Has any one read this article yet?
Hudson thinks it couldn't be that wrong, surely not
2007-03-27 16:48 ET - Street Wire
by Will Purcell
Hudson Resources Ltd., smarting from recent insults about its recent 47-tonne mini-bulk test at Garnet Lake, thinks an audit of the results will support its expectation of a higher grade from the kimberlite dike. Finding more diamonds in the tailings would be heartwarming, but the company will face new challenges when it sets up a dense media recovery plant to handle a larger test this year.
The inconsistency
On Feb. 28, Hudson revealed that its mini-bulk test produced 383 diamonds weighing 12.07 carats, for a grade of 0.26 carat per tonne. The result disappointed the market and Mr. Tuer as well, so Hudson got about looking for reasons why its grade was at least 50 per cent below its expectation.
A series of consistent diamond counts obtained from boulders and drill core supported hopes that the Garnet Lake dike had a grade of at least one-half carat per tonne, and a check sample of material taken from the mini-bulk test backed up the earlier counts. In fact, a 350-kilogram batch of the latest material yielded diamond counts and a size distribution pattern that were a near match for the initial 377 kilograms of kimberlite taken from various sites in and around the dike.
Mr. Tuer's new hope stems from the marked difference between the diamond counts and the mini-bulk recoveries of diamonds larger than 0.85 millimetre. Although 727 kilograms of rock processed by caustic fusion yielded diamonds larger than a 0.85-millimetre sieve at a rate of 22 stones per tonne, the mini-bulk test managed a rate of just eight stones per tonne.
The theory
Hudson processed its mini-bulk test using a recovery plant based on dense media separation, the most common method for processing larger samples of kimberlite for macrodiamonds. The plant separates heavier bits of material from lighter ones, capitalizing on the fact that the specific gravity of diamond is 3.52, while kimberlite typically has a specific gravity of 2.5.
Hudson's Garnet Lake kimberlite is at the heaviest end of the scale, with a specific gravity of about 3.0, making the separation of diamonds from barren kimberlite a challenge. For instance, a one-quarter-carat diamond attached to a small piece of kimberlite might have a combined specific gravity of 3.1, allowing it to slip through a dense media recovery system.
Mr. Tuer said Hudson processed about 30 tonnes of its mini-bulk sample late last year and came up with a lot of concentrate. That material yielded diamonds at a rate of six stones per tonne. In the new year, the amount of concentrate dropped by half, and the company recovered diamonds at a rate of just three stones per tonne. The difference is prompting Hudson's audit of the tails.
The plan
Hudson will be running its own dense media processing plant at the Garnet Lake site this summer. Mr. Tuer said it was more cost effective to pay $350,000 for the small plant and fly it in to the site than it would be to sling 600 tonnes of kimberlite out to the coast for shipment back to a plant in Canada.
As well, Hudson will have the opportunity to tune its plant to the Garnet Lake kimberlite. The company plans to send some rock to the Saskatchewan Research Council, which has a plant built by the same manufacturer, to see what recoveries it can get.
An efficient plant will be key to the new test. A successful feasibility study for a diamond mine on the coast of Greenland would likely need rock worth something between $50 (U.S.) per tonne and $100 (U.S.) per tonne, depending on the mining complexities. A grade of at least one-half carat per tonne would put less pressure on the diamond value, if Hudson is to achieve the required rock value at Garnet Lake.
Hudson closed down nine cents to $1.11 Monday on 52,200 shares. In February, before the results that need auditing, investors were paying well over $2 for the shares.