RE:Stockwatch Oct 9
Diamond & Specialty Minerals Summary for Oct. 9, 2024
2024-10-09 18:28 ET - Market Summary
by Will Purcell
The diamond and specialty minerals stocks box score for Wednesday was a positive 89-72-149 as the TSX Venture Exchange rose three points to 590. Ewan Mason's Star Diamond Corp. (DIAM) rose one-half cent to 4.5 cents on 620,000 shares. The company bucked the market blahs by hitting an intraday high of five cents today, a mark last reached a month ago.
Chuck Fipke and Chad Ulansky's Metalex Ventures Ltd. (MTX), a dogged diamond explorer in Ontario and Quebec for most of its 22-year existence, added one-half cent to 1.5 cents on 29,000 shares when it last traded on Tuesday. The company's exploration tastes have been more eclectic in recent years, more out of circumstance and necessity than through strategy. The company's Ontario diamond properties now sit idle, while its Quebec diamond project has morphed into a quest for lithium and scandium -- even gold.
Unfortunately, none of the pursued metals and minerals have appeared in promotable quantities, and so enthusiastic diamond investors that paid the equivalent of $56 per share in 2002 and held their shares since then are now in the forget-about-it position of having a $5,600 investment that purchased 1,000 shares erode to a 100-share holding worth just $1.50 -- a decline of 99.97 per cent.
At the end of July, Metalex had just over $300,000 in cash but owed over $2.5-million in current liabilities, leaving it with a working capital deficiency of nearly $2.2-million. Fortunately for retail shareholders, Mr. Fipke, the company's chairman, is heavily involved on both ends of the balance sheet. Nearly all the liabilities are owed to entities owned by him, mainly his C.F. Mineral Research Ltd. lab and his private explorer, Kel-Ex Development Ltd. Meanwhile, Mr. Fipke owned, directly and indirectly, nearly 82.3 million shares, about 35.1 per cent of the company -- shares currently worth about $1.2-million.
Metalex still has a diamond presence, although now in primarily in Africa, and even there it has gradually been fading away. The company still touts its Moroccan project, but it was last worked a dozen years ago, and while the company claims to still hold 402,100 hectares of ground, it says that "a new agreement needs to be finalized with the government." Metalex moved to pick up a new project in 2020 in South Africa, and while Mr. Fipke uttered his usual geochemical enthusiasm for the play, "the application for the mining right is still under way."
In Ontario, the jawing and negotiating for government permits ended a decade ago, but the locals are as intransigent as ever. In any case, the bureaucratic dithering lasted long enough to run out the clock on Metalex's sweetheart option agreement with Dundee Corp. (DC.A: $1.48). Dundee had agreed to pay up to $51-million for a major bulk sampling program of the U2 pipe, west of the De Beers Canada mine at Victor, but Dundee quit the arrangement because of the delay in getting permission.
Today, Mr. Fipke and his crew concede that no further work is planned on that project until agreements with the local communities are in place -- and even if that were to occur, Metalex would still need to find the $55-million that Dundee had originally agreed to spend under the long-gone option arrangement.
Quebec diamonds are also largely forgotten, but Mr. Fipke and Mr. Ulansky, president and chief executive officer, did spend nearly $200,000 on Metalex's James Bay project, which sprawls across a wide enough area that it has now turned into an area play for lithium, a scandium hunt based on the presence of ilmenite, and thanks to surface sampling, a quest for gold, copper and even uranium. And so, stay tuned -- Metalex cannot sink much lower after all, and Mr. Fipke is still doing work through his private companies.