeps the hope alive.

Greens Creek numbers look good. [Kitco]   ~2M ounces Ag  and 14K ounces Au in the third quarter, up 5.3% and 6.3% respectively.   America’s largest silver mine, right outside Juneau.