EDITORIAL PAGE — Worth the wait

The BHP-Dia Met results reported last week should finally convince most of the remaining naysayers that the Lac de Gras diamond prospect is more than a moose-pasture scam to lure unwitting investors. We do not mean by this that moose pasture is not being peddled. As with any hot exploration play, many current stock market favorites will eventually fall by the wayside.

But the BHP-Dia Met results certainly do support our contention, stated before in this space, that:

1) there will be a diamond mine, perhaps two, brought into production in the Northwest Territories some time around the turn of the century, if not sooner; 2) Charles Fipke eventually will be honored as the father of Canadian diamond mining;

3) some diamond-stock investors will be extremely well-rewarded; others will lose a lot of money (the vast majority of diamond stocks are, after all, ultra-speculative); and

4) all bets are off if De Beers’ Central Selling Organization loses its grip on the diamond market.

Now, let’s turn to the events of the past week.

The BHP-Dia Met partners reported uncovering 16 new kimberlite pipes, bringing the total number on their ground to 26. One target, called 93-J, a complete unknown to the investing public, returned an impressive 155 macrodiamonds (larger than 0.5 mm) and 259 micros. (Forty macros were greater than one millimeter in diameter.)

A 49.8-tonne sample from Pipe 4 contained 62.11 carats (31% being of gem quality) for a mean value of US$112 per carat. Please take note that the value per carat refers to the entire sample of diamonds from that pipe, not just the gem fraction.

A 179.7-tonne sample from Pipe 3 contained 61.28 carats (33% gem quality) for a mean value of US$81 per carat. The values for Pipe 1 were similar. The valuations are based on the mean of six independent estimates — two by London-based firms and four by Antwerp diamond companies.

On Pipes 3 and 4, the partnership is forging ahead with plans to run bulk samples of between 3,500 and 5,000 tonnes. The samples will be drawn from an underground ramp on one pipe and a large-diameter reverse circulation drill on the other. Also in the works is construction of a 110-person camp. The results also had negative surprises. For example, the original Point Lake discovery and Pipe 2 were deemed to have values too low to support further exploration.

Investors quickly digested this first bit of truly solid information by reaching for their pocketbooks and wading into the market for the shares of Dia Met, SouthernEra, the DHK trio and a few others.

However, this proved not to be a panacea for all the ills of an otherwise flat market. Many of the junior diamond stocks moved not at all, suggesting that this speculative market has indeed matured.

From the outset back in 1991 or thereabouts, this market took off like a rocket. It was one of the wildest speculative plays we’ve seen in Canada and certainly the most heated since the Kidd Creek discovery of the early-1960s. Even Hemlo takes a back seat to the diamond play. But now it seems a more rational approach has intervened. Investors are less willing to part with their money. They want some evidence of economic potential.

This time around, they got what they wanted from the BHP-Dia Met ground. Now comes the wait for news from the other main areas.