LETTERS TO THE EDITOR — Lab standards needed for diamond

I write in an attempt to warn shareholders and analysts of the possibility of erroneous conclusions when dealing with micro and macrodiamond counts as released by public companies in Canada and elsewhere.

Although I have, for nearly 20 years, been involved in the use of small diamonds (micros and macros) as a predictor for commercial size and grade of diamonds, I do not claim to be an expert in this field. However, much of the early pioneering effort and technology outside of De Beers Consolidated Mines was initiated by John Lee and myself in collaboration with Falconbridge’s research laboratory in Thornhill, Ont. When this lab closed, the knowhow was passed on to Lakefield Research.

One of the things the Falconbridge team learned, at a fairly early stage, was that fine crushing and/or attrition milling of kimberlite to release microdiamonds and macrodiamonds could, and did, break diamonds, and that these processes could therefore result in anomalously large numbers of smaller stones.

Unfortunately, however, they could also prevent any attempt to use geostatistical techniques on stone numbers and stone weights for the prediction of grade and stone sizes in the commercial diamond range. Analysts should therefore take into cognizance whether techniques used for the recovery of small diamonds are comparable or not. If not, then numbers of small diamonds (I include micro and macro stones) — and also, of course, the ratios of micros-to-macros — become meaningless if some diamonds are broken up in the recovery process.

To my knowledge, at least three or four labs are being used to recover small diamonds. Some of these are using fine crushing and attrition processes that are clearly breaking diamonds. The Lakefield process of caustic dissolution minimizes diamond breakage, depending on the primary crush size. Comparisons of data between Lakefield and other labs may be meaningless. A further point, probably not known by many analysts, is that microdiamond weights given by Lakefield are calculated from size measurement whereas most macros are weighed. The calculated weights are generally within 10% of actual weights.

Another fact not readily recognized is that, even in a single cluster, the average weight of diamonds, in both the micro-macro size range as well as the commercial size range, can vary substantially from pipe to pipe. Based on my experience, this can, in samples ranging from 50 to 150 kg, vary by as much as 9.1 times from one pipe to another. This, together with the fact that diamonds are normally distributed erratically in small samples and the fact that different kimberlite facies often have vastly different grades, means that the unwary shareholder — or even analyst — can easily draw very erroneous conclusions when it comes to buying or recommending diamond shares based on micro-macro data.

Shareholders should be aware that we in the diamond exploration business are trying, by means of scientific research, to find a means of accurately predicting grades from small samples. We have come a long way, but there are still substantial risks involved in those programs from which only small diamond numbers have been announced.

Once a bulk sample (which results in at least 3,000 carats) is extracted, risks are dramatically reduced, but even here, information on the sample — including whether it is representative of a certain phase and what percentage of the total reserve that phase represents — is necessary in order for shareholders to be fully protected. The disclosure of micro-macro weights in octacarats would, of course, go a long way in reducing some of the additional variables caused by microdiamond recovery labs using techniques that the original Falconbridge diamond team abandoned 15 years ago.

One final plea. Some analysts use micro and macrodiamond counts normalized to 10 kg, others to 50 kg. I suggest that, for standardization, we stick to 50 kg. Also, when companies get around to full disclosure, we should give normalized weights in octacarats per 50 kg.

Christopher Jennings, President

SouthernEra Resources, Toronto