RE: JKNFHope it is enough to convince you $3.50 very soon !!
2005-01-13 15:38 ET - Street Wire
by Will Purcell
John Ryder's Dianor Resources Inc. has produced another diamond tease from its new Leadbetter project in the Wawa area of Northwestern Ontario. The latest numbers continue to offer encouragement that a potentially large body of diamond-bearing rock could have a favourable stone size distribution and an economic grade. Still, the company will have to process some significant rock samples for microdiamonds using more traditional methods before a clear picture of the diamond content and size distribution becomes clear. Some of those results could be available in a few weeks.
The new counts
The latest stone haul came from about 130 kilograms of rock from the Leadbetter project. The material produced 53 diamonds, which worked out to about 400 stones per tonne. There were suggestions that the parcel had a favourable size distribution, as seven of the diamonds were larger than a 0.60-millimetre sieve and 13 more were large enough to cling to a 0.425-millimetre mesh.
Once again, the processing method does not lend itself to easy interpretation and the test provides no firm answers to the key questions. An independent group collected and concentrated five outcrop rock samples and the diamonds were ultimately selected from these concentrates by a binocular microscope. That method is markedly different from the traditional method of recovering diamonds. Typically, explorers recover microdiamonds from rock samples by caustic fusion.
The diamond counts are not representative as a result. One clear sign of that is that none of the recovered diamonds were smaller than the 0.212-millimetre screen. In most deposits, the numbers of diamonds increases with the smaller sieve sizes, and most Wawa samples displayed an exponential increase toward the smaller sieve sizes. As a result, there are few firm conclusions possible at this stage. The Leadbetter rock clearly is diamondiferous and the results from the latest rock batches undoubtedly understate the microdiamond content of the rock.
Meaningful conclusions are lacking, but the latest results still offer signs of promise. With seven 0.60-millimetre diamonds in 130 kilograms of material, the rock delivered a bit more than 50 such stones per tonne of rock. That tops what batches of rock with a comparable weight delivered from most other Wawa showings.
For instance, Pele Mountain Resources Inc. recovered 434 diamonds in about 100 kilograms of rock taken from its Cristal showing in 2001. That worked out to about 4,300 stones per tonne. The size distribution was not particularly favourable however, as just three of the diamonds were larger than the 0.425-millimetre sieve. That suggested a rate of about 30 stones per tonne.
Band-Ore Resources Ltd. also recovered hefty numbers of microdiamonds from its Engagement zone, although the numbers rapidly dropped off in the larger sieve sizes. For instance, the company processed about 343 kilograms of rock from drill core early in 2003, coming up with 2,714 diamonds larger than a 0.15-millimetre screen. Only two of the stones remained on a 0.60-millimetre mesh however, a rate of just six stones per tonne.
The earlier encouragement
Dianor had some promising numbers to tout when it picked up the Leadbetter play late last year, from a vendor that is believed to be prospector Joe Leadbetter. Mr. Leadbetter made news about a year earlier, when he turned up three promotable diamonds while poking about for precious metals. The largest stone weighed 1.39 carats and speculation pegs its value at about $3,000 (U.S.). That makes it the largest diamond found in the area just north of Wawa, and another of Mr. Leadbetter's stones ranks second. That diamond was not of gem quality, but it weighed a promotable 1.06 carats.
The finds prompted Mr. Leadbetter to test some bedrock material for diamonds and the move paid off. Mr. Leadbetter recovered 332 diamonds from an unknown quantity of material that he ran through a sluice. One of the stones remained on a 1.70 millimetre sieve and 31 more clung to a 0.60-millimetre mesh. Superficially at least, the result suggested the Leadbetter rock had a promotable diamond size distribution that was uncharacteristically promising for the Wawa area.
The questions
Things are not that simple however, as the method of recovery is inefficient. Sluicing works quite well when the mineral of choice is gold, a particularly heavy metal with a specific gravity of about 19. The specific gravity of diamond is just 3.5, which is not a great deal more than that of the host rock.
