Join today and have your say! It’s FREE!

Become a member today, It's free!

We will not release or resell your information to third parties without your permission.
Please Try Again
{{ error }}
By providing my email, I consent to receiving investment related electronic messages from Stockhouse.


Sign In

Please Try Again
{{ error }}
Password Hint : {{passwordHint}}
Forgot Password?


Please Try Again {{ error }}

Send my password

An email was sent with password retrieval instructions. Please go to the link in the email message to retrieve your password.

Become a member today, It's free!

We will not release or resell your information to third parties without your permission.

Why A Multi-Billion-Dollar Diamond Discovery Looms Large

Marc Davis Marc Davis,
3 Comments| February 25, 2019

{{labelSign}}  Favorites

The discovery of Canada’s next multi-billion-dollar diamond deposit is long overdue.

Truth be told, a truly big, world-class diamond discovery has not been made in Canada since the 90s. However, there has been a renewed push in recent years to unlock the geological secrets of northern Canada’s vast hinterland – where expansive diamond fields have yet to be fully explored.

In fact, the odds in favour of at least one more multi-billion-dollar diamond discovery are good enough to keep Canadian diamond explorers busy drilling for diamond dreams.

Among the small handful of diamond explorers that are making impressive headway with diamond discoveries in Canada’s Great White North are the following: North Arrow Minerals (TSXV: NAR), Peregrine Diamonds (TSX: PGD), Archon Minerals (TSX.V: ACS), Kennady Diamonds (TSX.V: KDI), Mountain Province Diamonds (TSX: MPVD; NASDAQ: MPVD), and Dunnedin Ventures (TSX.V: DVI).

Click to enlarge

So what makes these intrepid diamond explorers so willing to tough it out in some of Canada’s most inhospitable regions in the pursuit of glory.

First, there’s the reality that northern Canada is still a geologically fertile land mass for the discovery of more buried diamond treasure troves. Second, every diamond explorer is inspired by the phenomenal rags-to-riches success of Chuck Fipke – Canada’s most famous diamond explorer.

Hunting Diamonds: Following in the Footsteps of a Living Legend
Fipke is a doggedly-determined geologist who first made headlines around the world with his discovery of what became the Ekati diamond mine in the Northwest Territories (NWT) in the early 1990s.

Indeed, this was a landmark event. 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.

Fikpe’s sensational find sparked a staking rush. And not long after, another junior mining rags-to-riches story made the newspaper headlines – Aber Resources. Its share price had a similarly meteoric run after the company discovered what was to become the Diavik mine – which is in relative close proximity to the Ekati discovery.

Then Winspear Resources also struck the geological jackpot when it unearthed a diamond deposit that became the Snap Lake mine. Its shareholders also enjoyed a home-run return on their investments.

Another small-time player that won big – Mountain Province Diamonds – now co-owns the richly-mineralized Gahcho Kude diamond mine in the NWT.

Click to enlarge
Auger drilling for diamonds in Canada’s frigid northern tundra.

Fipke’s road to riches began in 1991 when he unearthed the first real evidence of the existence of diamonds in Canada – the discovery of the Point Lake kimberlite pipe.

Kimberlite pipes are giant carrot-shaped rock structures that can sometimes host billions of dollars worth of gem-quality diamonds, just like the pipes that feed the Ekati and Diavik mines in the NWT. To date, these two mines alone have produced over $25 billion worth of high-grade diamonds.

Point Lake was the first of about 150 kimberlite pipes to be unearthed at Ekati. Most proved to be barren. However, among them, five were found to be fabulously endowed with rich concentrations of diamonds. So they became Canada’s first ever diamond mine, yielding some of the best-quality diamonds in the world.

Notably, diamond fields usually involve 10-30 kimberlites but can in some cases include as many as 150 or more. A cluster of pipes usually resembles a shotgun blast spread out over an area in diameter of up to 100 kilometres in diameter.

Yet how did Fipke manage to single out the very best prospects when the statistical odds of each kimberlite pipe hosting diamonds is only one in 30?

He used an innovative form of mineral-finding geochemistry to identify and study the geological fingerprints of each kimberlite target. This involved following the dispersion trains of tiny, telltale indicator minerals in glacial till samples back to their diamondiferous, bedrock sources.

Many millennia ago, these tiny, colourful stones were eroded from kimberlites by glaciers and then deposited down ice. The thicker the dispersion train, the closer the indicator minerals are to their diamondiferous bedrock source. In other words, finding diamondiferous pipes this way is analogous to following a trail of crumbs to a loaf of bread.

Click to enlarge
Pictured above: Some of the gem-quality diamonds found by Dunnedin Ventures

Exploration Summary: Will History Repeat Itself?
Canada is the world’s fifth largest diamond producer in terms of volume in carats and value. Ekati and Diavik alone each produce about 6-7 million high-grade carats a year. But both mines face the prospect of being mined out in the not-too-distant future.

To complicate the threat of dwindling supplies, only several smaller mines have been commercialized in Canada in recent years with varying degrees of success. They include the lucrative Victor Mine in Ontario, as well as the Gahcho Kue mine that was already mentioned.

Therefore, it bears repeating that a new discovery may be long overdue.

So who will be the next Dia Met Minerals or Aber Resources? Only time will tell. What is far clearer is that someone is likely to beat the very long odds to find one or more extraordinarily richly-endowed kimberlites, heralding the arrival of a brand new, world-class diamond mine.

In fact, key industry experts point to the fact that the innovation of far more sophisticated diamond hunting technology than was available two decades ago is tilting the odds in favour of at least one scintillating new find.

In that case, diamond glory days reminiscent of the early 90s will be re-lived by a new generation of investors. And many of those who are early-stage, risk-friendly investors should enjoy the ride of lifetime.

About the Author: Marc Davis has a deep background in the capital markets spanning 30 years, having mostly worked as an analyst and stock market commentator. He is also a longstanding financial journalist. Over the years, his articles have also appeared in dozens of digital publications worldwide. They include USA Today, CBS Money Watch, Investors’ Business Daily, the Financial Post, Reuters, National Post, Google News, Barron’s, China Daily, Huffington Post and AOL.

{{labelSign}}  Favorites

Get the latest news and updates from Stockhouse on social media


Featured Company