Diamond & Specialty Minerals Summary for March 2, 2023 Diamond & Specialty Minerals Summary for March 2, 2023
by Will Purcell
The diamond and specialty minerals stocks box score on Thursday was a weak 84-102-124 as the TSX Venture Exchange fell two points to 632. Dean Taylor's Diamcor Mining Inc. (DMI) was among the unchanged, closing at 15.5 cents on 255,000 shares.
It continues to be two steps forward and a quick leap rearward for Diamcor at its Krone-Endora at Venetia diamond project in South Africa. The company has spent a decade trial mining the alluvial and eluvial deposit, during which it has been trying to improve its performance through a series of equipment and operating upgrades. Now, while the mining improvements are showing solid gains, South Africa's infrastructure woes -- primarily the supply of electricity from Eskom, the national power company -- are limiting Diamcor's progress.
Diamcor sold 1,466.12 carats for just under $295,000 (U.S.) in its first sale of the quarter, an average of $201 (U.S.) per carat. Mr. Taylor, president and chief executive officer, says that the company has recovered additional diamonds -- roughly 1,500 carats apparently -- during the period, but they are being held on hand for later sale. When is the question: Mr. Taylor says that the on-hand diamonds will either be sold with additional production during the quarter in the second and final sale of the period, or held over for sale in the coming quarter.
That is discouraging either way, as Diamcor sold 8,328 carats in the previous quarter, the third quarter of fiscal 2023, for $2.05-million (U.S.), an average of just under $250 (U.S.) per carat. While Diamcor was dealing with intermittent power woes in that quarter, the challenges were less than the company experienced in its second quarter of fiscal 2023, when Krone-Endora managed to produce and sell just 3,776 carats for $2.1-million (U.S.).
That worked out to a hefty $556 (U.S.) per carat, but the result was padded by the recovery and sale of a 59.35-carat diamond that fetched $1.2-million (U.S.). The good news is that Mr. Taylor is hoping for a similar result in the company's coming sale. He says that Diamcor pulled a 72.53-carat gem-quality diamond from Krone-Endora recently and -- this is an understatement one hopes -- he expects the diamond will "provide a positive impact to gross revenues."
Unfortunately, although Diamcor has vastly improved its water supply challenges and has upgraded its fleet of equipment at Krone-Endora, the power supply issues are back with a vengeance. Mr. Taylor says that he and his crew have "advanced discussions on procurement and installation of power systems" at the site, as they seek the "right solution to mitigate the impact load shedding has had on the project." The upgrades currently being discussed are essentially back-up power systems, and "details will be provided in the coming weeks once finalized." In other words, be patient and do not expect any improvement in the current quarter.
The Kelowna-based Mr. Taylor, and unlike Eskom, never a fellow to keep his shareholders in the dark, acknowledges the effect that brownouts and blackouts have had on the Krone-Endora operations. Still, he remains confident -- rarely is he otherwise -- that the implementation of the power supply back-up systems will provide improved power consistency needed for the processing plant to reach its designed potential.
In the meantime, Mr. Taylor finds much solace in Diamcor's latest big diamond find. The recovery of yet another larger, gem-quality rough diamond "demonstrates the project's continued potential to contain these higher-value rough diamonds even while operating below the project's processing capacity," he enthused. Of course, while the intermittent lack of power cuts the size of the carat crop, the big diamonds will still appear, just at a slower rate.
If all goes to plan -- which it has yet to do despite years of work and cheerleading -- Diamcor expects to quarry about 300,000 tonnes of gravel per month, remove about 180,000 of the tonnes as fines and send the other 120,000 tonnes of material to the Krone-Endora plant, where, Mr. Taylor expects, the company will recover about 10,000 carats per month.
That would be a big improvement, of course, but it will require Eskom to solve its load-shedding issues, Diamcor to have reliable back-up power when Eskom fails, and for Krone-Endora to perform to predictions, not its history. As well, the company will need an adequate supply of diamond-bearing gravel to quarry. Fortunately, Mr. Taylor thinks there should be more than enough, as he says about 50 million carats sloughed off or eroded away from the top of the Venetia kimberlite over the ages, and most of them wound up on Diamcor's property. Now, all he needs do is find where economic grades of those diamonds might be lurking.