Star DIAM Mentioned (Fri, 18 Feb) - Summary by Will PurcellStar Diamond will meet Rio Tinto to review, collaborate and consult on the FalCon plan for a few months at least. . . while polished diamond prices jumped 0.5 per cent (Fri) . .
Ewan Mason and Ken MacNeill's Star Diamond Corp. (DIAM) rode snippets of news to a four-cent gain, ending the day at 35 cents on 645,000 shares. First, the company said that it has appointed lawyer Larry Phillips as a director. Mr. Mason, the company's chairman, welcomed Mr. Phillips as a co-founder of Iamgold Corp. (IMG: $4.03) in 1990, noting that he and his fellow Star directors "look forward to the advice and counsel" of Mr. Phillips as the company moves forward with Rio Tinto Exploration Canada Inc. (RTEC), its current joint venturer and former litigant on the FalCon project in central Saskatchewan project.
Mr. Mason then yielded the floor to Mr. MacNeill, president and chief executive officer, who dolloped out some project news: RTEC has called a meeting of the joint venture management committee for early March, where the two companies will review work from the last two field seasons -- they mean years -- and approve an interim expenditures budget for work planned in April and May.
These two months, says Mr. Mr. MacNeill, revealing only what the joint venture agreement allows him to, will be "used as a data review and consultation period" for Star and RTEC to "collaborate and review data collected over the two previous field seasons" -- again, years -- before -- note the vagueness -- "planning further work programs and setting budgets."
The news was greeted with predictable enthusiasm from Star Diamond's information-starved retail investors, who were clearly willing to overlook some questions raised by the company's update. With the settlement of the legal dispute and a new joint venture agreement signed in early December, one key question is what have the two companies been doing about FalCon over the past 10 weeks, a period with limited field exploration opportunities.
The answer would appear to be next to nothing. The short, frigid and snowy prairie days would have been a prime time for the newfound friends to huddle together in a warm office to "collaborate and review data" in the "data review and consultation period" -- rather than waiting until mid-spring and therefore leave FalCon without boots on the ground until at least June. Indeed, Mr. MacNeill and his crew confirm that "no site exploration work is expected to take place" before the end of May.
While the reviewing and consulting may lead to a major push at FalCon later this year, perhaps even one causing the diamond sector to hold its breath, to paraphrase the propaganda accorded Germany's massive invasion of the Soviet Union in June 1941. While a major effort by RTEC would indeed be breathtaking at FalCon, after a year or more of inaction, like Operation Barbarossa the work might get under way too late in the year to fulfill the market's expectations. (It is unclear -- and a wee bit worrisome -- why RTEC and Star Diamond are dawdling at least into June; the Germans at least had an excuse thanks to Mussolini's farcical invasion of Greece.)
As to what work might lie ahead -- beyond the reviewing, consulting and collaborating that is -- neither co-venturer offered any clues. A 10-or-20-hole trench cutter program at Orion South could still be on the table, where it sat before Star took RTEC to court in early 2020, but even so, it may start too late to complete a full 20 holes as was once planned.
The information supporting a decision as to whether such work is still needed may lie buried deep within an order of magnitude study, or the desktop studies on minability that RTEC purportedly completed during the latter half of 2020 and last year. Those documents presumably detail what RTEC -- and its majority vote -- propose should happen, but investors will have to wait until at least March -- and perhaps late spring -- to find out the plan.
In another bit of news, investors may be getting the diamond breakage study that Star Diamond had been champing at the bit to see for the better part of two years, although it will be one of its own making. The company is working on the study, aided by its external consultants, work that should wrap up before the end of March. That will not be the end of the wait: Star will then "compare the results of this study with those of RTEC" before it is released.