Diamond & Specialty Minerals Summary for Nov. 8, 2022
2022-11-08 14:56 ET - Market Summary
by Will Purcell
The diamond and specialty minerals stocks box score for Tuesday was a positive 111-80-119 as the TSX Venture Exchange rose eight points to 602. Grenville Thomas and Ken Armstrong's North Arrow Minerals Inc. (NAR) was unchanged today on 17,000 shares.
North Arrow continues working quietly in the background at its Naujaat diamond project in central Nunavut. While the company has said nothing formally since it got the last of its diamond counts from a 2,000-tonne bulk sample of the Q1-4 kimberlite in July, its co-venturer, Peter Ravenscroft's Australia-based Burgundy Diamond Mines Ltd., has been chattier on the hustings back home.
Burgundy paid for the $5.6-million bulk sample that North Arrow excavated in 2021 and processed at a snail's pace over the following months, all in exchange for a 40-per-cent interest. The next stage is a 10,000-tonne test of Q1-4, and Burgundy can boost its interest to 60 per cent by paying for that effort. That arrangement has not moved past the letter of intent stage and Mr. Armstrong, North Arrow's president and chief executive officer, downplays the possibility, perhaps to limit disillusionment should Burgundy not proceed with the option.
Mr. Ravenscroft, Burgundy's managing director, nevertheless says that Naujaat is "very much in our focus at the moment" and he and his crew will "be making decisions fairly soon on how we are going to move forward." He does not telegraph what the decision might be, but he does plunk the transmitter key a few times, cheering that "everything we have done up until now has proven what we were looking to prove." And so, Burgundy appears willing to shoulder a 40 per cent share of the coming sampling, even if it does decide against earning a majority stake.
And the source of Mr. Ravenscroft's encouragement? Well, he pointed to the data already in hand from the latest sampling -- the diamond sizes, the diamond colours and the diamond size frequency distribution -- as yielding "very, very encouraging results."
Mr. Ravenscroft says that they are seeing a higher proportion of the fancy colours than had been expected based on previous sampling, and a higher proportion of potentially fancy vivid orange diamonds. "There is a range of colours from yellow, through orangey-yellow and yellowy-orange, all the way through to orange," he enthuses, adding "and we're seeing some very interesting deeper orange colours."
Next up in the continuing evaluation is a closer look at the potential value. Mr. Ravenscroft says that the size frequency distribution and grade of the target diamonds are now understood, so "getting the prices on them is now where we're at." He means that the diamonds are currently at appraisers in Antwerp, and once they are assessed there, the gems will fly off to Burgundy's headquarters in Perth, Australia. There, Mr. Ravenscroft says, Burgundy will be "doing some test cutting and polishing, looking inside those diamonds."
An inside look is critical, Mr. Ravenscroft says, noting that they are not necessarily the prettiest rough diamonds in the world, "but as we learned from other very successful fancy diamond projects, the rough does not actually tell you the story -- it's what is inside the stone." And so, he concludes, the cutting and polishing of the diamonds that will occur over the next couple of months "is going to tell us the story."
Mr. Ravenscroft's comments likely have North Arrow's crew nodding in agreement, as when they completed a 1,300-tonne test in the mid-2010s, the diamonds carried a modest value and were woefully described by stock guru John Kaiser as having the appearance of "certain bodily secretions." He named a few of those secretions, but in the end North Arrow had the last word, when a few of the "diamonds coloured like boogers, urine, gall stones or ear wax" were turned into very attractive polished gemstones.
And so, investors now await word about how North Arrow and Burgundy's new crop of diamonds will fare. The 2021 test produced larger stones in the fancy categories, and with diamond colours ranging considerably closer to orange than did the first test. Therefore, Mr. Armstrong and Mr. Ravenscroft eagerly await word of how the insides of the new diamonds look. Either way, they will need an assessment based on recoveries and valuations from the proposed 10,000-tonne test to provide a definitive answer.