WP on new findABZ Aber finds more carats
Deep Diavik tests add new sparkle
By Stockwatch
Last Updated: 11/23 05:26PM
Aber Diamond Corp (:ABZ)
Shares Issued 58,355,230
Last Close 11/22/2006 $41.62
Thursday November 23 2006 - Street Wire
by Will Purcell
Aber Diamond Corp. expects seismic profiling and two bulk samples will expand the mineral reserves at the Diavik diamond mine.
Deeper diamonds
Aber had its consultants complete an audit of the mineral resource at Diavik at the end of 2004. The Roscoe Postle Associates Inc. study showed the mine had a reserve of 95.6 million carats and an added 23.4 million carats as an indicated and inferred resource. Along with the 10 million carats already mined, the entire Diavik deposit held about 129 million carats.
Production from Diavik in 2005/2006 should reach about 17.5 million carats. That would theoretically drop the reserve tally to 78 million carats and the entire resource left in the ground to about 101.4 million carats, but a new reconciliation at the end of the year will yield a rosier result.
Aber and its partner continue to find more kimberlite within the existing pipes. A recalculation at the end of 2005 put an extra three million carats into the reserve column, and Diavik is finding more diamonds this year. Aber's chief executive officer, Bob Gannicott said Diavik was using seismic profiling in the deeper parts of the pipes, and the technique showed A-154 North and A-418 contained significant quantities of kimberlite below the earlier cut-off depths.
With constant grades and diamond values, the bonus material in those two pipes could add another five million carats to the project. As a result, the Diavik reserve will likely remain well above 80 million carats at the end of 2006, and the total resource could still come close to 110 million carats.
Mr. Gannicott said Diavik did not attempt the seismic work at A-154 South yet, because mining in the pit would have to shut down during the tests. As a result, the partners will not get a chance to outline any extra carats in the flagship pipe until next year at the earliest. A-21 could also contain additional diamonds in its deeper regions. Seismic profiling of those two pipes could bring further good news in a year or two.
Bulk tests
Mr. Gannicott said that the underground access was now burrowing into the A-21 kimberlite. The Diavik partners will pull out several thousand tonnes of kimberlite as a bulk sample, which will reveal the diamond value with sufficient confidence to upgrade the resource to reserve status. Aber estimates the pipe contains 14.6 million carats, and it thinks the diamond value will prove comparable to the best pipes at Diavik.
The feasibility study used a value of less than $30 (U.S.) per carat because of the tiny parcel of diamonds taken from the pipe. A big bulk sample of A-154 North more than doubled the projected diamond value, and the size and quality attributes of the A-21 gems is encouraging. Mr. Gannicott said Aber would likely have the results of the A-21 test by spring. If the diamond value grows as expected, the A-21 will move back into the reserve category.
The rough diamond market softened this year, after a few years of steady growth. The impact on the A-21 test should be minimal, as the nature of the Diavik diamonds insulated the partners from most of the decline. Prices for larger stones held steady or continued to grow, as did the values for the tiniest of stones. Large diamonds provide the bulk of the Diavik diamond value, and that is likely the case with A-21 as well. Meanwhile, the rough market is again on an upward trend.
Aber is also collecting a bulk sample of A-418. That test will allow the Diavik partners to confirm the diamond value across a much wider area of the pipe, which contained about 30 million carats at last report. The 2000 feasibility study used a diamond value of $69 (U.S.) per carat for Type A diamonds, and $49 (U.S.) per carat for Type B stones. The new test and a bigger parcel from a deeper part of the pipe could boost those numbers significantly.
Aber slipped 11 cents on 87,300 shares Wednesday, closing at $41.67