streetwire from stockwatch 2016-08-05 20:36 ET - Market Summary
by Will Purcell
The diamond and specialty minerals stocks box score for Friday was a negative 64-71-133. The TSX Venture Exchange fell fractionally to 806 while polished diamond prices fell 1.5 per cent. Peter Dasler's Canalaska Uranium Ltd. (CVV) lost four cents to $1.23 on 124,000 shares. The company is working a big diamond project in the Athabasca region of northwestern Saskatchewan with De Beers.
Patrick Evans and Dermot Desmond's Kennady Diamonds Inc. (KDI), down 12 cents to $3.90 on 28,000 shares, has begun its summer drilling at Kennady North. The company has two rigs operating on the Faraday kimberlites from land sites. One is testing the Faraday-1 and Faraday-3 kimberlites, which the company now thinks are joined. The second rig is currently testing Faraday-2. Dr. Rory Moore, who replaced Mr. Evans as president and chief executive officer in May, says the company is seeking to delineate all the Faraday bodies as they extend northwestward from Faraday Lake toward the shoreline. He says that the systematic drilling this summer will ultimately determine the size and shape of these bodies.
Dr. Moore is hoping to find northern extensions at Faraday that will prove similar to those at Kelvin. The continued drilling at Kelvin steadily increased the company's tonnage target for Kennady North from about five million tonnes to a range between 13 million and 16 million tonnes, most of it at Kelvin. Much of the added tonnage at Kelvin resulted from a series of step-out holes drilled toward the northwest, many of which yielded impressive intersections.
Expanding the tonnage at Faraday would be worthwhile, as the grades appear comparable with what the company has been finding at Kelvin, where a 442-tonne test completed in the southern lobe last year averaged 2.02 carats per tonne for diamonds larger than a 0.85-millimetre sieve. A 21.1-tonne test of Faraday-2 earlier this year averaged 2.69 carats per tonne on a similar sieve. Small tests of Faraday-1 and Faraday-3 produced diamond counts at comparable rates, suggesting grades of two carats per tonne or more are likely, although proving the point will probably have to wait until next year.
Meanwhile, Kennady Diamonds is busy with a second bulk test of Kelvin, this time from the apparently richer northern lobe. The company collected 620 tonnes of kimberlite this winter and nearly half of it has been processed so far. Dr. Moore expects to have the final results by mid-September, although he is already predicting that the sample will yield "more than 1,200 carats." Kennady Diamonds plans to have the diamonds valued, which he says should be completed by the end of September.
While expanding the tonnage at Kennady North through the summer drilling at Faraday would increase interest in the project, increasing the value of the Kelvin diamonds would give the project a bigger boost. The company pegged the diamond value in the two main phases tested to that point at just $56 (U.S.) and $70 (U.S.) per carat respectively, based on the 989 carats previously recovered from Kelvin. Dr. Moore, like Mr. Evans before him, is eager to remind investors that the diamonds at nearby Gahcho Kue are worth $118 (U.S.) per carat and its parcels have been appraised with a significantly higher value than that. As a result, investors will be particularly eager to get good news about large and high quality diamonds from the latest Kelvin sample.