Star DIAM Mentioned (Mon, 24 Jan) - Summary by Will PurcellInvestors remain intrigued by Star Diamond's Orion North kimberlite, thanks to some recent work by Rio Tinto. . . . while polished diamond prices jumped 0.4 per cent. Ewan Mason and Ken MacNeill's Saskatchewan diamond company, Star Diamond Corp. (DIAM), fell another cent to 33 cents on 1.92 million shares.
Star's fate rests with the Star and Orion South kimberlites, where a 2018 preliminary economic assessment proposed a mammoth mine that would gnaw away for 38 years at the two huge kimberlite complexes. The economic potentials of even those two bodies are not yet set in stone; that determination awaits a Rio Tinto feasibility study, expected in a few years. Nevertheless, a third kimberlite, Orion North -- one that has given investors many a promotional up and geological down over the past 25 years -- still clings doggedly to life, at least in the minds of investors.
Orion North has four discrete vents, all discovered by De Beers Canada in the 1990s. De Beers, joined in the mid-1990s by Kensington Resources Ltd., flitted across the Fort a la Corne district like a drunken raven with vertigo, seeking to prove or kill dozens of kimberlite discoveries -- and in the end accomplishing neither before being forced out by Star Diamond. (Star acquired Kensington in a 2005 stock swap. It then bought out De Beers and its lesser partners and briefly added Newmont Corp. (NGT: $79.88) as a co-venturer a year later.)
Once in control, Star sprung to work, launching a concerted effort on the Fort a la Corne pipes. The newly dubbed Orion South complex was up first, but Star also touted great expectations for its northern sibling, Orion North, which Star enthused, held over 800 million tonnes of kimberlite. The enthusiasm was hard to sustain. Large diameter drilling (LDD) on the No. 147 and No. 148 lobes delivered the first disappointment, as 3,400 tonnes of excavated kimberlite averaged less than three carats per hundred tonnes.
Undaunted by the results, the company scowled not at the grades, but at the standard equations for making such calculations. Led by its vice-president of exploration, George Read, Star Diamond insisted that "the simplest method of diamond-grade determination" for LDD sampling was to use just the retained tonnage. That, the company said, "accounts for diamond breakage and loss." Using just the retained tonnage, not the excavated mass, the grade reached nine carats per hundred tonnes at No. 147, while No. 148 crawled upward to seven carats per hundred tonnes
(The company doggedly stuck with that method in the years and tests that followed, but the approach was a reason that Newmont scurried off in the late 2000s. Over the past few years, Star Diamond's new co-venturer, Rio Tinto Exploration Canada Inc. (RTEC) spent over $100-million over the past few years rechecking Star Diamond's work and calculations at Star -- and it may do so at Orion South as well.)
Meanwhile, a few months later in 2007, a five-hole test of the No. 120 pipe did better, averaging 7.5 carats per hundred tonnes across 2,068 tonnes of extracted kimberlite without the grade juicer. Better yet, two of the tests averaged over 10 carats per hundred tonnes, leaving Mr. Read and his crew cheering those two of five holes within one of four Orion North pipes as "areas of high interest." Selective enthusiasm aside, the 7,300-tonne test of Orion North had averaged just 4.4 carats per hundred tonnes. Still, many of the gems were promotably large, with weights of up to 7.5 carats, and while Orion North went back to the back burner, it continues to simmer away with long-loyal retail shareholders.
In 2014, the company resurrected the promotion, pegging the No. 120 lobe of Orion North with a target for further exploration of between 170 million and 200 million tonnes, grading between 5.3 and 10.9 carats per hundred tonnes. (The three other lobes were pegged with between 340 million and 410 million tonnes, grading between 2.8 and 8.4 carats per hundred tonnes.) Those are the company's boosted grades, remember, and even so, they fall well short of similar estimates derived from LDD drilling -- and boosting -- at Star and Orion South.
Nevertheless, word two years ago that RTEC had drilled a small core hole at No. 120 and recovered a 0.55-carat stone got the market's juices flowing anew. Star promptly tapped its promotional tree, noting that the find was "anomalous" -- a fluke, in other words -- but one that "speaks to the potential for a coarse diamond size frequency distribution." Were it otherwise would be a shock -- the FalCon pipes are among the best in the world in that regard -- but the question remains whether the lacklustre grades at Orion North would be economic. It is not a question needing an answer any time soon, given that the current plan would leave the proposed mine amply fed by Star and Orion South until around 2065.