It’s the kind of fist-pumping, proof-of-concept news that advanced-stage diamond explorer Dunnedin Ventures Inc. (TSX: V.DVI), (OTC:OCPFF) has been anxiously awaiting.
A spring/summer drill program in Nunavut among northern Canada’s under-developed diamond fields has unearthed a sizeable kimberlite pipe that exhibits the preliminary potential to be a company-maker discovery.
Kimberlite pipes are giant carrot-shaped rock structures that can sometimes host billions of dollars worth of gem-quality diamonds, like the pipes that feed the Ekati and Diavik mines in the Northwest Territories. To date, these two mines alone have produced over $25 billion worth of high-grade diamonds.
This reality helps explain why Dunnedin’s new discovery is significant at its expansive Kahuna Project area. Notably, it was among the several dozen high-priority drill targets selected for special attention this drill season by the famed Canadian diamond hunter Chuck Fipke - who is also Dunnedin's largest shareholder with 12%.
Quite a few of those targets will not be drilled until this winter when more favourable drilling conditions will exist. This includes the ability to drill from surface directly down into intrusions that have become small, circular lakes. This is when these lakes will be frozen over. Notably, all of the richest-endowed diamond finds at Ekati and Diavik were all found beneath such water-filled intrusions.
If anyone can find similar treasure troves, it will be Fipke -- the doggedly-determined geologist who first made headlines around the world with his discovery of what became the Ekati diamond mine in the Northwest Territories in the early 1990s.
It was Canada’s first ever major diamond discovery. Fipke’s tiny exploration company, Dia Met Minerals, had succeeded where other much bigger players, including De Beers, had failed. Incidentally, his company’s share price catapulted from pennies to over $67 as the extent of the diamond riches at Ekati became apparent.
Now Fipke believes he may be on the verge of striking pay dirt once again in the twilight of his storied career. As a consultant to Dunnedin, his diamond hunting sleuthing skills are the company’s secret weapon.
Drilling at this latest discovery – known as KH10-11 – reveals that the kimberlite pipe is at least 112 metres deep and is open (continuous) for an undetermined depth. The pipe is also shown to have excellent geochemistry – involving tell-tale indicator minerals that are synonymous with the presence of gem-quality diamonds.
Company President Claudia Tornquist says this one discovery could unlock the value of a whole cluster of proximal pipes – all of which exhibit excellent geological potential to be diamond-bearing.
“This new discovery is significant. The depth of the drill intercept suggests that this pipe is of sufficient size to host a commercially viable deposit, assuming there is sufficient diamond content,” she says.
Tornquist adds: “What’s equally important at this stage is that this pipe has similar geological fingerprints, by way of its geochemistry, to many other pipes in this part of the world that are known to be diamondiferous. And there are at least half a dozen more nearby pipes that have the same kind of indicator minerals and therefore the same potential to host diamonds.
Among other drilling highlights, two other known kimberlite pipes – one of which has already been shown to be diamond-laced – were also drilled due to their excellent geochemistry. Notably, these are discoveries that were made by a previous explorer. But they were never extensively probed by way of drilling, until now.
Samples from all three pipes are now being tested to better determine their potential to host large amounts of diamonds. Results are expected back within a few weeks. They include 500 kilograms from different levels of the KH10-11 pipe – all of which will be tested for the presence of macro and micro diamonds.
“If we get an impressive diamond count, such a development could light up the potential for many more comparable pipes on our property,” Tornquist says.
Kimberlite pipes samples ready to be shipped to a laboratory for diamond count analysis
Unlocking the Secret to Zeroing-in on the Richest Diamond Pipes
Fipke’s task hasn’t been easy. Dunnedin’s property is expansive enough to host an entire field of diamonds, encompassing over 100 potential diamond-hosting structures – mostly kimberlites. However, the property also contains a few dikes (shallow, rectangular host formations) as well.
As an aside, several diamond dikes have been commercialized in Canada to date. And two of Dunnedin’s promising diamond discoveries – the Notch and Kahuna finds – have also been shown to be dikes that are well-endowed with diamonds. Such deposits are also mined in the rich diamond fields of Africa, where they are known as “fissure” deposits.
So how has Fipke managed to single out the very best prospects when the statistical odds of each kimberlite pipe hosting diamonds is only one in ten?
