Wow, what a journey and what an ending. The final valuations for the recovered stones has now been completed and it has helped confirm a kimberlite pipe (CH-7) as being significantly into the profit side of margin. The resulting base case valuation for those recovered stones is now set at US$114/carat or CAD$152/carat.
There were so many obstacles along the way. It was not an easy task to get this valuation data from Mother Nature. In fact, it was a lot tougher than anyone expected.
Now that the journey has ended, where did the journey start?
2.5 to 3 billion years ago -- Diamonds were forming about 200 km's into the earth and during the same time period the country rock of the Hall Peninsula Block was formed.
150 million years ago -- Emplacement of the kimberlites into the Hall peninsula occurred. (ancient volcanoes)
Glaciers -- Slowly shaved off the top 1/3rd of the kimberlites and spread them over the land (leaving clues along the way) and subsequently 5 to 10 metres of overburden formed over top of the pipes.
2005/2006 - Till sampling confirms kimberlite indicator minerals at Chidliak
2007 - Mineral permits acquired at Chidliak
August 2009 - CH-7 kimberlite pipe discovered (small outcrop)
2011 - LDD - RC Contractor selected with equipment list needed -- page 3 to 9 PDF
2012 - 2013 - LDD to site put on hold for various reasons (big obstacle - money)
2014 - Equipment finally mobilized to Iqaluit.
2015 - January - equipment brought in via sled to site. Air strip of ice created. All good
...then the snow stopped...another obstacle to overcome.
The LDD was focused strictly on CH-7 and holes expected for CH-44 and CH-6 were taken off the table.
Target - 1000 tonnes of material - result -- 814 tonnes of material.
Season ended earlier then expected because of warmer weather. The lack of snow prevented the rig from moving overland to the other kimberlites.
Material was sifted to get rid of material below 1.18 mm and this is what created 558 tonnes of material for transport. The material that fell through the sieve went into a sump that still exists on site.
The concept of sledding the 558 tonnes to Iqlauit went out the window (lack of snow). Material was sent via plane/helicopter and whatever method they could find.
All 558 tonnes made it to Iqlauit and the wait was on for the sealift to start up.
2015 - July - The bay where the sealift occurs was filled with ice that refused to break up and melt away. The sealift was probably a month delayed.
Eventually the sealift arrived and the material was sent via 2 or 3 sealifts to Montreal where it was loaded up on trucks to send to Saskatoon.
Arrival to Saskatoon and another wait. Kennady Diamonds was at the front of the line and the wait was on for use of the DMS unit.
That day finally arrived - the material started into the DMS (dense media seperation).
A heavy concentrate was formed from the DMS unit. This is where a lot of the indicator minerals plus the diamonds were collected. A heavy concentrate is great news from a pipe potential point of view (good problem to have)..but it also slows the next process down (XRAY sorting/grease). A lot of concentrate to process and recover.
They started seeing the diamonds from the recovery process and there was significant breakage noticeable. The tracer diamonds had no damage and the Domain 1 diamonds (surface mini bulk) from a few years ago had no damage...so it has been assumed the breakage had occurred from the RC drilling itself. RC drilling is a cost-effective form of drilling...but does have breakage. This obstacle was yet another test for CH-7. Up to 80% of the stones had some damage. Worse yet...some stones were smashed into pieces and those pieces fell through the 1.18mm sieve on site (That sump is loaded with tiny stones..whole and many broken fragments).
2016 - Parcel of over 700 carats finally has a chance to make it to Antwerp for evaluation. Together with a very important breakage study, all the micro curve datasets, and the original 50 carats from the domain 1 mini-bulk from a few years ago.
Valuation results are finally out and are very important input parameters into determining whether it is feasible to build a mine at Chidliak or not.
Future -- The parcel from this 558 tonnes is valued at US$75K and will probably sit in an insured safety deposit box indefinitely. The value of this parcel is not measured in $$'s...but rather measured into a very valuable dataset that will stick with the project as it progresses into the unknown. That dataset is worth a lot more than US$75K and getting that dataset cost a lot more than that and was a lot more challenging then originally thought.
