Article on CD HistoryWritten mainly for an MTX review but it reviews Chuck's history with CD.
2004-05-26 11:45 ET - Street Wire
by Will Purcell
The shares of Chuck Fipke's Metalex Ventures continued their slide last week after the company sketched out plans for a new mineral hunt in Morocco. Speculators seemed less than thrilled with the unexpected news of a new play, when they were impatiently awaiting word of progress at the company's Attawapiskat diamond hunt in Northern Ontario. Some investors took the acquisition of a new project as a bad omen for the current play, and Metalex's shares briefly dipped to the $1 mark as a result. They could be right, but a more optimistic spin would be that Mr. Fipke has decided to renew an earlier gem hunt, this time a bit farther to the north.
In mid-May, Metalex revealed that it had acquired the right to conduct preliminary exploration over an area covering 1.35 million hectares in the southern part of Morocco. The deal is believed to be the first such arrangement that has been made with the Moroccan government, and it also marks the first real crack at exploration on the company's new play.
Mr. Fipke touted Metalex's new concession as being on an Archean craton and therefore prospective for finding diamondiferous kimberlites, but he also included the possibility of finding base and precious metals in Metalex's opening promotional salvo. Mr. Fipke's company apparently has already started a reconnaissance exploration program over its new project.
The famous diamond explorer was delightfully unspecific about the site of the new hunt. He placed the new gem hunt in the southern part of Morocco. Furthermore, the vagaries of African politics have increased the ambiguity of just where Mr. Fipke plans to explore.
In the late 1970s, Morocco occupied Western Sahara after the territory was partitioned from Mauritania, and a guerrilla war raged until a United Nations cease fire took effect in the early 1990s. A referendum was supposedly part of that arrangement, but it has not been held and Morocco still claims and administers the territory. As a result, Metalex's new play could be in the region north of Mauritania, near the Anti-Atlas Mountains, or it might be farther to the south in Western Sahara, just west of Mauritania.
In any case, Metalex's new project appears to be in the same general area as one of Mr. Fipke's earlier diamond hunts. In 1999, Dia Met Minerals signed a joint venture deal to explore for diamonds on the West African craton in Mauritania with Australia-based Ashton Mining. Ashton had been working in the region since 1995 and had a bit of success, coming up with a cluster of kimberlite pipes and a few diamonds.
An array of promising indicator minerals provided the prime attraction. Dia Met touted a collection of finds that included chromites and chrome diopsides, as well as both eclogitic and peridotitic garnets, including the particularly promotable G-10 variety. Adding to the company's hope was the discovery of some small diamonds in its samples, along with a 1.16-carat gem that had come from a 50-tonne gravel sample. Several other macrodiamonds were found in smaller gravel tests, and that indicated that there were diamondiferous sources somewhere in the region.
In the summer of 2000, Ashton and Dia Met discovered a diamondiferous kimberlite, dubbed MAQ-1, in the northern part of the desert country. The find is believed to have been made in the Mauritania's Maqteir region, which is centred about 250 kilometres east of Western Sahara and about 500 kilometres south of Morocco.
Ashton and Dia Met processed 369 kilograms of kimberlite from MAQ-1, coming up with 78 diamonds that weighed in excess of 2.85 carats. The haul included over 30 fragments that were believed to have once been seven larger diamonds, including one that weighed about 1.7 carats. The sample was encouraging, but a check test did not duplicate the promise. A further 245 kilograms delivered just five stones, which weighed about 0.0002 carat.
The partners continued to work on the play for a time, but if significant progress had been made, they kept mum about it. In any case, Ashton was taken over by Rio Tinto and Dia Met was bought out by BHP Billiton a few years ago, and nothing has been heard of the Mauritanian hunt since then.
Rex Diamond Mining was also searching for gems in Mauritania, and there was nothing quiet about its promotional efforts, in the early days at least. The Belgium-based promotion carried Rex's shares to a peak of $15.20 early in 2000, after the company turned up several kimberlites and touted its chances of finding a number of mines on its Mauritanian licences.
Like Ashton, Rex had little trouble finding Mauritanian kimberlites, but coming up with diamonds was a much tougher task. Late in 1999 and early in 2000, Rex had tallied 20 finds, all of them on its Bir Amrane permit area, which is northeast of the Maqteir district, about 350 kilometres east of Western Sahara and roughly 450 kilometres south of Morocco.
