Diamonds Summary for Oct. 22, 2009


2009-10-22 21:17 ET - Market Summary

by Will Purcell

Thursday's diamond stocks box score was a poor 25-39-26-24 (A-D-U-N), in step with the TSX Venture Exchange which fell 11 points to 1,332. Polished diamond prices also fell today but investors appear bullish about increased sales ahead. Tiffany and Co. gained $1.01 (U.S.) to $41.69 (U.S.) on 1.91 million shares, continuing a rally that began in early July at $24 (U.S.). Tiffany's shares traded as low as $16.70 (U.S.) in early March, when both polished and rough diamond prices bottomed. Tiffany is not alone: Harry Winston Diamond Corp. ($10.66) is currently trading for five times its mid-March low of $2.19.

Eric Friedland's Peregrine Diamonds Ltd. lost 32 cents to $2.78 on 1.81 million shares. The company has recovered diamonds from drill core samples of the CH-1 pipe at Chidliak, on Baffin Island. The 179-kilogram batch of rock yielded 322 diamonds, but just one sat on a 0.85-millimetre sieve, sparking today's decline. A closer look at the numbers shows no statistical difference between the results obtained from the surface of the pipe last year, suggesting Peregrine was unlucky not to find a few more macrodiamonds in the test. The real story will come later this year, when Peregrine wraps up a 50-tonne test of the pipe. The numbers still point to a grade of one carat per tonne or better, but look out below if the test falls short.

Shahe Sabag's Dumont Nickel Inc. closed unchanged at two on 1.54 million shares. This week, Dumont provided clarification about its work to recover metals from a black shale project in Alberta. The company believes it can leach a wide variety of metals from the shale, apparently by using micro-organisms present within the rock. Unfortunately, Mr. Sabag's clarification seemed no help. A clarification of the clarification might help stir some enthusiasm for the project but in the meantime, Dumont is again touting its diamond properties in Northern Ontario. The company shares the Attawapiskat project with Metalex Ventures Ltd. ($1.00) and Arctic Star Diamond Corp. ($0.04). Fortunately, Dumont's 10-per-cent interest is carried, as Mr. Sabag intends to spend what little cash Dumont has on the black shale property.

Graeme Rowland's Adroit Resources Inc. lost one cent to seven cents on 4,000 shares. The company has a lacklustre history in diamond exploration, mainly as the tag-along partner of the equally unimpressive Tres-Or Resources Ltd., ($0.085) in Northeastern Ontario. Now, Adroit is drilling for oil in Texas. Unfortunately, Mr. Rowland's attempts to replenish Adroit's treasury have gone from bad to worse. He had two European backers renege on million-dollar investment commitments a year ago and no amount of lawyerly persuasion could get them back. Then, in the depths of the liquidity crisis a year ago, he tried for a $24-million loan. That proved a no-go, despite the promise of interest rates worthy of a payday loan company. Mr. Rowland did pry $500,000 out of investors this year but he had the bad fortune of putting a good chunk of it into the Stanford International Bank Ltd., just before it went under and authorities arrested the chairman. Adroit thought its ship had come in this summer, when it won a $1.4-million award from the British Columbia government. Naturally, the government lawyers appealed, so there is no money yet for poor Adroit, which had a $1.7-million working capital deficiency on May 31.

Harp Sangha's Douglas Lake Minerals Inc. lost two U.S. cents to 33 U.S. cents on 23,000 shares. Douglas Lake had a working capital deficiency of $1.2-million (U.S.) as of July 31 and Mr. Sangha, a former stockbroker with Global Securities Inc., has not raised any new cash since then. Fortunately, he has been able to find partners with money, or at least with a knack for promotion, to work Douglas Lake's Tanzanian projects. In his latest deal, the company is optioning an 80-per-cent interest in the Mkuvia alluvial gold project to a group of three Chinese companies, in exchange for a $20-million (U.S.) exploration program. This summer, Mr. Sangha granted Morgan Magella's Midex Gold Corp. ($0.06 (U.S.)) an option to earn a 100-per-cent interest in the Magembe diamond project. Midex agreed to pay Douglas Lake five million shares and spend $2-million (U.S.) exploring Magembe over two years. Midex had just $18,000 (U.S.) in the bank on June 30 so it has not spent much, but Mr. Magella's opening promotional salvoes did manage a brief sextupling of Midex's shares this summer.

Leni Keough's Olivut Resources Ltd. lost one-half cent to 20 cents on 11,000 shares when it last traded on Monday. The company is getting set to explore its new diamond project in Uruguay, but it could be tough slogging for the company's field crew. It is now spring in northern Uruguay and just coming into the rainy season -- although there is no truly dry period. Olivut, which must spend $250,000 on preliminary work by June 1, 2010, will have to endure nearly one metre of rain between now and then. Ms. Keough's Uruguay play has not garnered much notice but it lies just south of Brazil, one of the most prolific diamond producers in history.

Laura Lee Duffett's Tres-Or Resources Ltd. closed unchanged at 8.5 cents on 65,000 shares. Tres-Or has been focusing on Ghanaian gold this year, leaving its Timiskaming diamond projects nearly idle. Ms. Duffett still likes her gem plays and Brian Trottier's continuing role as a Tres-Or consultant is a sign the company intends to drill more targets once it finds the money. Mr. Trottier's NHL hockey career ended 15 years ago but he still has a promotable name in Canada. His Metis ancestry has been a greater asset for Tres-Or. With Mr. Trottier's help, Ms. Duffett has schmoozed her way into a cozy working relationship with the local Indians, who control much of the ground where Tres-Or wants to drill. Ms. Duffett has several kimberlite finds on her properties, but the best have been barely diamondiferous so far.