Key Obstacles:
Money - 2012 to 2013 were tough years for the Chidliak to advance. Lean budgets and the like were a must.
Weather - April 2015 - Lack of snow at Chidliak prevented moving (as per permit) of LDD rig. Mild winter also closed up drilling early.
Weather -- June/July 2015 - Ice was a problem for sea lifts to enter into Iqaluit. Deepwater port in 2020 will alleviate all of this problem and make it faster and cheaper to use.
Wait -- Saskatchewan Research centre had another busy customer and this kimberlite had to wait a bit before processing.
Breakage - Significant breakage with the LDD rig on existing diamonds and some diamonds didn't make it through to the parcel/valuation phase.
Success:
All of these obstacles above were overcome (very challenging) to create a base case valuation of US$114/carat that can now be used for the PEA and be part of datasets in the future for subsequent studies.
Final thoughts:
Mother Nature was not easily convinced to give up this knowledge...however, in the end Mother Nature gave very important lessons (a teacher) for Chidliak's future work and this will no doubt benefit Chidliak over the long run.
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January 2016 update: (Jan 12 2016 News)
The bulk sample results are now out.
That 558 filtered tonnes represents 814 dry tonnes of bulk sample material and 717.65 carats of diamonds with 75 to 90% of them being damaged by the original large diameter RC drill rig. The double whammy is that a lot of the associated broken stones would have fell through the filter onsite and if they had made it to the SRC, it still would have been filtered out at 1.18 mm. Is this a bitter end to the journey? A bit unexpected, but not bitter. Diamond breakage during RC drilling is well known and they have a whole industry on breakage studies to try and figure out what the original diamonds looked like and how big they were and what kind of carat loss occurred. In this case, the amount of breakage is twice (maybe more) the norm. The resulting 717.65 carats is not even considered conservative as they know at least 10%, maybe up to 40% of material has been lost. The 717.65 is basically an under reporting of what mother nature is in reality. All is not lost as valuation models can be completed utilizing breakage report information.
What's next? The 717.65 carats (should have been higher) and the original ~50 carats from the smaller 50 tonne bulk sample back in 2010 will now be combined and sent to Antwerp, Belgium for the analysis and valuation model to be completed. That information will be used in the upcoming PEA (preliminary economic assessment) report.
Mother nature has been tough throughout the journey and the problems mentioned above is just a continuation of this.
December update:
The KIM-2 Bulk sample has been in Diamond recovery for all of December (xray/grease table) and should be almost finished (DMS of Domain 2 was completed in November). The other domains should all done with photographs and descriptions of the bigger diamonds. The wait is on until all information is available and will be released all at once.
There should be a parcel of many diamonds sitting in a secured location at the SRC. The size of this parcel will be equivalent to the size of a fist (give or take).
A long and much anticipated journey on the way and grades and photos will be coming out over the next 2 weeks. From there, the parcel of diamonds will makes its way to the valuators for valuation and modeling. At that point an inferred tonnage can be made and the bulk sample program of 2015 will be officially completed.
November update:
There have been a couple more updates for the journey of this bulk sample tonnage.
Nov 17th news release
"The 2015, 558.5 wet tonne bulk sample from CH-7 consists of units KIM-2, KIM-3, KIM-4 and KIM-5. Dense Media Separation ("DMS") processing to a concentrate at the SRC is now complete for KIM-3, KIM-4 and KIM-5 and final diamond recovery and sorting is in progress for concentrates from these three units. DMS processing of the KIM-2 bulk sample material has commenced. The increased total diamond content recently identified by the caustic fusion results reported above should be supported by the upcoming bulk sample results for CH-7 which are expected in January, 2016 as previously reported."
The three smaller LDD samples are in diamond recovery (xray sorter/grease table) or already in the sorting area. The fourth much larger LDD sample (domain 2) is going through the DMS unit currently. That is a lot of material to get through.