As a result, a significant number of diamonds would likely slip through undetected, and that proportion would likely grow with smaller stones. Because of that, the test undoubtedly understated the diamond content of Mr. Leadbetter's samples, but the actual diamond size distribution of the rock could be markedly less favourable than his test suggested.
Just how much rock Mr. Leadbetter ran through his sluice is also unknown, although it seems likely that the material weighed at least a few tonnes. Until Dianor produces diamond counts from a significant sample of material, the diamond content and size distribution of the Leadbetter project will remain major questions.
One aspect of the latest test adds a touch of sparkle to the play. The 53-stone parcel weighed 0.0553 carat, which hints at a diamond content of about 0.4 carat per tonne, based on the 130-kilogram weight of the five samples. Calculating a grade based on such a small sample is usually a meaningless exercise, especially when the weight includes the tiny microdiamonds. Still, the result offers encouragement that the Leadbetter rock can top the grades found elsewhere on the Wawa play.
Another key question is the size of the Leadbetter body, although there are some encouraging signs on that front as well. The diamondiferous bedrock outcrops for at least 500 metres, and a limited drilling program produced some significant intersections of the diamond-bearing rock. One hit encountered over 165 metres of the material, while a second yielded a 51.65-metre intersection.
It will take a major drill program to define the geometry of the body, but the limited data so far points toward a potentially large source. That could be important, especially if the diamond content is significant across the entire body.
A few other Wawa sites produced promotable diamond counts and grades, but larger and more varied tests failed to match the early promise. There is no real sign of how consistent the Leadbetter diamond counts are, although the five latest samples delivered encouragingly consistent numbers.
There were some variations within the five batches, which weighed roughly 25 kilograms each, but normal statistical variation could easily account for the differences. All five batches contained at least one diamond larger than the 0.425-millimetre sieve and three of the five samples held at least five such stones.
The wait for answers
Speculators may not have a long wait for more news that could start to supply some of the answers. Dianor collected something less than 150 kilograms of bedrock late last year that it sent to CF Minerals in Kelowna, along with a further 27 kilograms of material that went to the SRC lab in Saskatoon. As well, the company collected 12 due diligence rock samples that went to SRC.
Dianor is having the 27-kilogram batch of material processed by caustic fusion. That will be the first test of the Leadbetter rock that is not skewed by the processing method. The results from that test are due within the next few weeks.
The company expects the diamond counts from the first four of the due diligence samples early next month. Dianor collected those samples at 35-metre intervals along the strike length of the outcrop. In all, the company gathered over five tonnes of material and sent about 3.3 tonnes of it to SRC for caustic fusion. It is unclear whether Dianor will process all the material at once, or start with much smaller batches. The latter approach seems a prudent course for a junior with a limited treasury.
Tight treasury or not, Dianor will have to spend up a storm over the next four years, for it to earn an 80-per-cent stake in the play. The company must spend $5-million on exploration and pay $3-million in cash and stock, which works out to an average of about $2-million a year.
That might seem a challenge for a company with less than $200,000 in working capital at the end of September, but Dianor got a start at coming up with the cash late last year. The company sold 9.23 million shares, adding about $1.2-million to its coffers. The shares come with warrants with an exercise price of 19 cents, and they could add a further $1.75-million to the company's account.
If the next sets of diamond counts prove promotable, Dianor will have several exploration choices on which to spend that cash. More drilling to delineate the existing body seems one likely course of action, but the company could also complete a larger sample, given the outcropping nature of the rock. Dianor could also poke around for new bodies on the small, 944-hectare property.
Despite the questions surrounding the Leadbetter play, investors seem hopeful that Dianor can deliver some promotable answers in the coming months. Dianor's shares traded for less than a dime last fall, but the stock jumped to a crest of 40 cents following the Leadbetter news and the stock continues to trade in a range near the 30-cent mark.
Dianor was unchanged Wednesday, closing at 30 cents.
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