Tuesday, November 29, 2016

2017 Field Program

2017 field program (winter/spring - early 2017)

A lot of details have been coming out for the upcoming field program.

The two questions that need to be asked are:

1 - What are the details?

2 - What will this accomplish?

The answer to question 2 is the most important..but that cannot be answered without delving into question 1.

So, what are the details?

CH-6 will be the focus for this program.


1 - Bulk trench sample x 500 tonnes (1000 to 2000 carat parcel). Small number of limited blasts and hauling of material into 1 tonne bags to send down to the SRC for processing and recovery of rough diamonds.

2 - LDD - RC - The Large Diameter Drill will drill deep into CH-6. Probably a few holes. Maybe up to 500 tonnes of material that will be screened to above 1.13 mm. Minor adjustments will be made to hopefully reduce the expected breakage to occur. This should create another 1000 to 2000 carats of rough diamonds that will be shipped in 1 tonne bags down to the SRC for processing.

3 - Geotechnical drilling - Core drilling in the country rock to establish conservative, yet reasonable pit slopes for an open pit mine.

4 - Core drilling at depth. The geotechnical holes in #3 will be aimed toward the kimberlite at 300 metres or lower to establish an extension of the known resource.

5 - Core drilling in kimberlite -- Twin the LDD holes for validation, drill deep to extend depth, drilling around the high grade zone (4cpt+) to better define the zone.

6 - Related surface tasks - 2 airstrips on frozen lakes - 1 long strip (10+ km's away) and 1 small strip (5+ km's away) to bring in people, equipment, etc. Establish winter trail to bring in equipment and supplies and to be used to ship out the bulk sample material to Iqaluit.

This an estimated list of tasks (above) and may differ when a final and detailed program is released. Some of the items above have been taken from permit applications and news articles.

So, what will this accomplish?

Increase the economics and continual de-risk of the project.

In the PEA (preliminary economic assessment), the majority of the NPV was front end loaded with CH-6 and CH-7 provided an extension to the life of mine with positive cash flow.
Heading toward the next step is the PFS (Prelminary Feasibility study). With the focus of CH-6, the indicated resources that can be used in the PFS will only come from CH-6.

Not all carats in the PEA were used in the PEA. Why?  The biggest reason was the strip ratio used in the study due to lack of geotechnical information.
Here is a link that talks about strip ratio -- Strip Ratio
The end result for CH-6 in the PEA was an average of 10 to 1 (waste to ore) and that is just the average. Reality is the upper tonnage is a lot smaller than 10 to 1 and the tonnage near the bottom of the pit is much higher than 10 to 1. Once further geotechnical information is obtained, the pit wall angle can be steepened up to something more reasonable based on real data instead of just defaulting to the most conservative angle. Will this decrease the strip ratio from 10 to 1 to something lower?
Not necessarily. With steeper pit walls, you can go deeper into the ground, so those tonnages even lower will still have larger strip ratios. The aim of the project is also to deepen the existing resource even further as well.

On a resource side, the main goal will be to convert inferred and add even more tonnage to the indicated category to be used in a PFS study.

End result? With the significant rock value of CH-6, adding more tonnage has a very significant effect to the project and NPV. The valuation timeframe for the PEA (february 2016) was done at a dip in the rough diamond price market. The valuation is up over 10% since then and there is a reasonable chance to say that the PFS will be done at a time where rough diamond prices are higher then the PEA timeframe.

What is the end result?

Coming up with a PFS that has a pre-tax NPV (@7.5%) of CAD$1 billion is probably a very reasonable goal. It would be a great accomplishment and outcome from this upcoming winter/spring program.

Other possible tasks?

1 - There is a sub-domain that doesn't have a valuation assigned to it and is considered waste with 0 value now. Possibility of putting an LDD RC drillhole into this to obtain more data.
2- There is a string of pearl (kimberlite pipe) north of CH-6 that the open pit will break into. If they can deepen CH-6, it will grab even more tonnage from this pipe. Possibility of putting an LDD RC drillhole into this to obtain more data.


  1. Cogent analysis as always. Inevitably the share price will catch up to the facts of the project. Now how the hell are they funding this?

    1. The how looks like it has already been answered as they full on green light with community relations, permitting details and a budget target for the field program. The question is not 'how'..the question is 'when' will the world get to know the 'how'.