an old willp note on WawaPele Mountain's bigger test to start at Genesis
Pele Mountain Resources Inc GEM
Shares issued 40,884,014 Dec 4 2003 close $ 0.51
Friday December 5 2003 Street Wire
by Will Purcell
Al Shefsky's Pele Mountain Resources and its Wawa diamond hunt partner, De Beers Canada, are about to collect the largest mini-bulk sample taken to date from the area just northeast of Lake Superior. The partners plan to test about 250 tonnes of Wawa material, starting with the Genesis outcrop that has produced the most promotable results to date. So far, the largest test of a diamond bearing Wawa rock outcrop weighed about 123 tonnes, and although the Cristal showing delivered the largest Wawa diamond, the sample grade was very modest. Nevertheless, there are signs that the planned tests on Pele's Festival property will produce some better grades. Either way, the results of the De Beers sampling program should have a big impact on the fortunes of the Wawa diamond play.
Mr. Shefsky has been touting his Festival play since the company first added diamonds to its wish list in 2000, hot on the heels of some early encouragement from Band-Ore Resources that revived the Wawa diamond play begun by Spider Resources in 1996. Prior to the Festival acquisition, the Ontario-born Mr. Shefsky had been concentrating on gold plays in Northern Ontario. Mr. Shefsky has been keeping much closer to home of late, although Pele first hopped aboard the Labrador mineral hunt when the former lawyer and stockbroker created the company in the mid-1990s.
With the price of gold in the dumps, Mr. Shefsky was getting little promotional mileage out of his precious metal projects, but diamonds were occasionally producing some promotional sparkle. As a result, Mr. Shefsky was apparently among the bidders for the discovery property that is now owned by Band-Ore. Its bid was unsuccessful and the company had to settle for the Festival ground to the north, but since then, little Pele Mountain has managed to produce the largest Wawa diamond, the best mini-bulk grade, the loudest promotional noise, and bring De Beers to the Festival.
Pele Mountain subjected the Genesis outcrop to a 4.5-tonne test in the summer of 2002. The company was continuing to plug away on its project without a formal partner, although De Beers had been waiting in the wings, offering assistance on occasion, apparently in exchange for a peek at some of the data. Pele completed the Genesis sample on its own however, using a low-tech but apparently quite effective processing system of its own.
The 4.5-tonne batch of rock yielded 0.52 carat of diamonds that were large enough to remain on a 0.8-millimetre sieve and that indicated a sample grade of 0.116 carat per tonne. That modest value was nevertheless several times better than what Pele's Cristal sample had delivered, and it also more than doubled the 0.05-carat-per-tonne value that Band-Ore had obtained from a 12.5-tonne test of its Engagement Zone in the spring of 2001.
Tiny samples such as the Genesis test are subject to a large degree of statistical error, and the results are often skewed by the presence of one large diamond, such as the 0.72-carat diamond from the Cristal sample, which was dubbed the Big Goose by an enthused Mr. Shefsky and Pele Mountain, or by the 0.25-carat stone that Band-Ore had found in its mini-bulk. The Band-Ore stone had previously been the largest diamond found in a Wawa rock sample.
The Genesis sample did not appear to be skewed by any particularly larger diamonds however. The largest stone weighed just 0.085 carat, and with an average diamond weight of just 0.01 carat, the Genesis sample did not appear to contain a significant number of diamonds weighing over 0.05 carat. That might not bode well for the size distribution of the Genesis rock, but it could just as likely mean that Pele Mountain had simply been unlucky with its sample, and larger tests could even the score with some larger stones.
Pele Mountain's consultants, AMEC, seemed to think the latter was more likely, as they modelled the results of Pele's various sampling programs, coming up with a predicted grade of 0.30 carat per tonne for diamonds smaller than a one-millimetre mesh. That modest value could well be of economic interest, given the favourable location of the Festival property, near the main highway and about 25 kilometres north of Wawa, and should a larger test produce a grade in excess of Pele's initial result, it would prove quite toutable for Mr. Shefsky and his company.
Pele's first mini-bulk test was a pleasant surprise, given the earlier Wawa results, but the initial microdiamond recoveries had pointed toward Genesis having a more favourable size distribution curve than the company's other showings.
A few months before it took the larger test, Pele processed 17 kilograms of rock from Genesis by caustic fusion, coming up with 308 diamonds larger than a 0.106-millimetre sieve. Many of the Wawa occurrences have been prolific producers of microdiamonds, and Genesis was clearly one of them, with about 18,000 micros per tonne, which is several times more than were recovered from the far richer deposits in Canada's North.
