Street WireRhonda's barren kimberlites a minor setback for Inulik
Rhonda Corp RDM
Shares issued 44,219,588 Jul 21 close $0.21
Tue 22 Jul 2003 Street Wire
by Will Purcell
John and Glen Alston's Rhonda Corporation had some bad news to end last
week, with word that the kimberlite samples from several dike-like bodies
on their Inulik property were barren. The news was not what the struggling
diamond hunter needed, but the fate of the Inulik play will ultimately
hinge on whether some significantly diamondiferous kimberlite pipes can be
found, not on the diamond counts from a series of dikes. Rhonda's partner
at Inulik, Teck Cominco Ltd., took over the exploration program last week,
and the company has plans to conduct more work this summer, in the hunt for
the elusive pipes.
Rhonda and Teck drilled 12 holes this spring into nine targets, and six of
them produced kimberlite dikes of varying widths. That was an encouraging
rate, but most of the hits were small, and the subsequent processing of the
samples dashed any real hope for the bodies. The most substantial bodies
produced a 24.4-metre hit in one hole and a 10.0-metre intersection in
another.
That was enough to provide 59 kilograms of kimberlite from the largest
intersection, and 45.1 kilograms that was primarily from the 10-metre body.
As well, the partners processed a further 28.8 kilograms of kimberlite from
thinner intersections, which were as small as 20 centimetres wide. In all,
about 133 kilograms of kimberlite was processed, but not one diamond was
recovered.
Rhonda found a positive spin to the bad news, noting that more than 80 per
cent of the Inulik property was yet to be explored, and that does appear to
be the case. Teck and Rhonda never formally said just where their drill
targets were, although they did drop some broad clues that the region was
on the southeastern portion of the property, about 10 kilometres to the
southeast of the diamondiferous Knife pipe.
With Judy Stoeterau as its vice-president of exploration, Rhonda collected
more than 500 till samples in its 2001 exploration program, and that work
identified two regions with higher counts of indicator minerals, about one
kilometre apart, within several kilometres of the Knife pipe.
That reconnaissance program was followed in 2002 by a more detailed look in
the region southeast of Knife, and Rhonda came up with at least six trains
of kimberlite boulders on the southeastern portion of the property. At
least some of the recent drill hits produced kimberlite material that is
similar to the rock obtained from the boulder trains, which would appear to
be a source for at least a portion of the kimberlite float. The kimberlite
material was strewn across an area covering roughly 8,000 hectares of the
33,000-hectare Inulik block, which is just less than one-quarter of the
entire property.
The lack of a single microdiamond in over 100 kilograms of kimberlite is
disappointing, as a majority of the North Slave bodies have been marginally
diamondiferous, but so far at least, the immediate area surrounding the
Inulik dikes has not been a prolific diamond producer, despite several
neighbouring kimberlite discoveries.
In the mid-1990s, De Beers discovered the Kikerk-2 body on what is now the
southeastern part of Inulik, but it subsequently abandoned the ground. Just
a bit farther east, the Amaruq sill, which lies on ground owned by Tahera
Corporation, coughed up just a single micro from about 14 kilograms of
kimberlite. Just south of Inulik, Ashton Mining of Canada discovered two
kimberlite bodies in the late 1990s. The Hydra body failed to produce any
diamonds from nearly 200 kilograms of kimberlite, but things were a bit
better with the Perseus sill, just to the east. Ashton processed 318
kilograms of rock, recovering 87 diamonds, but none of them met even the
most lenient definition of a macrodiamond.
The Knife pipe appears to have a significantly better diamond content than
its immediate neighbours to the south and southeast, although the results
of a sample containing several tonnes of kimberlite will provide a better
picture of just how diamondiferous the large pipe actually is. If the
macrodiamond recoveries are encouraging, the result would give a big boost
to Rhonda's promotion of the Inulik play, as the property surrounds Knife
on all but the northern quadrant, and most of that ground is believed to
still be relatively unexplored.
