Yellow Diamonds

It has been an interesting month for the colour yellow within the diamond industry.

Recently (July 1st, 2015), the Ellendale mine has closed doors.

Here is an article -- Mine closure

Excerpt:

"Ellendale Diamond mine, east of Derby, produces about half the world's supply of rare yellow diamonds."

The reason for the closure was a decrease in the quality of the mined gems on top of a decrease in rough diamonds. This compounds the issue. This is a telling statistic that the mine itself is very close to margin and highly sensitive to price volatility.  The mine is no longer able to cover operating costs anymore...let alone sustaining capital or onsite exploration.

On June 9th, North Arrow Minerals produced valuation results for a project that included very deep yellow colours in diamonds to date.

here is the press release -- June 9 2015

Excerpt:

"North Arrow Minerals Inc. (TSXV-NAR) is reporting the results of a valuation exercise completed on a diamond parcel recovered from the Qilalugaq Diamond Project bulk sample. The parcel of 383.55 carats of diamonds greater than +1DTC (~1 mm) was valued at $13,795 or $36 per carat and a modelled range of possible values was also produced with a “possible low” model price of $43 per carat and a “possible high” model price of $92 per carat.  The diamond valuation exercise was conducted by WWW International Diamond Consultants (“WWW”), an international diamond consultancy that specializes in the valuation and modeling of diamond parcels of this type. The valuation and modeling exercises were based on WWW’s proprietary price book as at May 15, 2015 and are priced in US dollars. "

Using a grade of 0.5 cpt, leads a significant negative profit margin outlook. NAR is now focused on another project and this project will wait a larger bulk sample if it ever happens.

Analysis:

Within 1 month, you have a project that could supply significant yellow diamonds to the world get a big setback and you have a mine that produces half of the fancy yellow diamonds close shop.

Where could Chidliak fit in?

On the CH-6 valuation release -- Feb 26 2014

"The parcel contained a number of yellow diamonds. None of these were fancy yellow, but the depth of colour indicates that fancy yellow diamonds may be found in a production scenario."

So, the CH-6 kimberlite has high quality white diamonds to ensure a very, very healthy profit margin per tonne (hundred's of $$'s)...and there is significant chance that a by-product of production are some of these fancy yellow stones.

The 2 news items over the last month are not necessarily a bad thing for the economic's of CH-6...but more likely are a value-add by ensuring any significant yellow stones out of CH-6 will have a few places to choose from for a final destination.

It is of noteworthy, that DO-27 (Peregrine's NWT pipe) already has confirmed high quality yellows..but does not have the associated profit margin buffer of such.