Talk of releasing results in January 2016...but wait a minute.
Subsequent to that release, there was another news release 2 days later about a rights offering.
"Partial results for individual geological units may be released as they are received. The complete bulk sample result for CH-7 is expected in early January, 2016 with diamond valuation results expected in the first quarter of 2016 as previously reported."
There is very good indication now that Domain 5 results (first up) will be released in mid to late December. Possibly even Domain 4.
New caustic results have also confirmed that Domain 5 results are greater than CH-6 micro grades and hence there is good support to see a macro grade above 2.58 cpt in the bulk sample results. Domain 2 has come in surprising higher than the previous indications. It may reach 1 cpt or greater in the bulk sample. Expectations were originally set for a low of 0.5 cpt, but the caustics are now more positive.
More time to wait....could be weeks away from some nice new Diamond Photos!
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Oct 31st - Let's take a step back and see where the 558 tonnes came from before it even reached Chidliak.
Diamonds come from deep into the earth and shoot up with magma forming a kimberlite type volcano. Some of these diamonds will be resorbed before reaching the surface and some will be disaggregated all around the material. In certain cases, nodules of rock make it to the surface through kimberlite and on occasion these do contain diamonds that were formed deep in the earth and these diamonds went along for the ride up to surface. The photo above shows one of these mantle nodules that is confirmed at CH-7. These nodules are denser than the normal kimberlite rock and do reach densities equal to that of diamonds themselves. CH-7 is known to have these nodules and also known to have deeper densities as the depth of the deposit goes down. There are some density samples from the technical reports that actual equate to the density of diamonds. The question then becomes whether these nodules do in fact contain diamonds or not. Current nodules out there have known to contain an abundance of diamonds. What is the quality of these diamonds is a question that needs to be asked. The quality of diamonds spread out through a kimberlite deposit can vary dramatically depending on what happened during the ascent. The diamonds within a nodule are actually well protected since they were formed deep in the earth.
Here is a quote from a website talking about nodules:
Site -- Transport of diamonds article
"Where nodules have broken apart or “disaggregated” and released their diamonds directly into the kimberlite magma, these diamonds often show evidence of resorption in the form of trigonal pitting on their surface, or of physical abrasion in the form of surface scouring. Conversely diamonds retained in nodules during the entire transport process are often pristine crystal forms"
There is a reasonable chance that part of this 558 tonnes of material came from portions of these nodules. This nodule material is now at the SRC and going through or has gone through the DMS unit. If there are diamonds within these nodules, chances are greater that the diamonds will be of gem quality as they were protected deep down into the earth through to the southern part of Baffin Island and now found themselves stuck in a lab in the middle of Saskatchewan patiently waiting to be unlocked from these nodules. This is no quick process and accurately getting all the diamonds out is preferable to leaving some locked into mother nature and dumped in some rejects pile.
There is a good chance that some of this nodule material that isn't made up of diamonds is making its way through to the diamond recovery stage. At some point, there might be need for caustic fusion to finally unlock mother nature's hidden gems. This would be a costly option...but this journey hasn't been the smoothest or cheapest from the get go. The SRC might be no different.
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September 14th today and the first of the bulk sample from CH-7 is now being sent through the DMS (Dense Media Separation) to form a super concentrate. Up to 10 weeks until all material is concentrated and then it will move onto the next stage.
Update Sept 9th
After a long and delayed journey from Iqaluit, the 558 tonne sample is now securely stored at the SRC in Saskatchewan.
The DMS plant at the SRC is going through cleaning and final preparation to process the first sample. The first sample will be the Domain 5 batch and that will start on September 14th.
The whole 558 tonne sample started as 700 to 800 tonnes and was sieved onsite at the 1.18 mm to get it down to an already concentrated state. These are wet tonnes, so that adds another dimension to the whole process. Once the material gets through the DMS, the sample size will be significantly concentrated and at that point, it will be ready for final diamond recovery and potentially caustic fusion. Tracer diamonds will be inserted at some point early in this process to validate the expected recovery at the end. If a significant portion of these tracer diamonds do not come out the other end...then a problem exists somewhere.