Rhonda did complete a geophysical survey over the property last year, and a
regional till sampling program has produced a number of targets that Teck
and Rhonda are expected to check out in greater detail this summer, with a
more detailed till sampling program and additional prospecting.
Teck and Rhonda are expected to switch their Inulik focus to possible pipes
rather than dikes or sills. Rhonda's earlier work apparently identified a
number of bullet-like geophysical anomalies, and it is some of these
targets that the partners are expected to be examining in greater detail in
the coming months. If all goes well, Teck and Rhonda could come up with
several new drill targets, and if they prove to be pipes, they would be
potentially more promising than their initial dike drill hits.
With De Beers now running things on Rhonda's tiny Knife property and Teck
now the operator on the Inulik ground, Rhonda may have less need for its
own geological team. That could be behind the recent resignation of Judy
Stoeterau as Rhonda's vice-president in charge of exploration. A geologist
by trade, the Calgary-based Ms. Stoeterau has been hunting minerals for
more than 25 years, since her graduation from the University of Manitoba.
In recent years, she has been playing roles with Rhonda and another
explorer in the Alston clan's small stable of companies, Hansa Corporation.
Ms. Stoeterau was president of Hansa until April, when Glen Alston took
over, demoting Ms. Stoeterau to vice-president of exploration. Last week
however, Ms. Stoeterau resigned from both Rhonda and Hansa, effective at
the end of August, although she will act as a consultant for Rhonda as
required.
That leaves Rhonda with just two geologists on its board, or in its
executive offices. One is John Alston, the father of Glen Alston, the
current president of Rhonda and Hansa, as well as Jan Alston, the head of
Purcell Energy Corp., which is the most successful of the three Alston
companies to date. The senior Mr. Alston has been involved in the mineral
hunt for more than 50 years, and he has been promoting Rhonda since 1986,
while son Glen hopped aboard during the heady days of Rhonda's Saskatchewan
diamond hunt in 1993, becoming president in 1998. The younger Mr. Alston
may have joined his father at Rhonda, but he did not follow in his father's
geological footprints, electing instead to earn a commerce degree from the
University of Calgary.
A second Rhonda director has a geological background. Thomas Whittingham
has been on Rhonda's board since 1989. Mr. Whittingham now is a business
and energy consultant, and he was formerly the vice-president of
exploration for Westcoast Petroleum Ltd., which would not be confused with
a diamond hunter.
Bernard Benning, now the chairman of Rhonda's board, also appears to have
had little to do with the search for gems. He has been a Rhonda director
since 1995, and he popped up in Purcell's board two years later. Mr.
Benning is the vice-president of corporate development for Bow Valley
College in Calgary, and a certified management accountant by trade. Lastly,
on the board is another certified management bean counter, the
Yellowknife-based Jim Lehman, who is also the chief financial officer of
Nunasi Corporation.
The deals with Tech and De Beers in the North Slave region will remove much
of the exploration burden from Rhonda's tiny treasury. Teck has an option
that will allow it to earn a 51-per-cent stake in the Inulik play by
spending $4-million exploring the property over a four-year stretch, and it
can ultimately earn a 70-per-cent stake by carrying Rhonda to production.
The new deal with De Beers requires the diamond giant to spend a total of
$10-million exploring the property by early in 2008, and with just
$2-million spent to date, De Beers could be paying the bills on the Knife
property for some time to come.
Rhonda's shareholders have long been experiencing the roller coaster ride
of their company's diamond promotions. The company's stock peaked at more
than $10 early in 1994, and the initial hype surrounding Knife and the
North Slave play carried the company's stock to a quick triple, from about
45 cents to a peak of $1.35 in the fall of 2001.
With Knife tied up in litigation and no real news from Inulik, a Rhonda
share went for just 12 cents late last year, but improving news from the
region nearly triggered another triple, as Rhonda's stock peaked at 34
cents in early March.
Things have been less rosy since then however, despite the kimberlite hits
on Inulik and the settlement of the Knife fight. Rhonda closed unchanged at
20 cents on Friday, just before the disappointing news from Inulik.
(c) Copyright 2003 Canjex Publishing Ltd. https://www.stockwatch.com