Star DIAM Mentioned (Mon, 02 May) - Review by Will PurcellStar Diamond is enthused with a new assessment of old diamond parcels from its FalCon project in Saskatchewan. Ken MacNeill and Ewan Mason's busy Saskatchewan diamond promotion, Star Diamond Corp. (DIAM) inched one-half cent higher to 31 cents on 370,000 shares.
Star's modest gain was the result of it huffing new air into its 15-year-old promotion of two lesser kimberlite clusters in its Fort a la Corne (FalCon) galaxy: Orion North and Taurus. The new pitch promoting old data gained traction early on, sending the stock to a 33-cent intraday high, but it was difficult for investors -- at least beyond the long-loyal cadre of retail shareholders -- to see an immediate upside.
The company's good cheer centres on several hundred carats of diamonds that it recovered in the first three years after it acquired the FalCon project beyond the bounds of its original Star pipe. Today, Star Diamond said that the Saskatchewan Research Council assessed and valued some of its old gems, and the work revealed a high proportion of Type IIa diamonds among the diamonds. This is good news, as most of the huge diamonds mined around the world have been Type IIa gems and they can deliver noteworthy values.
Finding Type IIa diamonds at FalCon hardly rates as news. The company has been applauding that story for a dozen years, starting with word that over one-quarter of the plus-2.7-carat diamonds recovered from the Star pipe were Type IIa gems. Three years ago, Star Diamond said that 26.5 per cent of the diamonds larger than 0.32 carat in the Star pipe were Type IIa stones, while 12.5 per cent of the diamonds in Orion South were Type IIa gems.
Today, Star Diamond applauded word that over 52 per cent of the plus-0.05-carat diamonds recovered from the K147/K148 lobes of Orion North were Type IIa stones, while 10.81 per cent of those within the K120 lobe were similarly classified. The largest gem from K147/K148 weighed 6.88 carats, and true to form it was a Type IIa worth $3,544 (U.S.) per carat, but the Type IIa hype lost a bit of oomph at K120, where the largest diamond recovered was a 7.5-carat Type I gem and it carried a greater value, at $4,051 (U.S.) per carat.
The story played out much the same at Taurus. Over 45 per cent of the plus-0.05-carat gems in the K118 lobe were Type IIa stones, while the proportion hovered just over 20 per cent at K122 and K150. Despite the Type IIa hype, the largest diamond recovered by Taurus was a 7.9-carat Type I diamond valued at $2,420 (U.S.) per carat. At the K150 lobe, a 2.84-carat Type I stone was the largest and most valuable, coming in at $3,000 (U.S.) per carat. At K118, the largest diamond was a 3.42-carat Type IIa that weighed $2,734 (U.S.) per carat.
Star Diamond declared a target for further exploration (TFFE) at both Orion North and Taurus in 2014, listing the Type IIa-rich K147/K148 lobes with between 340 million and 410 million tonnes hosting between 15.7 million and 30.2 million carats -- perhaps averaging a modest six carats per hundred tonnes. At the K120 lobe, the company listed between 171 million and 199 million tonnes with between 9.7 million and 20.2 million carats, suggesting an average grade of about eight carats per hundred tonnes.
Meanwhile, the Type IIa-rich K118 lobe at Taurus was credited with a TFFE of between 96 million and 109 million tonnes holding between 6.5 million and 7.8 million carats, about seven carats per hundred tonnes. At K122, the company listed a TFFE of between 117 million and 136 million tonnes with between 6.7 million and 8.8 million carats, again averaging about six carats per hundred tonnes, while the largest lobe, K150, held between 157 million and 189 million tonnes and between nine million and 12.3 million carats, perhaps six carats per hundred tonnes.
TFFE calculations typically have broad ranges and -- as the name clearly states -- further exploration is needed to adequately assess their economic potential. That makes Star Diamond's new applause for two kimberlite clusters that rank third and fourth on the list of FalCon clusters rather perplexing. If Rio Tinto Exploration Canada Inc., the company's majority co-venturer at FalCon, decides that further exploration of the two bodies is warranted at this stage, a feasibility study and a mining decision could be delayed.
Indeed, if RTEC were to decide to better test Orion North and Taurus before committing to a mine plan, then it would be difficult for it not to complete the Bauer test of Orion South as initially planned, delaying the project further. With Star Diamond's earlier studies proposing a 38-year run from just the higher-grade Star and Orion South clusters, there is little value to be gained by worrying about what kimberlites might come next at a FalCon mine.