Star DIAM Mentioned (Mon, 18 Apr) - Summary by Will PurcellStar Diamond is offering investors a gaze at its Orbit clusters of kimberlites at FalCon, in Saskatchewan. Ken MacNeill and Ewan Mason's Star Diamond Corp. (DIAM) rose one-half cent to 30 cents on 163,000 shares. Late last week, the company rolled out the first of what it promises will be a "series of releases" addressing eight "topics of interest" discussed in early March at a joint venture technical committee meeting held with its majority co-venturer, Rio Tinto Exploration Canada Inc. (RTEC), at their shared FalCon project in central Saskatchewan.
The first burst of enthusiasm covers Star's take on RTEC's update of the Orbit kimberlites, four clusters of secondary pipes that Star Diamond deemed of interest several years ago and which had intrigued De Beers Canada a decade or two before that. RTEC, Star Diamond cheers, used a "spectrum of evaluation techniques" to review and prioritize the FalCon kimberlites beyond the two main deposits -- Star and Orion South -- where a formal resource estimate has been calculated and upon which the fate of the project undisputedly rests.
As a result of RTEC's evaluation, in which it used a relogging of drill core, a variety of geochemical approaches and earlier microdiamond sampling, it has identified Orion North, Orion Centre, Taurus and K119 as bodies of interest. RTEC further classified the clusters, deeming Orion North as "having significant potential to add to the FalCon project," while the three others "stand out in the field as having a number of the attributes sought but require further work to completely evaluate."
The weaseling is anticlimactic: Mr. Mason, chairman, Mr. MacNeill, president and chief executive officer, and George Read, former vice-president and now Star's technical adviser, rightfully sniff that the Fort a la Corne kimberlites "have already been subject to extensive evaluation," including work by De Beers Canada when it ran the project in the 1990s and early 2000s, and then by Star Diamond when it took a new look, including a large test of Orion North several years later.
That large-diameter drill test saw Star Diamond recover 100 carats from 3,400 tonnes of kimberlite, and while it is not clear if that was the theoretical excavated tonnage or the amount of retained kimberlite processed, either way the result was discouraging, at 2.9 carats per hundred tonnes. In all, bulk sampling over the past quarter century produced 467 carats from 10,176 tonnes of extracted kimberlite -- about 4.6 carats per hundred tonnes and less than half of what either Orion South or Star has produced.
Star Diamond listed a target for further exploration at Orion North, with between 511 million and 609 million tonnes holding anywhere between 25.5 million and 50.5 million carats, therefore grading somewhere between an uneconomic 4.6 carats per hundred tonnes and a more intriguing nine carats per hundred tonnes -- a range supporting RTEC's assessment -- but divined by Star using hard sampling data and just a mere fraction of RTEC's geochemical handwaving.
Star Diamond also bulk sampled Taurus adding to the earlier De Beers work, gleaning 266 carats from 5,660 tonnes of extracted kimberlite, about 4.7 carats per hundred tonnes. Star therefore had enough data to prepare a target for further exploration, listing Taurus with between 370 million and 434 million tonnes and 21.3 million to 28.8 million carats -- perhaps six carats per hundred tonnes. Orion Centre got lesser work, as did K119, and the company never declared a target for further exploration at either of those bodies.
Star Diamond does not say if RTEC offered grade expectations in its update, but it presumably did since it sintered all its geochemical and other data into an OGWI. That acronym, which represents "ore grade width intercept," may also mimic the sound that regulators make when a metals promoter touts such calculations, which are the product of assay grade and the intersection interval. The result, Star Diamond says, is that Orion North met the RTEC's OGWI hurdle -- which means more work is needed -- while Orion Centre, Taurus and K119 merely "indicate the potential to deliver OGWIs" -- which logically implies that more work is needed to determine if more work is needed.
While the Orbit evaluation allows the possibility that FalCon might expand beyond Star and Orion South, the dithering cannot be encouraging for investors looking for a quick production decision. RTEC's recheck of Star Diamond's old bulk sampling at Star took two years and it has yet to start a comparable check at Orion South. If RTEC also plans to test the lesser clusters at FalCon before committing to a mine plan, it could be many years before the first diamonds clatter out of a FalCon processing plant.
Even Paul Zimnisky, a diamond analyst bullish about FalCon, targets a mining start-up date in the "late 2020s-plus" range -- implying a date that could slide into the 2030s even without RTEC choosing to better evaluate Taurus, Orion North and the other bodies before completing the mandatory feasibility study of a FalCon mine that will surely include Star, and most likely Orion South.