Veteran diamond hunters bring new tools to NWT diamond resurgence
It’s been more than a decade since Canada has seen a new diamond discovery but the gem hunters are back and more determined than ever.
Bolstered by steadily rising demand, a vastly improved exploration tool kit and an impressive bank of diamond expertise, diamond explorers have reignited the search for fresh stones to increase Canada’s share of a world diamond market that hit a record $79 billion last year.
Junior players led by the likes of Kennady Diamonds, Canterra Minerals and North Arrow Minerals have also resparked investor interest: between $40 and $50 million has been ploughed into prospecting the Arctic’s ancient cratons in the past couple of years.
“There hasn’t been a major discovery for 15 years… and the timing to us, looked like it couldn’t be better. We just decided last November to put the band back together and try out our luck,” says Randy Turner, President and CEO of Canterra Minerals Corp, whose Winspear Diamond Corp. found the Snap Lake deposit in 1997.
“The land is open for exploration, there are untested targets and ideas that we never carried out back in the early 2000s or late 1990s.”
Turner isn’t alone in his thinking or his passion for that which is forever. Indeed, many of the veterans of the original diamond rush of 1990 have returned to the race for new “ice.” All that original talent has, in turn, lured investors.
“Their return speaks to the potential that’s here,” says Pam Strand, Director of the NWT Government’s Mineral Resources Division, of $1.6 billion in value generated by mining in 2013. She cites the aggressive consolidation at Dominion Diamonds, led by Bob Gannicott, and impressive early results at Patrick Evan’s Kennady Lake prospect, as evidence that diamonds have very good friends.
Greg Klein, a reporter with the web-based exploration bulletin Resourceclips.com, echoes that trust plays big in this high risk game.
“These people have proven successes, the expertise, there’s gotta be something that’s driving them back, and that (storehouse of experience) might be one thing an investor would consider,” says Klein.
A May, 2014 paper by Dundee Capital Markets reinforces the value of experience. It reported on two diamond developers and three advanced explorers, noting that those with market caps of $30 million or more beat out precious metals equities in 2013.
“The companies that we have identified in this report have well-regarded and experienced management teams and the resources required to reach key milestones and deliver positive results providing significant upside potential,” said the report.
“The more mature players are back in the game who understand diamond exploration,” says Turner. “We still have some of the top diamond experts with us that still have a passion, that’s where we are.”
Clusters and Closeology
Miners and oil drillers have long known that a new discovery could likely be next door to an old producer. Geologists and investors call it “closeology” and it couldn’t be truer than in diamond geology.
“The strategy of closeology is stronger for kimberlites than it is for gold deposits or even uranium,” says Klein. It’s amply demonstrated in the NWT’s so-called Corridor of Hope, the ground that hosts the Ekati and Diavik Mines. The two are very close neighbours; on a clear day they can see each other’s mine works.
Dominion Diamond, which owns 90 per cent and 40 per cent respectively of the Ekati and Diavik mines, has its own cluster of nearby kimberlites pipes and is assessing whether to open several more. Gren Thomas’s North Arrow Minerals is working with Dominion on a neighbouring Lac de Gras project, probing an unsourced mineral indicator train, and Archon Minerals, led by Stu Blusson (one of Ekati’s co-discoverers) has interest in three different Lac de Gras projects.
Closeology kicks in again, not far to the south and east, where De Beers’ 100 per cent owned Snap Lake Mine and its Gahcho Kue project (owned 49 per cent Mountain Province Diamonds, expected to begin production in 2016) are only 90 kilometres apart.
This is the new Ground Zero for diamond hunters. Just a few kilometres from Gahcho Kue, Kennady Diamonds Inc.’s Faraday and Kelvin kimberlites have yielded remarkable results. Kennady’s President and CEO Patrick Evans, is also the man behind Mountain Province Diamonds, and expects to bring news of a maiden resource for Kennady Lake to the market early in 2015.
Kennady’s results spurred a mini-rush in 2013 that captured much of the ground within a 30-kilometre radius of Gahcho Kue. Turner’s Canterra Minerals is there, along with Margaret Lake Diamonds and Arctic Star Diamonds (both of which have Buddy Doyle, who led the Diavik discovery team, as Vice President of Exploration). Newcomer Prima Diamonds Corp. has two choice targets, while Canada’s first Aboriginal-owned miner, Denendeh Exploration and Mining Company (DEMCO) of Yellowknife has claims that include seven known kimberlite pipes.