Hard to imagine that this will be whittled down to ~200 grams of final diamond material to be valued...this is the end goal...but not the end journey. That ~200 grams of material will head to either Antwerp, Belgium or somewhere in Canada for a valuation of the diamonds. They don't only do a valuation of the diamonds, they also do a valuation model, a predictor of what one can expect in a mining scenario.
This is not just the journey of 558 tonnes...this is a journey of all stakeholders involved.
These include shareholders, employees, Iqaluit residents, territory of Nunavut and of course Canada.
A bit of a very slow moving roller coaster ride.
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Update August 20th
Anna Desgagnes has come and gone.
Qamutik is now unloading in Montreal and will load back up and leave Montreal on August 23rd.
Umiavut is still expected to arrive in Montreal on August 23rd.
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Hard to imagine the end result of this journey is to have a small container with 200 grams of diamonds. The cost to get that material in preparation for valuation is anywhere between $10K and $100K per gram depending on where you are in Canada. Having the valuation expert tell you each gram is worth $1K is an ecstatic result.
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Update - August 19th
The Anna Desgagnes has now delivered it's full cargo in Montreal and has started it's journey back to the North.
The next boat (Qamutik) is arriving in Montreal today to delivery it's cargo.
The third boat (Umiavut) is due in Montreal on August 23rd.
It was clarified that Peregrine has indicated the shipment goes to the SRC on the Road.
So, the shipment should be loaded directly onto a truck for it's final delivery to the SRC in Saskatchewan.
Once there, it will be processed through the DMS (Dense Media Seperation) into a very concentrated few tonnes of material. From there, it will be sent into a secondary process unit to actually extract the macro diamonds. The stones will be individually classified by the SRC for weight and size and grade before being sent for valuation. Peregrine is part of the Diamond Bourse of Canada and this offers alternatives to valuations versus sending to Belgium (the normal route).
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Update - Aug 14th
The Anna Desgagnes arrived in Montreal yesterday (August 13th) and should be in the process of unloading it's cargo. Not sure if the Chidliak bulk sample made it on this vessel or one of the subsequent vessels.
Here is an image of the Anna Desgagnes location. The dots represent the location of the vessel over the last 6 hours.
If the bulk sample is being unloaded, it won't be long before it gets loaded onto a train car as the train tracks are in the vicinity.
The latest earnings indicate:
The Company expects processing of the CH-7 bulk sample to a concentrate to be completed on or before November 15, 2015. The high grade Domain 5 should be first up in the processing.
Update - Anna Desgagnes is to be in Montreal from August 13th and depart on August 18th with a full load. It is August 16th now, so chances are, the vessel has fully unloaded.
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The LDD bulk sample on the drilling side and collection side is complete.
The journey to the pea is far from complete.
The 558 tonnes of material is sitting somewhere in Iqaluit waiting for a sealift to Montreal.
The first sail's will begin shortly, but they are by no means a straight process and involve a significant milk run as it stops at many communities along the way.
There are 2 companies that offer the sea lift and highlighted below is the timeframe for the 4 available sea lifts coming up:
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NSSI:
Vessel Anna Desgagnes
Leave montreal area June 23rd
milk run
arrive iqaluit july 16th, leave Iqaluit July 21st.
arrive Montreal - July 31st.
July 20th - Update - Sailed from Kimmirut - arrival into Iqaluit - July 23rd, departure July 27th.
Arrival in Montreal - August 5th -- Current PDF link
July 23rd Update - arrival into Iqaluit July 24th, depature July 27th. Arrival in Montreal - August 5th.
July 24th Update - arrival into Iqaluit - July 25th, depature - July 28th..second dip into Iqaluit on August 2nd and departure on August 3rd. Arrival into Montreal - August 8th.
