2023-06-05 17:19 ET - Market Summary
by Will Purcell
The diamond and specialty minerals stocks box score for Monday was a positive 95-78-137 as the TSX Venture Exchange rose fractionally to 609. Dr. Michael Gunning's VR Resources Ltd. (VRR), which jumped six cents to 28 cents on 1.09 million shares, is pressing ahead with its diamond program in Northern Ontario.
Late last week the company said it was seeking $800,000 in aid of further work at its Northway kimberlite discovery between Kapuskasing and Moosonee. VR is selling 2.05 million flow-through shares at 19.5 cents and 2.22 million regular shares at 18 cents, each block to raise $400,000. The new shares are going to two current institutional shareholders of the company.
Some of the hard cash will support VR's working capital requirements, but the bulk of the financing is slated for drilling a second hole at Northway, and for processing the kimberlite for microdiamond recovery. The company completed one hole as advertised last month, but then moved the rig to its Hecla-Kilmer rare earth project, 12 kilometres to the southwest. Now, Dr. Gunning, chief executive officer, says that he and his crew will return the rig to Northway for one more hole before the spring program wraps up.
VR Resources drilled the fringe of a large magnetic anomaly last fall and encountered about 40 metres of weathered diatreme breccia kimberlite at a depth of about 240 metres. That whetted the company's appetite to drill the core of the anomaly. It is not clear why VR Resources did not do so with the first hole, but the second test was a success, returning over 110 metres of kimberlite, again starting at a depth of 240 metres. (It is equally unclear why Dr. Gunning did not elect to complete the second Northway hole after finishing the first, before moving the drill to the rare earth project.)
Dr. Gunning said a few weeks ago that he expected to have the microdiamond results from the first hole by late summer, and the additional rock to be obtained may be facing the same timetable. The additional kimberlite will help flesh out the diamond population -- if there indeed is one to be fleshed -- and that could be key, as most Ontario kimberlites are poor providers of microdiamonds, even those with potentially economic grades.
De Beers Canada nearly scrapped its Victor kimberlite in the 1990s, after it obtained just modest microdiamond counts. Available data show that over 1,080 kilograms of Victor kimberlite yielded about 140 microdiamonds -- 130 specks of diamond per tonne -- which is typically far below what economic kimberlites contain. After mulling the matter for a few years, De Beers pressed on with a big bulk sample as was rewarded with a grade of about 23 carats per hundred tonnes, and with an abnormally high average diamond value to boot.
And so, weak microdiamond counts would not necessarily kill the Northway promotion, but they would force VR Resources to complete far larger tests to prove or kill the project, at a cost likely far beyond the company's ability to raise cash. While Northway's location is not as remote as Victor's home in the Attawapiskat lowlands, access to the Northway kimberlite is arguably more challenging for another important reason.
All available data -- the two completed holes -- show that the top of the Northway kimberlite lies beneath 240 metres of overburden, mainly limestone and sandstone cover, while Victor sat beneath just 10 to 30 metres of unconsolidated material. The depth of Northway will leave the collecting of any larger samples to the drillers, or perhaps to underground miners, and either method will require a hefty budget.
Even so, the large size of the anomaly lends credence to hopes that Northway is huge. The second hole, drilled in the core of the anomaly, was sited 450 metres northwest of the discovery hole, and the full geophysical anomaly is described as 1,200 metres in diameter. The tonnage could, therefore, be huge, on the order of at least a few and perhaps several hundred million tonnes of kimberlite.
Dr. Gunning applauded the second hole as showing that the Northway anomaly was real, adding that "it's game on now for the potential of this large kimberlite complex and the field of targets we have staked." Having proven Northway is a kimberlite opens the door for the 20 other targets that VR Resources has staked nearby, each of which might be a kimberlite with its own diamond content and proximity to surface. And so, stay tuned.