Much of this action is due also to the volume of original claims that have lapsed in recent years, as the recession and rising gold prices bled exploration dollars away from other commodities. Largely untested, that ground is now being restaked.
At its peak in 2007 there were 5.9 million hectares under claim in the NWT, says the GNWT’s Strand. “Now we’re at a third of that (1.6 million hectares) which means there’s all that open ground,” she says, adding that 305 claim applications have been logged in the first half of 2014 – almost double the 163 filed for all of 2013.
The NWT is not alone in the excitement. Stakers have been busy around Stornoway Diamond’s newly launched Renard mine in northern Quebec, and at De Beers’ Victor mine in northern Ontario. Players include Prima Diamonds, and Metalex Ventures, led by Chuck Fipke, the guy who co-discovered the Ekati mine in 1990.
Supply Dwindling for Diamonds
The world’s demand for gems and jewellery will grow four per cent a year for some time to come, led by China and India, says the De Beers Group in its Insight Report released in October. Demand is also recovering in the United States, which commands 40 per cent of global jewellery sales.
Confounding that rosy future, though, is the diminishing supply chain. World production of rough peaked at 176 million carats in 2005, and then dropped considerably before recovering. It was up seven per cent in 2013 to 146 million carats and will rise as more mines come on stream, says De Beers, but it worries that unless major discoveries are made soon, production will again start to slide after 2020.
This supply/demand imbalance is a fundamental key in the resurgence of new exploration.
But finding viable deposits is a frustrating and expensive quest, fraught with failure: more than 8,000 kimberlite and lamproite deposits have been found worldwide, yet only 15 per cent are diamondiferous. Of these only 67 have become mines, and only seven of these yield 63 per cent of total supply.
De Beers says since 2000, an astonishing $7 billion has been invested in exploration, with “meagre” results and only one major find – the Bunder in India – to show.
“Existing supplies will be depleted as mature mines deplete,” says Greg Klein. “Canadian diamonds (15 per cent of supply by value) are internationally respected, ethically mined and they’re also valued for their quality.”
Diamond Hunting Goes High-Tech
Today’s Arctic explorers have a considerably better and bigger tool kit at their disposal, says Canterra&rs
quo;s Turner. The evolution of airborne gravity surveying, pioneered by BHP of Australia, has been a huge gain, he says, along with understanding KIMs – kimberlite indicator minerals such a garnets – the relatively abundant, telltale mineral grains that can lead geologists to a potential diamond source.
“Back in the 1990s, if we found a G10 garnet, we thought we had ourselves a diamond mine. It doesn’t work that way. It’s a lot more complicated than that,” says Turner. “There’s a lot of things we didn’t understand then, that we understand now… and things we still don’t understand.”
Arctic Star Exploration Ltd.’s Buddy Doyle, one of world’s top diamond geologists, said in a 2013 interview in Mining.com that experience and technique have evolved dramatically from the day when his Kennecott team found the Diavik mine in 1994.
“Whereas these past discoveries were largely reliant on using one particular exploration tool or another, we’re now using all the tools in the tool kit.”
That kit, after some 25 years of evolution, also includes a wealth of exploration data that explorers can tap, says Strand, including the world’s largest collection of kimberlite core at the NWT Geoscience Office in Yellowknife.
This year, on a recommendation in the NWT Government’s 2013 Mineral Development Strategy, it created a $400,000 exploration incentive fund and awarded grants to a diverse group of diamond hunters, most of them NWT-based. It’s the first year of the program, says Pam Strand, as the government and industry work to make NWT mining more attractive.
While Canterra’s application was not among the lucky ones, Turner applauds the NWT’s program as a step in the right direction that he hopes will increase. (Yukon just this year upped its incentive pot to $1.4 million).
“I think the NWT government has to offer a lot more incentives to get people to come back in… if you want southern capital to partake in exploration in the North.”
What do the years ahead
have in store?
“We will advance 10 to 15 years from now… there will be other discoveries,” Turner predicts. “The easy ones have been found, let’s make no bones about that. But there are still some hidden monsters out there somewhere.”