July 27th Update - Arrival in Montreal - August 14th
August 6th Update - Arrival in Montreal - August 14th
August 7th Update - Arrival in Montreal - August 14th, Stopover in Pangnirtung after Iqaluit has been cancelled.
August 10th Update - Arrival in Montreal - August 13th.
Website tracking vessel -- desgagnes vessel tracker
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NEAS
Vessel: Qamutik
Leave Montreal Area - June 22nd
milk run
arrive iqaluit july 20th, leave iqaluit july 25th.
arrive montreal area - August 1st.
July 20th - Update - arrived in Salluit- arrival into Iqaluit - July 27th, departure July 29th.
Arrive in Montreal - August 6th -- Current PDF Link
July 23rd - Update - arrival for Iqaluit - July 27th, departure - July 30th. Arrive in Montreal - August 8th.
July 26th - Update - arrival in Iqaluit - July 27th, depature - July 31st. Arrive in Montreal - August 8th.
July 28th - Update - arrival in Iqaluit - July 28th, departure - August 1st. Arrival in Montreal - August 10th
July 29th - Update - ARRIVED in Iqaluit - July 28th, departure - August 1st, Arrival in Montreal - August 10th.
August 3rd - Update - departure - August 8th - Arrival in Montreal - August 14th
August 9th - Update - Arrival in Montreal - August 16th.
August 10th - Update - Arrival in Montreal - August 17th, Stopover in Pangnirtung after Iqaluit has been deferred to another vessel.
August 12th - Update - Arrival in Montreal - August 18th
Sailed from Iqaluit August 12th. Arrival in Montreal - August 19th
August 20th update - Arrived in Montreal August 19th. Unloading, Departure date - August 23rd.
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Vessel: Umiavut
Leave Montreal area - June 21st
milk run
arrive iqaluit july 21, leave iqaluit july 26th
arrive Montreal area - july 31st.
July 20th - Update - arrived in Akulivik - arrival into Iqaluit - August 3rd, departure August 5th.
Arrive in Montreal - August 10th -- Current PDF Link
July 23rd - Update - Arrival in Iqaluit - August 4th, departure August 6th. Arrive in Montreal August 11th.
July 26th - Update - Arrival into Iqaluit - August 5th, depature August 8th. Arrive in Montreal - August 14th.
July 28th Update - Same as July 26th.
August 3rd Update - Arrive Aug 8th, depart August 11th, Arrive in Montreal - August 17th
August 9th Update - Arrived August 9th, depart August 12th - Arrive in Montreal - August 17th
August 10th Update - Arrive in Montreal - August 19th.
August 12th Update - Arrival in Montreal - August 20th
Departure from Iqaluit - August 17th - Arrival in Montreal - August 23rd.
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Vessel: Avataq
Leave Montreal area - June 26th
milk run
arrive iqaluit july 20th, leave iqaluit july 23rd
arrive montreal area - July 29th
Vessel Anna Desgagnes
Leave montreal area June 23rd
milk run
arrive iqaluit july 16th, leave Iqaluit July 21st.
arrive Montreal - July 31st.
July 20th - Update - Sailed from Kimmirut - arrival into Iqaluit - July 23rd, departure July 27th.
Arrival in Montreal - August 5th -- Current PDF link
July 23rd Update - arrival into Iqaluit July 24th, depature July 27th. Arrival in Montreal - August 5th.
July 24th Update - arrival into Iqaluit - July 25th, depature - July 28th..second dip into Iqaluit on August 2nd and departure on August 3rd. Arrival into Montreal - August 8th.
July 27th Update - Arrival in Montreal - August 14th
August 6th Update - Arrival in Montreal - August 14th
August 7th Update - Arrival in Montreal - August 14th, Stopover in Pangnirtung after Iqaluit has been cancelled.
August 10th Update - Arrival in Montreal - August 13th.
Website tracking vessel -- desgagnes vessel tracker
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NEAS
Vessel: Qamutik
Leave Montreal Area - June 22nd
milk run
arrive iqaluit july 20th, leave iqaluit july 25th.
arrive montreal area - August 1st.