Working out of his renowned laboratory – CF Minerals – in Kelowna, BC, he used his own proprietary form of diamond indicator mineral analysis to identify and study the geochemical profiles of each kimberlite target. And this has allowed him to predict the potential of each rock structure to host diamonds.
Fortunately, these are the same till sampling and mineral ranking techniques that he used to great effect at Ekati. Fipke has since refined and improved upon these techniques thanks to the benefit of over 20 years of additional diamond data and experience.
At Ekati, he had a comparable challenge – to discover which five of the 150 kimberlites discovered at Ekati contained very large concentrations of diamonds. Yet he still succeeded in identifying around half a dozen pipes that have to date yielded many billions of dollars of high-quality diamonds.
Truth be told, Fipke has been excited enough about Dunnedin’s best diamond prospects to have even compared them favourably to the richly-mineralized Ekaki diamond mine that he discovered in 1991.
By which I mean, he says they have similar geochemical (minerals-in-soil) fingerprints to the diamondiferous rock structures that became Canada’s first-ever diamond mine.
To this point, here’s his past assessment from studying thousands of till samples collected in the vicinity of the company’s geological targets: the geochemistry of Dunnedin’s best prospects suggests that they contain plenty of clear, high-quality commercial-sized diamonds.
“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.”
How Dunnedin’s Story is Going from Strength to Strength
Dunnedin has already had some success in its hunt for diamonds. In this regard, the company has established a high-grade, near-surface inferred diamond resource at the heart of its sprawling property. This essentially represents a proof of concept. In essence, it offers the potential to monetize the company’s existing discoveries.
In fact, two of the deposits that Dunnedin is working on demonstrate an average grade of one carat per tonne of what appear to be high quality, commercial-sized diamonds. This means that their grades and diamond qualities measure up favourably against producing diamond mines. Yet the full extent of their diamond riches has yet to be explored.
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. Drilling into these bodies is still very shallow, but Dunnedin has stated that drilling these kimberlites to greater depths could add multiples of the original resource estimate, thereby prospectively creating much larger diamond resources.
Among the diamonds found to date are some large ones, including a reconstructed gem that weighs in at 13.4 carats.
Also, there still exists the prospect of outlining another significant resource at the under-explored PST kimberlite, where Dunnedin’s sampling has generated impressive diamond grades of over 4 carats per tonne – some of the highest-grade diamond results reported in Canada.
Collectively, all three of these smaller deposits may prove to be a company-maker, assuming the high reported grades remain consistent.
Such discoveries essentially represent a fallback position, at least ensuring that the prospect of a modest commercial success among these untapped diamonds fields is very much in the offing.
Investment Summary
Dunnedin is blessed with the opportunity to make one or more multi-billion-dollar diamond discoveries among Canada’s least explored diamond fields. This follows three years of systematic, exhaustive exploration work that has yielded some exceptional exploration results so far.
As a fallback position, the company fortunes are buoyed by several proven diamond deposits that are all constrained by size, but nonetheless exhibit economic potential.
However, the true sizzle in the steak comes in the form of Dunnedin’s new discovery, as well as the rich potential offered by other high-priority drill targets that have yet to be tested.
This is where the company has the best shot at making a world-class diamond discovery under the guidance of the world’s leading diamond hunting guru -- Chuck Fikpe.
Indeed, if a glittering treasure trove is found, Dunnedin can also take heart from the fact that Nunavut is a mining-friendly Canadian jurisdiction that stands to benefit immeasurably from meaningful economic development.
Nunavut’s diamond fields are also home to another intrepid diamond explorer, Peregrine Diamonds, which has had had such good success that it is being acquired by De Beers for CDN $107 million. Two of Peregrine’s richly-endowed kimberlite pipes are said to contain over 22 million carats of extremely high-grade diamonds.
Not surprisingly, Dunnedin’s recent news has fired up the investment community, leading to an impressive uptick in its share price on good volume – in spite of its being the middle of summer. That said, no-one has missed the boat as yet as Dunnedin’s price is still vey inexpensive relative to the company’s risk/reward profile.
The return of assay results from drilling will be the next expected value catalyst for Dunnedin. So patient investors may yet be well-rewarded.
FULL DISCLOSURE: Dunnedin Ventures Inc. is a paid client of Stockhouse Publishing.