The world’s most famous diamond-hunting guru, Chuck Fipke, likes what he sees.
And what he’s excited about points to a potential multi-billion dollar diamond discovery in-the-making.
(Pictured above are some of Dunnedin’s high-quality diamonds)
If he’s right, the start-up diamond explorer Dunnedin Ventures (TSX.V: DVI) may yet have a realistic shot at glory. In so doing, it could emulate the stratospheric success that earned Fipke’s own publicly-listed diamond explorer a legendary reputation.
Known as Dia Met Minerals, Fipke’s company catapulted from mere pennies in 1991 to over $67 a share the following year. This was after Dia Met discovered what was to become the Ekati diamond mine -- Canada’s first -- which is in the Northwest Territories (NWT).
Since then, numerous other diamond exploration companies have tried their luck in the frigid, forbidding wastelands that encompass Canada’s northern diamond fields. Only several have succeeded. Yet they, too, made millionaires of many ordinary household investors.
That said, the odds of finding large concentrations of diamonds under meters of ice are very long, to say the least.
For instance, even though Canada has produced over $25 billon dollars worth of premium-grade diamonds to date, it is still home to only four diamond mines.
Including Ekati, three of them are in the NWT -- a part of the world that was believed to be devoid of diamonds until Fipke proved all the so-called experts spectacularly wrong. Canada now produces some of the world’s best-quality diamonds.
That’s why Fipke’s consulting services as a rain-maker in the diamond hunting business are so coveted. But he’s a very rich man who doesn’t need a pay cheque. So he seldom sees a project worth getting involved with.
Dunnedin is a rare exception. Here’s why.
Hunting Diamonds with the World’s Very Best
Fipke’s success with Ekati -- one of the world’s most profitable mines -- had little to do with luck and everything to do with the genius of his geological sleuthing. More specifically, he’s a world-renowned expert in using indicator mineral geochemistry to lead him to buried diamond treasures.
In the quest for telltale trails of indicator minerals, Fipke recently coordinated the collection and processing of glacial till samples (mostly gravel and sediment) on Dunnedin’s expansive 60,000-hectare property in Nunavut. Now these samples are being carefully scrutinized at Fipke’s world-renowned laboratory, C.F. Minerals, in the BC city of Kelowna.
Fipke’s team are finding exactly what they’re looking for -- plenty of the most desirable kinds of indicator minerals. This is a big deal.
It’s because these tiny colourful, glassy stones are ones that co-existed with diamonds millions of years ago. In other words, they were formed under the exact same conditions that create diamonds; they also originated from the same source rock.
As was the case with the hunt for Ekati’s hidden riches, these indicator minerals have been smeared long distances down-ice by glacial action. However, Fipke has an uncanny knack for tracing these telltale minerals back to their diamondiferous source. It’s analogous to following a trail of bread crumbs back to a loaf of bread.
Fipke explains how incredibly effective this exploration methodology can be: “We honed-in on the best kimberlite pipes at Ekati using till sampling,” Fipke explains.
That was no easy task considering that a total of 170 kimberlites (the host rock formations for diamonds) were found but only seven of them had enough carats to collectively become a mine, he adds.
Now he’s set his sights on one more major discovery -- something of a last hurrah during the sunset years of his illustrious career.
“It’s very possible that there’s commercial concentrations of diamonds on Dunnedin’s property,” Fipke enthuses. “The geochemistry certainly suggests this may be the case.”
“Very few places in the world have geochemistry this good. In fact, it’s very similar to the geochemistry of the richest pipes at the Ekati diamond mine.”
At a recent investment presentation in Vancouver, Fipke told a packed room some very encouraging news: the geochemistry of these pipes suggests that plenty of clear, large, high-quality diamonds probably exist among Dunnedin’s kimberlites.
“That’s why I’m very interested in this project,” he concluded.
It’s worth noting that most of the world’s kimberlites are either barren or bereft of sufficiently economic quantities of diamonds. So even though Dunnedin has plenty of unexplored kimberlites, most are statistically unlikely to be of any real value.
However, investors should take heart from the fact that at least several of Dunnedin’s kimberlites have already been shown to be embedded with diamonds of impressive quality and size.
For instance, two of these kimberlites are already at an advanced stage of exploration. No fewer than three near-surface bulk samples, totalling 360 tonnes, have already unearthed plenty of glittering promise.
More specifically, an inferred resource of around 4,000,000 carats averaging over one carat per tonne has been outlined at the Kahuna and Notch kimberlites. Among the diamonds found to date are some large ones, including a reconstructed gem that weighs-in at 13.4 carats.
The company now hopes to more than double this existing inferred resource at its two discovery pipes by way of an upcoming spring drill program involving 6-12 drill holes. (Investors should note that an inferred resource is an approximate measurement, rather than a definitive one.)
Conceptual models of these two emerging diamond deposits give Dunnedin’s management reason to believe that anywhere between 4.1 million to 15.9 million additional carats may yet be unearthed.
Notably, neither kimberlite has been drill-tested below 100 meters, which is where plenty more diamonds may be hidden.
As an aside, most kimberlites are cone-shaped with a circular surface diameter of up to one hundred meters. But Kahuna and Notch have an entirely different structure. Known as “dykes”, they’re far more angular and are closer to the surface.
If they become a mine, they are therefore amenable to low-cost, open-pit mining methods.
As an example, the past-producing Snap Lake diamond mine, which is in the NWT, is also a dyke-shaped kimberlite. It was embedded with rich enough concentrations of diamonds to warrant a profitable, even though short-lived mine, which operated between 2008 and 2015.
Strength through Diversification
In spite of the diamond exploration success that Dunnedin has enjoyed to date, management has been shrewd enough to diversify into gold exploration/development projects as well.
The company owns an early-stage gold porphyry project in the Atlin mining district in northern BC -- a region where there’s been a flurry of big dollar M&A activity lately due to several recent exploration successes.
Additionally, Dunnedin is also hunting for gold in the vicinity of its Nunavut diamond project -- an under-explored region that is fast-becoming a hotbed of staking activity.
Both of these projects boast considerable sex appeal which I will discuss in my next article about Dunnedin. However, the company doesn’t want to show all of its cards at this juncture. So mum’s the word for now.
Investment Synopsis
Dunnedin is committed in 2017 to drilling untested high-priority kimberlites, as well as uncovering more diamonds at its Kahuna and Notch kimberlites. These key value drivers will go a long way towards determining if a multi-billion dollar jackpot really is within the company’s reach.
Having Chuck Fipke in Dunnedin’s corner will certainly boost the company’s prospects for success. He believes that Canada’s Great White North likely has at least one more dazzling secret to give up. And if anyone can come up trumps, it will probably be him -- in conjunction, of course, with Dunnedin’s own accomplished team of geologists.
Whatever the eventual outcome, 2017 heralds a year in which Dunnedin’s investors will need to tighten their seat belts in readiness for an exciting journey into uncharted territory -- one that may yet prove to be the ride of lifetime.