A few kind words from Purcell Will Purcell had a few kind things to say but closed with his usual brand of cynicism.
Patrick Evans's Mountain Province Diamonds Inc. (MPV), up 13 cents to $4.66 on 87,000 shares, has a pleasing array of microdiamonds from the depths of its Tuzo pipe at Gahcho Kue, 250 kilometres northeast of Yellowknife in the Northwest Territories. The 434 kilograms of core yielded 2,514 diamonds. Most were tiny and useful only for population modelling, but 82 of the gems sat on a 0.85-millimetre sieve. Those stones weighed 2.46 carats, implying a grade of 5.67 carats per tonne. Mr. Evans rolled out the data without comment, probably confident his loyal retail shareholders would handle all the enthusiastic horn tooting. (Some obliged, salting social media with optimism, which helped to reverse this week's modest dip.) Mountain Province and its majority co-venturer, De Beers Canada, already have a significant resource estimate delineated in the Tuzo Deeps. Its average grade is just a fraction of that produced by the latest tiny test. The partners calculate an indicated resource of 1.5 million tonnes averaging 1.67 carats per tonne and an inferred resource of 3.7 million tonnes at 1.61 carat per tonne, based on a big drill program in 2012. The indicated resource lies between 300 and 360 metres below ground; the inferred kimberlite at depths between 360 and 564 metres below surface. The latest drilling tested Tuzo to depths greater than 740 metres, but it seems improbable that the grade of the deepest kimberlite suddenly triples. It does, however, allow the possibility of further expanding the resource base at Tuzo. Mountain Province and De Beers are building an $850-million mine based on a Gahcho Kue reserve of 35.4 million tonnes at 1.57 carats per tonne. Tuzo is home to 16.4 million of those tonnes, making it the largest of the three Gahcho Kue pipes, although at 1.25 carats per tonne it has the lowest grade of the three. (Large chunks of granite are embedded within the upper zones at Tuzo, otherwise its grade is quite consistent.) Assuming Gahcho Kue lives up to its billing as a profitable source of diamonds, mining would presumably continue into the inferred resource that is incremental to the reserve. Most of the inferred kimberlite, 8.9 million tonnes of the 11.3 million total for the project, are at Tuzo, most of it at considerable depth. Mr. Evans loves to tout the appraised diamond values for Gahcho Kue rather than the modelled valuation, which is considerably lower. The success of mining Tuzo at depth will ultimately rest on whether the diamond value approaches the $311 (U.S.) appraised value for a 2,300-carat parcel, or if it shrinks to the $95 (U.S.) value the parcel would have had if one spectacular 25-carat gem had not turned up.