Diamond & Specialty Minerals Summary for June 17, 2019

The diamond and specialty minerals stocks box score on Monday was a weak 59-84-157 as the TSX Venture Exchange fell three points to 584. Rough diamond prices dropped 0.14 per cent over the past week, says Paul Zimnisky’s weekly global rough diamond price index. The index is off 7.2 per cent this year and 14.4 per cent over the past five years, but it is 0.76 per cent higher than it was six months ago. Patrick Power’s Arctic Star Exploration Corp. (ADD) dropped another one-half cent to 4.5 cents on 549,000 shares. The company has no news — a part of the problem — but it hopes to test kimberlite targets at Timantti in Finland.

Craig Taylor’s Defense Metals Corp. (DEFN), down two cents to 17 cents on 55,000 shares, has sold 3.76 million shares at 15 cents and 2.66 million flow-through shares at 20 cents, raising $1.09-million. The new cash, says Mr. Taylor, president and chief executive officer, is for work on the company’s Wicheeda rare earth project in British Columbia, and for working capital. The placement closed slightly oversubscribed; the company set out late in May to sell 3.33 million regular shares and 2.5 million flow-through shares. (Defense Metals says that one unnamed director participated in the placement. While his identity is not yet known, a likely candidate is Maximilian Sali, who owned over 1.5 million shares at last report. Mr. Sali the company’s founder, had also been president and CEO until Mr. Taylor replaced him in April.)

Mr. Taylor has been carrying on with Mr. Sali’s promotion of Wicheeda, a project the company acquired late last year from a private British Columbia-based company. (To earn a 100-per-cent interest, Defence must spend $1.93-million on exploration over three years and pay $370,000 in cash and roughly $100,000 in stock.) In early May, the company said that it had received permits to drill at 51 sites on Wicheeda.

Mr. Taylor says that the permits are valid for five years, but he assures investors that the company plans to drill “starting in the summer of 2019,” as it seeks to further delineate the Wicheeda carbonatite intrusion that hosts “important rare earth elements mineralization,” and to provide additional samples for metallurgical work. As well, the company hopes to drill soil and geophysical anomalies that have not yet been tested.

Mr. Taylor and Defense Metals say nothing about any plan to calculate a resource estimate for Wicheeda. That is curious, since the company had an estimate earlier this year — at least until the regulators got out their fine-toothed combs and made the fledgling calculation disappear. (Well, not quite: This is the Internet age, and investors can easily find out that Wicheeda held 11.37 million tonnes inferred at 1.96 per cent light rare earth elements, led by 1.14 per cent cesium, 0.53 per cent lanthanum and 0.23 per cent neodymium.)

At last mention in January, Mr. Sali, then in charge, had assured his backers that Defense was “in the process of amending the report as soon as reasonably possible in order to address all non-compliant and non-current disclosure issues.” The thick waffle suggests that for some time yet, the resource will remain non-compliant and should not be relied upon — the standard regulatory boilerplate for numbers that are retracted but cannot be forgotten.

Another Patrick Power promotion, Equitorial Exploration Corp. (EXX), added one cent to four cents on 272,000 shares. It is offering 13.92 million shares at three cents, seeking $417,500. About $260,000 is for paying bills, the rest for general working capital, which dangles the possibility that some cash will go to exploration. If any of the company’s prospects see work, the leading candidates would be the Little Nahanni lithium pegmatite project in the southwestern corner of the Northwest Territories, the Cat Lake lithium project in Manitoba and the Tule and Gerlach lithium brine properties in the what Mr. Power, president and CEO, promotes as “lithium-rich Utah and Nevada, within easy reach of the Tesla Gigafactory No. 1.”

The one most recently being worked is Cat Lake, northeast of Winnipeg and just east and along strike of the old Irgon mine, where mid-1950s drilling had led to a historical resource of 1.2 million tonnes at 1.51 per cent lithium oxide. Drilling on the Cat Tail pegmatite by Equitorial on its Cat Lake property last year yielded assays of up to 1.67 per cent lithium oxide over 30.53 metres. The company’s former president and CEO, Jack Bal, found that work sufficiently encouraging that he planned a phase 2 program last fall. Shortly thereafter, he was replaced by Mr. Power, and the new drilling was apparently put on hold.

One reason for the inaction is the lack of cash. In fact, Equitorial defaulted on a $25,000 payment needed to keep its option agreement with W. S. Ferreira Ltd. in good standing. Mr. Power says that he and his crew are negotiating with Ferreira to continue the option arrangement. Should the jawing lead to a new deal, and the new deal lead to the phase 2 drilling, Mr. Power says that the company “plans to initiate” a preliminary economic assessment of the project.

Jim McKenzie’s Ucore Rare Metals Inc. (UCU), up 1.5 cents to 25.5 cents on 111,000 shares, is again applauding a Donald Trump executive order pertaining to critical minerals, some of which Ucore just happens to have. The U.S. government presents “six calls to action, 24 goals and 61 recommendations” regarding specific steps that it will take to diminish American dependency on foreign nations for the supply of 35 minerals deemed critical. Ucore’s Dotson-Bokan Ridge deposit hosts seven of them and Mr. McKenzie, the company’s president and CEO, has been tirelessly promoting Mr. Trump’s various calls to action for the past few years — in part because there has been little interest in the company’s project since the rare earth price bubble popped in 2011.

Ucore’s stock got as high as $1.27 in 2011, aided by the market enthusiasm for rare earths. Bokan-Dotson Ridge held — and still does hold — 4.8 million tonnes indicated and 1.05 million tonnes inferred, all at 0.6 per cent total rare earth oxides. The company rolled out a preliminary economic assessment nine years ago, deriving a discounted net present value of $577-million (U.S.) for what was expected to be a $221-million (U.S.) mine. While its rare earth rivals have tried revising — they prefer the word “optimizing” — their studies, Mr. McKenzie has not. Instead, he regularly cheers the Trump administration’s hawkish attitude toward trade with China as a rare earth light and the end of a long dark promotional tunnel.

 

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