SNO share price has reached a point where very little value has been priced into the stock for the Mud Lake deposit and the prospect of finding more kimberlite in the surrounding area. Perhaps, too, there is some trepidation, on the part of investors, with respect to the forthcoming results from De Beers and the audit and re-processing of the concentrate at the SRC. 

Reading the posts on this and other message boards, investors could get the impression that SNO's world is coming to an end, whereas other posts offer a much brighter vista. With this in mind, I would like to put some thoughts down upon which I have based my decision to buy more shares in the company. Of course, part of this investment decision was based upon the goal of trying to average down my share cost, but it was the fundamentals of the play and my interpretation of recent events that has made up my mind to part with my money. Below are some of these points and I hope that you will find them helpful in your own decision process:

1 - The Initial Bulk Sample Results Are Only a Start:

The accuracy of the initial results from the SRC is now under investigation. There are a number of potential issues that are now being carefully reviewed by Snowfield in liason with the SRC and De Beers, as mentioned in the last NR. Whether this review will result in more diamonds being found in the concentrate, we can only guess. However, this was only a small sample and cannot be taken as an accurate representation of the Mud Lake kimberlite deposit. Many more bulk samples, amounting to many thousands of tonnes, would need to be carried-out for an accurate and reliable estimation of the diamond content to be developed for Mud Lake and any other kimberlite bodies that may be found at Ticho.

Conclusion: It is far too early to say what the Mud lake kimberlite holds. It could be a motherlode of diamonds, or a more modest amount. But, diamonds are there...no one can doubt this as it has already been proved. At this stage, investors have insufficient data upon which to rest their investment decisions. This information will come, but it will take time. The market reaction to the recently released results should not be taken as an accurate guide to the prospects this play and how meaningful the results were.

2) A Better Understanding of the Mud Lake Deposit is being Developed:

It is highly probable that mother nature through a curve into the SRC lab results. While this was totally unexpected, I am sure that it is not the first time that this has happened to a diamond exploration company. What is important is how the company and the laboratories react to the new information. Thankfully, since the results hit the streets, we have the satisfaction of knowing that a strategy has been put into place. Snowfield's last NR states that this strategy not only involves the audit and caustic dissolution of the concentrate at the SRC, but also involes a lot more drilling of the Mud Lake deposit to gain a better understanding of the differences between each of the sills and the uniformity of the kimberlite within each of them.

Conclusion: The talented management, consultants and field staff are fully engaged and stepping up their focus upon Mud Lake. A lot more is known already and, as this progresses, we will all get a better understanding of the prospects of Mud Lake. Future exploration work, bulk sampling and laboratory analysis will be specifically tailored for the unique characteristics of the Mud Lake kimberlite. This, in turn, will allow investors to make better informed decisions about their investments and also help to reduce the unknown elements that are an integral part of this play.

3) Potentially of Low Cost Mining Plays An Important Part:

There is no doubt that Snowfield will establish how valuable the Mud Lake deposit is. This will involve a lot more exploration, bulk sampling and diamond valuation. In the end, though, it all boils down to how much the average tonne of kimberlite is worth compared to the cost of digging it up and processing it. Here is where Snowfield has a lot of potential compared to other diamond plays in more remote parts. It will only take a modest amount of diamonds at a modest average value per carat to make the Mud lake deposit viable.

Conclusion: Indicator minerals and core samples indicate that there is a good chance that Mud Lake hosts macro diamonds. Indeed, they have already been found. Provided that the stones are of gem quality, it would take very few of them to make the Mud Lake mine a very real and profitable prospect. A positive outcome is not a foregone conclusion and a lot more work will need to be done, but the prospects of a good return for investors is probably better now than it has ever been, as Snowfield hones its approach.  

4) There is More Kimberlite at Ticho:

What if Mud Lake does turn out to not be commercially viable? Firstly, this does fly in the face of what the indicator mineral chemistry has been telling us. However, it is important to note that it has been proven that more kimberlite is present on the Ticho property. Futhermore,  the indicator minerals have told Snowfield that the unknown kimberlites are not far from where they are searching. So, it is only a matter of time before they are found. Do not underestimate the work involved, however, as the kimberlite might only present a very small section of its width to the exploration crews that are hunting it down. Drilling a few feet in either direction could mean hitting the kimberlite or going empty handed. Patience is the key , but it will be found.

The trail of the kimberlite indicator minerals (KIM) is being used to track the kimberlite down. This KIM is of the same uniquely high quality as at Mud Lake, so it is very likely that the additional kimberlites will be diamondiferous. How is this known? Many of the garnets within the KIM exist side-by-side with diamonds within the diamond stability zone in mantle of the earth. If these garnets are present in the KIM, there is a BIG chance that diamonds are present there too.

Conclusion: Whatever the outcome of the exploration work and analysis upon the Mud lake deposit, more kimberlite is known to be on the Ticho land package. Not only this, but the kimberlite is highly likely to be diamondiferous. This presents investors with a lot of potential, added-value and the prospects of good s/p upside from here, as the results of exploration continue to roll-in.

5) Highly Capable Management & Site Personnel With Integrity & Track Record :

New or potential investors will read a whole bunch on posts, on this message board and elsewhere, that questions the ability of Snowfield's management in the light of the recent laboratory results. One thing is for sure, there was nothing hidden or dressed up in the recent two news releases. No attempt was made to make light of the results. Also, management was not tempted to worsen the situation by hurriedly putting out a potentially erroneous and ill-informed update as soon as the share price had taken a nose dive. This is a key insight into the integrity and level-headedness of Snowfield's people and an endorsement of Bob Paterson's leadership.

What happened in the markets as investors dumped their shares is not a reflection of Snowfield, but an indication of how much the stock and been over hyped, over bought and how little many investors knew about diamond exploration and the Ticho Project itself. I learned a lot too and it was sufficient for me to decide to not sell my shares and to hold on for more conclusive results sometime down the road.

Conclusion: We have seen a strong and even more determined continuation of work on the part of management and no stone will be left unturned in the efforts to explore and fully understand what the Ticho Project holds.  The highly talented people at Snowfield is complimented by the likes of Allan Barry and the services of Jennifer Burgess. All have exceptional track records and investors can rest assured their investments are in good hands.