|To: cautious36 who wrote (6441)||1/19/2008 6:14:45 PM|
|From: Letmebe Frank||Read Replies (2) | Respond to of 7114|
|Here's what the hard rock analysts had to say in their January report:|
Diamonds North (DDN-V; halted at $0.78)
was halted this morning and has now delivered strong reverse circulation results from one of its kimberlite targets within its lead Amaruk project on the northwest side of Hudson's Bay. A total of 81.75 kg of material from the Tuktu-1 kimberlite pipe has returned 550 diamonds. Typically an early test of this size is considered a success if it returns 1 diamond per kg Results of this tenor are strong enough to bring diamond aficionados to the play. Tuktu-1 is a 1.2 ha target within a complex that is 3 ha in scale; adjacent targets bring the total surface area targeted here to 8 ha. These are the strongest preliminary results to date from Amaruk which now boasts three separate areas of diamond bearing deposits. Using an RC drill rather then a core rig has allowed DDN to move more quickly and at less expense, which is important in a project with over 500 targets to be tested. Concern has been voiced that the RC rig might damage stones, but we doubt anyone will argue with a count this strong. The stream of results from this program will continue. The dearth of new diamond supply is becoming a louder discussion within the sub-sector, and is beginning to leak into the general press as a story of yet another commodity shortage. As with our insistence that treating gold like a commodity was the best way to underscore its scarcity, we now like what we have been hearing about diamonds. Combining that with the scarcity of market stories to focus on (at least on the long side), we think this could become a strong year for diamond deals. With that as a premise and these results in hand, we are shifting our DDN outlook to strong speculative buy for on-going diamond exploration.
Stornoway Diamonds (SWY-T; $0.63)
has made great strides advancing its Renard project in Quebec (50% JV with SOQUEM) but none of that is helping its share price. Work has begun on an official resource estimate that will focus on the larger Renard 2 and 4 pipes along and the higher grade but smaller Renard 3. The Lynx dyke will be added to this picture as well. Mini bulk sample numbers for Lynx released in December had a good grade of 1.07 carats per tonne, and included a 25 carat stone. While the projects continue to advance SWY is burdened with far too many shares outstanding and a lack of leverage. It might be worth accumulating in the current range but we would not pay more. Hold for Renard resource calculation.
Diamondex (DSP-V; $0.29)
is a company about which we have said little in the past few years. Its first appearance in HRA was when we wagered on a higher take-over bid price for Winspear Diamonds from which it was spun out. Since then it has taken a lot of dilution in the expensive task of grass roots diamond exploration. Two recent discoveries by third parties, one diamond based and the other nickel based, make it worth another look right now as drill spec. The diamond news is from Santana Diamonds (STA-V; $1.60) which was formed early in 2007 to deal with a large block of ground in the area of Diamondex’s Lena West project. In September STA announced discovering kimberlite in this area, and in late December that initial drill results included a 0.55 carat stone. This discovery to the west of the main diamond exploration area in Canada’s north provides a “proof-of-concept” waypoint for DSP that has spent $18 million here to date. The nickel news is from the James Bay lowlands area of Ontario where Noront Resources (NOT-V; $3.89), which was looking for diamonds near DeBeer’s Victor discovery, announced a high-grade nickel discovery that has had the market buzzing since August. DSP has recently completed funding to test a series of targets in this area that, all things considered, have the same odds for nickel discovery as those tested by NOT. Diamondex has been proof that even for those with success in the diamond exploration game it can be difficult to move grass roots projects to the next level in Canada’s north. These two events will help revive interest in the company, but it will take some volume to lift the stock after the last five years of dilution. Stay on top of its progress through this winter season. Hold for drill starts.