Rex sent samples from 19 of its finds off for processing, but there were just two dozen diamonds to be had from about 3.4 tonnes of kimberlite, and 13 of the kimberlites failed to produce a single microdiamond. Unlike the Ashton and Dia Met sample, all of Rex's diamonds were tiny, as its entire parcel weighed just a bit over 0.0075 carat, suggesting an average grade of 0.002 carat per tonne for the entire lot of rock.
The best of the lot was K-9, from which a 163-kilogram batch of kimberlite had accounted for 10 of the diamonds. Those stones weighed 0.0065 carat, yielding a microdiamond content of 0.004 carat per tonne.
Rex's diamond hunt went off on a tangent after it turned up some encouraging assays in 2000, as Metalex now plans to do in Morocco. While Mr. Fipke simply included base metals and precious metals on his wish list for Metalex, Rex was far more specific with its proposed hunt, specifying nearly 50 metals and minerals, in what seemed an effort to corner the periodic table of the elements.
Rex's metal promotion was based on an early assay that indicated a nickel content of 0.89 per cent, along with a combined precious metal content of 1.64 grams per tonne, over 20 metres. Subsequent tests failed to better the initial result, and like Rex's diamond hunt, its metal play seemed to be swallowed up by the desert sands.
Nevertheless, the exploration efforts of Ashton, Dia Met and Rex did find kimberlites and diamonds, along with hints of base and precious metals, and that would seem to bode well for Mr. Fipke's plan to continue the search farther to the north and west.
Mining accounts for a significant portion of Morocco's economy. Although it is phosphate that dominates the industry, there are a number of other mines in the country, producing metals such as lead, zinc, copper, cobalt, gold and silver.
Mr. Fipke is best known for his big diamond find that led to the Ekati diamond mine in Canada's North, but in recent years he has occasionally hunted metals in faraway places. In the late 1990s, his Cantex Mine Development crafted an effective promotion out of two metal plays in Yemen, the Hariqah gold project and the Suwar metal prospect.
Mr. Fipke's success with diamonds generated a considerable amount of market enthusiasm for the Yemen plays, and the company managed two good runs on the story. The arrival of Mr. Fipke as chairman quickly carried the shares of what was then known as Goldtex Resources to a crest of $13.75 in the initial burst of promotion.
The stock was subsequently split on a 5-for-1 basis prior to a merger that created Cantex, and the subsequent downturn in the resource sector let the remaining air out of the company's share price. By the fall of 1999, a Cantex share could be had for less than a dime.
Some encouraging assays revived the market's interest in Mr. Fipke's play, and the stock hit a peak of 98 cents early the following year, but a worsening political situation muted Cantex's best promotional efforts. The company's work site was vandalized and a terrorist attack in the fall of 2000 blew a big hole in the side of the USS Cole, and another one into the heart of Mr. Fipke's promotion.
In 2001, Cantex's partner had had enough. Falconbridge cited Yemen as being too dangerous and inhospitable, and it walked away from the project. A Cantex share cost just three sad pennies for much of last year, but the company's promotion has been showing a few signs of life in recent months.
Mr. Fipke's Metalex's promotion also got off to a roaring start. The company's shares surged from less than $1 in the fall of 2002 to a $5.60 crest early in 2003, on the strength of its Attawapiskat diamond hunt. Interest in the story has been faltering of late, although unlike Cantex, the speculative frenzy seemed to end more with a whimper than with a bang, as a lack of news has taken its toll.
Many investors seemed to interpret the new Morocco play as a sign that Mr. Fipke was striking out on his Attawapiskat hunt, and the company's shares took a tumble in the hours following word of the deal, briefly touching the $1 mark in intraday trading.
It has been nearly four months since Metalex and its Attawapiskat partners began drilling core holes into its toutable targets, but there has been little word since the program began. In mid-May, Mr. Fipke revealed that its auger and core drilling program were "progressing well," and Metalex promised an update on its Attawapiskat activity.
That promised update will likely need some good news to spark a new surge of interest in Metalex's promotion, as only a few brief rallies have interrupted what has been a steady slide over the past year.
Metalex did gain six cents on Tuesday, closing at $1.19.