WASHINGTON, D.C. – After my diamond safari in Sierra Leone, I am pursuing stones.
Not just any stones. Karl Smithson and Rowan Carr at Stellar-Diamonds in Sierra Leone told me enough about “any old stones” to realize profits do not come from romancing rock.
Hitting it big in gems is nearly impossible. We all love our glitter. But when it comes to diamonds perhaps 50 mines in our human history have been commercially successful.
Most of those are in Africa and several in Canada. Still, diamonds are everywhere. They are sprinkled here and there across Sandspring Resources’ (TSX: V.SSP, Stock Forum) Toroparu property in British Guyana. I just ran into a geologist, Pete Evans at Revolution Resources (TSX: T.RV, Stock Forum), who told me about diamonds washing in and out of rivers and streams across the Carolina Slate Belt.
No, romance and stones/gems are not partners. Finding a pipe with saleable diamonds is tough enough. Making a diamond mine an economically sound producer– in Sierra Leone, Guinea, South Africa, Zambia, wherever – requires experienced diamond drillers, blasters and dike seekers who have worked diamond fields for most of their lives.
Not to mention accountants, logisticians, a metric ton of cash, good roads and rail, expensive equipment and a kind of fine-tuned expertise one ordinarily does not come across on gold, silver or copper projects. (Photos here: fresh stones from Stellar-Diamonds in Sierra Leone’s Tongo Mine – Thom Calandra photos)
I was in Sierra Leone, that “blood diamonds” nation in West Africa, to find the next DeBeers. I figured London-traded Stellar Diamonds, with a small work force of former DeBeers miners, was a decent start. So I am in (as an investor), convinced that anyone who invests in stones has to be either financially senseless … or willing to go where the action is. I don’t mind getting roughed up.
This is not all about diamonds, which are in demand increasingly by our friends in China and India. I am now into rubies. Or future rubies, one hopes.
I came across True North Gems (TSX: V.TGX, Stock Forum) a few weeks after my latest tour of West Africa. I found myself in East Africa, where I was kicking up some dirt at two projects controlled by Canaco Resources (TSX: V.CAN, Stock Forum) in Ethiopia and Tanzania.
Geologist Andy Smith after many years appears to have a winner in Canaco and its Magambazi gold and copper project in Tanzania. In East Africa, aside from the gold diggers, I was struck silly by the variety of gems one finds when cruising parts of the continent. Got to love tanzanite, for instance, which only became commercially available in the mid-1960s.
When I lived briefly in Colombia almost 30 years ago now, and on my 10 or 12 trips back since then, I was and am entranced by emeralds. Entonces, now it’s rubies. Mr. Smith’s other interest is rubies.
He has a British gemologist, Nick Houghton, running True North. The company has had few if any ups and plenty of downs. But then, so did Canaco before it crossed, albeit briefly, the $1 billion mark earlier this year. Canaco is more than halfway back to that billion-mark.
If True North Gems makes it there, the returns would be something like 4,000 or 5,000 percent (before dilution, that is). Right now, Mr. Houghton tells me his team is in Greenland looking for sources of rubies.
The dynamic for rubies is easy enough to understand. About the only place you can find ‘em is in Burma (Myanmar). Most retailers, including Tiffany’s, regard Myanmar as a less-than-ethical source. Thus, Tiffany’s and other fine retailers have not sold rubies for eight years. So says Mr. Houghton.
“The appetite for gems of color is at a fever pitch,” he says. Mr. Houghton and Mr. Smith run True North Gems, and Canaco, and soon, Tigray Resources of Ethiopia, from Vancouver, Canada.
Rubies are red or chromium in color. When they come in pink, they are classed as sapphires. If you are intrigued, we shall return to stones in a follow-up article. I apologize for leaving you hanging; not my usual report. But right now, my flight is boarding.
Just be warned: I have never made money in diamonds, rubies, sapphires, emeralds, tanzanite. I think it is about time I do. Make money that is. In spades ... er, stones.
(Thom owns shares of Canaco, soon-to-be-public shares of Tigray and shares of True North Gems. He owns shares of Stellar-Diamond, whose ticker is STEL on London’s AIM. Thom also owns shares of Golden Valley Mines (TSX: V.GZZ, Stock Forum), which operates a Sierra Leone subsidiary. None of these investments are for folks who are ill prepared to watch all of their capital transform into pebbles.)
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