from stockwatch by Will Purcell
The diamond and specialty minerals stocks box score on Thursday was an upbeat 117-87-112 as the TSX Venture Exchange rose six points to 630. Dermot Desmond and Mark Wall's Mountain Province Diamonds Inc. (MPVD) nevertheless lost one-half cent to 48.5 cents on 125,000 shares.
As the 2020s drag on, the pressure to augment the reserves of Mountain Province's 49-per-cent-owned Gahcho Kue mine grow, as the most recent mine plan, rolled out last year, projected the last kimberlite being processed early in 2030. With the end just seven years off and the company and its majority co-venturer, De Beers Canada, looking at hefty costs of closure, delaying the inevitable by even a few years is a worthwhile exercise.
And so, Mr. Wall, president and chief executive officer, continues to broach the subject of his company's fully-owned Kennady North project, home to three seemingly economic kimberlites that could fit the bill. As well, the partners are looking at boosting the life of the existing Gahcho Kue kimberlites through underground mining.
A key to that plan is the Hearne Northwest extension, a potentially significant amount of kimberlite sitting under the partners' noses until the open-pit mine exposed the southeastern end of the limb over a year ago. De Beers and Mountain Province drilled 16 holes last year and hit "significant kimberlite intersections" in 10 of them, allowing for modelling the new area for possible mining. A second phase of drilling is under way, with 13 more holes planned.
Officially, Mountain Province says the Hearne Northwest extension offers "potential to transition Gahcho Kue to an underground producer," a move that could potentially increase the mine life. Indeed, Mr. Wall cheers -- enthusiastically and more than a bit redundantly -- that "we see it potentially as the key to the lock to unlock the potential both underground and for Kennady at Gahcho Kue." He is looking beyond Hearne, projecting that the mine may also proceed underground elsewhere, at 5034 and its nearby NEX extension, as well as at Tuzo.
While there is unlikely to be a formal go-no-go decision for underground mining before the end of 2024, Mr. Wall and his crew say the proposed plan will be investigated in stages over the coming year or two, as De Beers and its junior partner look to derisk the opportunity. While the opportunity available at Hearne is currently front and centre, the longer-range potential at Tuzo could be the real motivator.
The most recent reserve estimate for Tuzo listed 15.1 million tonnes of kimberlite at 133 carats per hundred tonnes, or about 20 million carats. Over 10 million more tonnes, nearly all of them inferred at depth, carry 17 million more carats at about 170 carats per hundred tonnes. More carats are potentially available even deeper within Tuzo, sitting as a target for further exploration. And so, the real potential to extend Gahcho Kue with underground mining appears to be at Tuzo, with Hearne still just an appetizer.
And then there is Kennady North -- a project with two tiny kimberlite finds that De Beers threw back to Mountain Province nearly 20 years ago, only to learn that the bodies are not so small after all. At last report, the Kelvin pipe held 8.5 million tonnes of kimberlite at 160 carats per hundred tonnes, about 13.6 million carats, while the Faraday 2 body had 2.07 million tonnes inferred at 263 carats per hundred tonnes and Faraday 1-3 provided 1.87 million tonnes inferred at 104 carats per hundred tonnes, good for a combined 7.35 million carats.
With a total resource of about 21 million carats, Kennady North could offer another three or four years of life to Gahcho Kue, but there are challenges. The bodies are smaller and more irregular than the ones 10 kilometres to the southwest at Gahcho Kue, and underground mining would likely be required to get at the bulk of the carats.
Then there is the matter of who owns what. While De Beers gave Kennady North away to Mountain Province, the latter company and a subsequent spinoff, Kennady Diamonds Inc., spent big developing the resource estimates. (When Mountain Province reabsorbed Kennady several years ago, it gave its shareholders roughly one-quarter of the stock in the merged entity.)
Unfortunately, De Beers appears to be balking at paying much to reacquire a 49-per-cent interest in Kennady North, which would be a prerequisite for Gahcho Kue handling the Kelvin and Faraday kimberlite. Good news from the Hearne Northwest extension and development of an underground mine plan there and at Tuzo could speed up the never-ending talks about developing Kennady North as a part of the Gahcho Kue mine.