July 20th - Update - arrived in Salluit- arrival into Iqaluit - July 27th, departure July 29th.
Arrive in Montreal - August 6th -- Current PDF Link
July 23rd - Update - arrival for Iqaluit - July 27th, departure - July 30th. Arrive in Montreal - August 8th.
July 26th - Update - arrival in Iqaluit - July 27th, depature - July 31st. Arrive in Montreal - August 8th.
July 28th - Update - arrival in Iqaluit - July 28th, departure - August 1st. Arrival in Montreal - August 10th
July 29th - Update - ARRIVED in Iqaluit - July 28th, departure - August 1st, Arrival in Montreal - August 10th.
August 3rd - Update - departure - August 8th - Arrival in Montreal - August 14th
August 9th - Update - Arrival in Montreal - August 16th.
August 10th - Update - Arrival in Montreal - August 17th, Stopover in Pangnirtung after Iqaluit has been deferred to another vessel.
August 12th - Update - Arrival in Montreal - August 18th
Sailed from Iqaluit August 12th. Arrival in Montreal - August 19th
August 20th update - Arrived in Montreal August 19th. Unloading, Departure date - August 23rd.
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Vessel: Umiavut
Leave Montreal area - June 21st
milk run
arrive iqaluit july 21, leave iqaluit july 26th
arrive Montreal area - july 31st.
July 20th - Update - arrived in Akulivik - arrival into Iqaluit - August 3rd, departure August 5th.
Arrive in Montreal - August 10th -- Current PDF Link
July 23rd - Update - Arrival in Iqaluit - August 4th, departure August 6th. Arrive in Montreal August 11th.
July 26th - Update - Arrival into Iqaluit - August 5th, depature August 8th. Arrive in Montreal - August 14th.
July 28th Update - Same as July 26th.
August 3rd Update - Arrive Aug 8th, depart August 11th, Arrive in Montreal - August 17th
August 9th Update - Arrived August 9th, depart August 12th - Arrive in Montreal - August 17th
August 10th Update - Arrive in Montreal - August 19th.
August 12th Update - Arrival in Montreal - August 20th
Departure from Iqaluit - August 17th - Arrival in Montreal - August 23rd.
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Vessel: Avataq
Leave Montreal area - June 26th
milk run
arrive iqaluit july 20th, leave iqaluit july 23rd
arrive montreal area - July 29th
July 20th - Update - Not going to Iqaluit anymore.
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Any of these options above will transport the bulk sample to Montreal right at the end of August.
At that point, they will get on a train and journey more then half way across Canada to the SRC (Saskatchewan Research Centre) in Saskatoon)
Once at the SRC, it will go through the macro diamond recovery circuit.
Dense Media Seperation -- 5 tonne per hour capacity
HPGR recirculation
Flow sort X-ray sorting
Grease table recovery
Globe box diamond observation
At this point, a grade (cpt) and photos of the diamonds will become available to the market place.
The journey is not done yet as the diamonds from all of ch-7 need to be valued and a valuation model will be created. This can be done in Antwerp, Belgium. With networking and association with the Canadian Bourse, this valuation should be able to be done within Canada.
The valuation and grade will be key inputs into the PEA (preliminary economic assessment) study to determine how profitable a CH-6 and CH-7 open pit mine can be.
At this point, a trench bulk sample at ch-44 will be started and any other bulk sampling needed and the process will start all over again.
It is still unknown if a portion of that 558 tonnes that is within the very high grade Domain 5 will be sent direct to the SRC via airplan instead of sealift. This will be 22 tonnes of the material.
Confirmed, the 22 tonnes of Domain 5 is going with the rest of the material on the sealift.
The SRC has been very booked and the material would not have been processed any sooner.
Confirmed, the 22 tonnes of Domain 5 is going with the rest of the material on the sealift.
The SRC has been very booked and the material would not have been processed any sooner.
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