Experts compare Dia Met with South African mines

Without waiting for a detailed examination of diamonds found by Dia Met Minerals (VSE) and BHP-Utah Mines on their Lac de Gras property, analysts are already comparing the grades with gem stones mined in South Africa and Australia.

Although BHP says such comparisons are premature given the small size of the bulk sample, analysts are measuring the results against established diamond producers to determine the economic potential of the Dia Met find. According to Christopher Jennings, a geologist who played a key role in staking 540,000 acres in the Lac de Gras area 130 km northeast of Yellowknife, N.W.T., diamonds being sampled at BHP’s Colorado plant is comparable in grade to those from some of South Africa’s richest mines. After BHP’s announcement that diamonds weighing a total of 90 carats have been recovered from a 160-ton bulk sample, Jennings calculates the grade to be 0.56 carats per ton. He estimates the value to be in the range of US$70-80 per carat.

He says that puts Dia Met in the same ball park as South African producers which are mining at an average of 0.3 carats per ton and at an average value of US$80-100 per carat. The evidence so far, says Jennings, shows the Dia Met property could prove to be a producer primarily of gem-quality diamonds rather than industrial diamonds, the type mined at Australia’s Argyle mine. With an average grade of six carats per ton, Argyle is the world’s richest mine, but only about 5% of the diamonds produced there are of gem quality. By contrast, about 25% of the Dia Met diamonds are gem quality. While other experts interviewed by The Northern Miner say it is much too early to make such bullish predictions about the economics of the discovery, some of Toronto’s leading mining analysts are equally optimistic. “Although the companies are being very guarded in their statements, the results look exceptionally good and clearly confirm the promise of the 465-ft. discovery hole,” said John Hainey, an analyst with Loewen, Ondaatje, McCutcheon.

In a recent report, he describes the bulk sample as a normal step in the evaluation of a diamond-bearing kimberlite, and says he believes it was designed to be as representative as possible at this size of sample. “We would be surprised if the discovery is found to be non-commercial.” However, Michael Waldman, a Denver geologist now a consultant to Lac de Gras diamond explorer Aber Resources (TSE), is much more cautious. For a true representation of the kimberlite found last year on the Dia Met property the joint venture will have to obtain a 20,000-ton bulk sample containing about 3,000 carats, he says.

Such a sampling program is likely to be time-consuming and could involve the transfer of BHP’s Colorado processing plant to the Lac de Gras project where the Dia Met kimberlite is situated 150 ft. below the waters of Point Lake. Dia Met and other players in the Lac de Gras area must also contend with the fact that kimberlites generally occur in clusters of 30-40. Typically, as few as two — if any — can prove to be economic.

Analysts also warn that of the 1,000 kimberlite pipes discovered around the world so far, about 500 contain diamonds but only about 50 contain diamonds in economic quantities that justify recovery.