As well, Genesis had greater quantities of larger diamonds, unlike many of the other Wawa showings. Just less than 12 per cent of the diamonds in the Genesis parcel had remained on a 0.30-millimetre screen, while a bit better than 2 per cent clung to a 0.425-millimetre mesh. Although about one-quarter of the diamonds in a number of kimberlites in the North had been large enough to remain on a 0.3-millimetre screen, and about one-eighth of the parcels had been collected by a 0.425-millimetre sieve, the Genesis result compares favourably with the numbers posted by most other Wawa outcrops.
For instance, Pele Mountain processed about 61 kilograms of rock from three sites on its Dom Perignon outcrop, recovering 188 diamonds, or about 3,100 stones per tonne. That was also an impressive haul, although it was barely one-sixth the rate that the tiny Genesis sample had produced diamonds. Perhaps of greater importance, the size distribution of the Dom Perignon sample was markedly inferior to the Genesis result. Just a single diamond had been recovered by the 0.30-millimetre sieve, accounting for a minuscule 0.5 per cent of the parcel. None of the Dom Perignon diamonds were recovered by the 0.425-millimetre screen.
Pele Mountain's Cristal site produced a more hopeful microdiamond size distribution curve, although the diamond counts were significantly lower than what had come from the Genesis sample. About 171 kilograms processed in 2001 had yielded 327 diamonds, and 43 of them remained on a 0.30-millimetre screen, or about 13 per cent of the parcel, while 13 stones had clung to a 0.425-millimetre mesh, or about 4 per cent of the Cristal haul.
Those proportions were actually a bit better than the Genesis tally, but there were far fewer diamonds in the Cristal samples, which yielded a bit fewer than 2,000 stones per tonne, nearly an order of magnitude fewer than the tiny batch of Genesis material.
As a result, those numbers appear to have translated into a particularly modest grade, but with a few larger diamonds. In all, Pele Mountain managed to process a total of 123 tonnes of rock from Cristal in three separate tests, coming up with about 3.7 carats, for a cumulative sample grade of 0.03 carat per tonne. That figure was significantly influenced by the presence of Pele's Big Goose, which accounted for about 20 per cent of the total diamond weight.
The second largest Cristal diamond weighed just 0.18 carat, but the presence of the 0.72-carat stone may not have been that much of a fluke, given the microdiamond distribution curve at Cristal. In fact, De Beers seemed to think that larger diamonds were possible, as the diamond giant modelled a grade of 0.06 carat per tonne for Cristal that was based on the earlier results, prior to the Big Goose tumbling out of a later batch.
That last Cristal test, which weighed 13 tonnes, also offers hope for a toutable result at Genesis. In all, 1.142 carats of diamonds came from the final portion of Cristal rock that had been collected when Pele took its 100-tonne test, but not processed until quite some time later. The result was a sample grade of a bit less than 0.09 carat per tonne, which was below the Genesis grade, despite most of the diamond weight in the Cristal sample coming from the 0.72-carat Big Goose.
Two of Pele Mountain's original directors remain on the company's board along with Mr. Shefsky. St. John's-based geologist, Peter Dimmell had little to do with diamonds prior to the Festival project, but he has more than 30 years of experience, much of it with Noranda, Corona and Lacana Mining. Mr. Dimmell played a key role in Pele's Labrador play several years ago, and his prime preoccupations with Pele these days are the company's gold plays.
A Toronto-based archaeologist, Martin Cooper, has also been with Mr. Shefsky since the start of things with Pele in the spring of 1996. A partner at Archaeological Services Inc., Mr. Cooper specializes in helping companies with their environmental assessment and land tenure issues. He apparently also dabbles with things financial, as he serves as Pele Mountain's chief financial officer. Mr. Shefsky got some legal company on Pele's board last year, with the addition of a Toronto lawyer, Steven Rukavina. His legal practice concentrated on securities, corporate and mining matters, and he had been Pele's secretary since 1997.
Steven Cohen, who was appointed early this year, is Pele's fifth director. He came to Pele with an MBA and some management experience, but he also had little to do with diamonds. Mr. Cohen is an executive with Teknion Corp., an office furniture company, and he runs a private investment company with real estate interests.
With little diamond experience on its board, Pele relies on consultants to advance its diamond projects. Ed Walker, a geologist with over 16 years of diamond experience, runs the company's Wawa diamond hunt, while P. C. Delisle has conducted much of the prospecting and sampling across the Festival property and is credited with most of the diamond finds to date.
Mr. Shefsky has been having success selling his Wawa diamond story to investors of late. A Pele Mountain share could be had for just 17 cents in June, but the stock rallied through the summer, hitting a 60-cent crest as fall began. Things have levelled off since then, but Pele continues to trade in a range near the 50-cent mark.
Pele gained 2.5 cents on Thursday, closing at 51 cents.
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