ODDS’N’SODS — Assessing diamond discoveries

Simple, straightforward and to the point. And much, much better late than never.

We are describing the new guidelines for public reporting of diamond exploration results, resources and reserves, which were unveiled by the Association of Professional Engineers, Geologists and Geophysicists of the Northwest Territories (NAPEGG).

In early 1994, we had expressed concern about the lack of reporting standards for public companies involved in diamond exploration. At the time, in the midst of an exploration boom in Canada’s North, sparked by discoveries in the Lac de Gras region, the need was obvious. Few of the junior companies involved in the search for diamonds up north had any experience in this specialized endeavor.

The learning curve was even steeper and more precarious for investors, who had heard plenty about G-10 garnets and chrome diopsides, but little about the many stages a diamond prospect must go through before its economic potential can be determined.

Fortunately, our editorial, “Diamond Standard Needed” (T.N.M., Feb. 28/94), did not go unnoticed. NAPEGG picked up the ball and formed an ad hoc committee to deal with the issue. The final committee consisted of representatives of Dia Met Minerals, Monopros, BHP Diamonds, Cominco, Homestake and NAPEGG.

The report that resulted from their efforts, A Guideline for . . . The Reporting of Diamond Exploration Results, Identified Mineral Resources and Ore Reserves, was recently published in an attempt to improve the quality of public reporting of diamond results. The guidelines make it less likely that companies will report preliminary exploration results in a way that implies potential economic mineralization has been discovered.

NAPEGG says the guidelines are warranted because of the unique characteristics of diamond exploration. For example, diamond content is extremely low, usually in the range of 0.05 to 2 carats per tonne; diamond value depends on color, size and quality; and diamond valuation can only be reliably estimated on large parcels (of at least 2,000 carats).

The guidelines call for companies to specify the number and total weight, in carats, of diamonds recovered. However, the weight may be omitted if the sizes are all under 0.5 mm (microdiamonds).

Furthermore, attention must now be drawn to the availability of inadequate data, and macrodiamond grade must be correlated with that of microdiamonds.

In evaluating a parcel of diamonds, a company must state the weight in carats, size range, value in U.S. dollars per carat, and the reason for the ommission (if any) of stones, along with the credentials of the valuer.

The guidelines call for reserve statements to be signed by the mine manager. Reserves are to be quoted in minable dry tonnes and carats per tonne and dated. The gem quality should also be described.

The guidelines were adopted by the NAPEGG Council on May 26 and are now official. All NAPEGG registrants who are involved in diamond exploration are expected to conform closely.

We salute NAPEGG’s efforts, and the valuable contribution made by the companies involved in this important development. The guidelines are simple and easy to follow. Our hope is that they will be adopted by all companies exploring for diamonds in North America.