Diamond & Specialty Minerals Summary for July 31, 2020
by Will Purcell
The diamond and specialty minerals stocks box score on Friday was a rousing 119-64-117as the TSX Venture Exchange rose 15 points to 721 while polished diamond prices leapt 0.4 per cent. Rough diamond prices inched 0.2 per cent higher last week, according to Paul Zimnisky's global rough diamond price index. This puts prices up over 2 per cent since early April, according to adjusted numbers. (This is a tweak in the data: The index is "subject to revision," says Mr. Zimnisky, based on new data.) Whatever the data, there is no doubt that prices fell over 12 per cent in late winter and early spring, because of the COVID-19 lockdown, but they are inching painfully higher as markets slowly reopen.
Dean Taylor's Diamcor Mining Inc. (DMI), down one-half cent to 8.5 cents on 6,000 shares, is enduring a government-ordered shutdown at its Krone-Endora at Venetia diamond project in South Africa. The operation -- essentially a mine -- has been in near-continuous bulk sampling since 2013, but the South Africans ordered it and other mines locked down in late March.
As a result, there have been no more diamonds coming out of the gravels since then, leaving Mr. Taylor, president and chief executive officer, to "reduce, defer and minimize costs" including management and director pay. As well, Diamcor is working with its bankers and the bureaucrats to secure relief cash, including funds to allow the company to restart a day shift operation at Krone-Endora whenever the government gives the go-ahead.
Mr. Taylor did have some good news, as Diamcor managed to sell the remaining diamonds wending their way through the recovery circuit. The company sold 2,427 more carats recently -- how and where it did not say -- receiving $271,263 (U.S.) for the gems, or about $112 (U.S.) per carat.
Mr. Taylor said that he and his crew were "very pleased" with the sale, given that the higher dollar-per-carat value was primarily associated with a higher percentage of larger, higher quality rough diamonds that had been encountered just before the lockdown. He deemed the timing of the lockdown "unfortunate," given the improved diamond sizes and quality, presumably as a result of the company's recent improvements and upgrades, and undoubtedly whetting his appetite for a quick restart to mining once the government reopens South Africa's mining industry.
The trial mining at Krone-Endora at Venetia has so far produced nearly 160,000 carats that sold for well over $26-million (U.S.) over the past several years despite a series of problems with water supply, with the old fleet of balky and outdated equipment, not to mention the usual teething problems associated with trial mining. The company had been hoping to boost its processing rate and the efficiency of recovering larger diamonds through its upgrades and the COVID-19 crisis hit just as Mr. Taylor was about to say: "I told you so."
The crowing will have to wait a while longer, but investors remain optimistic -- about as optimistic as one can be for a mothballed diamond deposit without a dream sheet or a recent resource estimate -- although the steady trickle of revenue has provided more cheer than most of Mr. Taylor's peers have been able to tout.
Dr. Francis Dube's Zen Graphene Solutions Ltd. (ZEN), up three cents to 62 cents on 144,000 shares, is ramping up its promotion of a "antiviral, graphene-based ink formulation," a product for which it has "commenced collaborations with research teams at a number of personal protective equipment manufacturers." Essentially, Zen, a busy promoter of things graphene and a laggard developer of a graphite mine, wants to make masks to combat the spread of COVID-19. Dr. Dube, president and CEO, says that based on results so far and continuing discussions, Zen is "quickly moving" to integrate its material into commercial products.
Meanwhile, there has been little progress at the "unique Albany graphite project" in Northern Ontario since the company produced a dream sheet in 2016. Albany hosts 25.1 million tonnes indicated at 3.89 per cent graphite and 20.1 million tonnes inferred at just 2.2 per cent. Zen's stock had been as high as $5 in 2013, but the 2015 resource estimate halved its share price and a preliminary economic assessment in 2016 halved it again, once it became apparent that Albany was deemed capable of generating millions, not billions, of value for shareholders.
Jon Evans's Lithium Americas Corp. (LAC), down eight cents to $8.25 on 172,000 shares, has a draft environmental impact statement for its Thacker Pass lithium project in Nevada. The company, which touts the project as the "largest and highest grade known sedimentary lithium resource in the United States" -- note the several qualifiers -- is now working on a feasibility study that should be ready late this year, according to Mr. Evans, president and CEO.
Thacker Pass hosts a reserve of nearly 180 million tonnes averaging 3,283 ppm lithium, enough to support a mine plan laid out in a two-year-old feasibility study that called for an operation to start at 2,640 tonnes per day and double to 5,280 tonnes per day four years later. The study put the cost of the starter mine at $581-million (U.S.), with the expansion to consume a further $478-million (U.S.).
The bottom line was pleasant, with a discounted net present value of $2.6-billion (U.S.), but to get there, the study needed a lithium carbonate price of $12,000 (U.S.) per tonne, well above current prices. Therefore, Lithium Americas will be taking its time, tweaking every ounce of optimism available from its optimizing work at Thacker Pass ahead of its coming feasibility study.
Tucker Barrie's Noram Ventures Inc. (NRM), up one cent to eight cents on 996,000 shares, is planning a two-stage drill program this fall at its Zeus lithium project in the Clayton Valley of Nevada. This is arguably a three-stage plan, with the first stage having the company "preparing to permit" with the Nevada bureaucrats for the proposed program.
If the bureaucrats grant permission, Noram will drill eight to 12 holes early this fall and as many again later in the fall, or about 2,500 metres of drilling in all. The company will be looking to add to the existing resource of 124 million tonnes indicated, averaging 1,136 ppm lithium, and 77 million tonnes inferred at 1,045 ppm lithium. The full resource holds 1.18 billion tonnes of lithium carbonate.
There are glimmers of optimism for lithium promoters of late, as recent prices for lithium carbonate have edged upward to $7,500 (U.S.) per tonne, a modest boost from the $6,000 (U.S.) range earlier this year. The analyst consensus is that prices are unlikely to fall -- but they might -- a perplexing forecast akin to "sunny with cloudy periods and the chance of a shower."
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