The diamond and specialty minerals stocks box score on Friday was a pleasing 99-60-151 as the TSX Venture Exchange rose three points to 609. It was another week, another decline for rough diamonds, according to diamond analyst Paul Zimnisky's global rough diamond price index, which slipped 0.2 per cent this week. The price of rough diamonds continues to stagnate in the wake of the all-time high set early in 2022. The New York-based Mr. Zimnisky says that his global rough diamond price index dropped again, the 12th consecutive week without a measurable increase. Indeed, over the past three months, he has prices down 2.5 per cent -- an annualized rate of 10 per cent, which is not far off the 8.6-per-cent decline over the past year. Rough prices are now 12.9 per cent below their all-time high, a bubble that capped a nearly two-year-long run that followed the COVID-19 collapse in the spring of 2020. Rough diamond prices did briefly rebound from a recent low set in the first week of January, briefly enjoying a 3-per-cent bump on the heels of the holiday buying spree, but they are now nearly back to that low. Mr. Zimnisky, usually the optimist like most analysts, now describes the rough diamond market as having been "apathetic of late," acknowledging that "softer prices have prevailed across almost all sizes and categories" because of a variety of unspecified factors. One factor he did mention was "a speculated boost in Russian supply in recent weeks," as the country's state-controlled diamond miner, Alrosa, attempts to claw back market share that it lost last year because of sanctions related to Russia's war with Ukraine. And so, diamond promoters continue their struggle to raise exploration and development cash, especially in North America, which more than Europe and Australia, has been locked in a 15-year bear market for diamond explorers. Consider the returns received by shareholders of the few success stories. Mountain Province Diamonds Inc. (MPVD) got to $9.75 in the heady days of 1996 but fell below 50 cents in 2000, when it looked like De Beers was mothballing their shared Gahcho Kue project. The stock was back to $6 in 2007, but the Great Recession kicked it back below $1, only to rebound to near $7 in 2011 as rough prices reached a then record high and De Beers finally agreed to build a mine. Several years of stagnation followed, but Mountain Province's stock got to $7.18 in the fall of 2016 as the ceremonial ribbons were being cut at the just-completed mine. Unfortunately, that stock price and the $1.15-billion market value it implied for Mountain Province's 49-per-cent share of Gahcho Kue were built on an assumption that rough prices would start high and move higher, beating inflation by a few percentage points each year. As it turned out, a weaker diamond size distribution profile set the company's initial sales much lower than expected. Worse, inflation proved to be the victor by a few percentage points over the next few years. And so, MPVD's stock fell to near $1 just as COVID was wending its way out of Wuhan, and to 25 cents in mid-2020 during the dark days of the collapse. Rough diamond prices are better now than three years ago of course -- and at least they can be sold to willing buyers -- but Mountain Province's chart still gives investors the shivers. MPVD was unchanged at 46.5 cents on 53,000 shares today. Anthony Milewski's Nickel 28 Capital Corp (NKL) lost two cents to $1.29 on 190,000 shares. The company, locked in a proxy battle with a dissident group led by Pelham Investment Partners, cheered word this week that Institutional Shareholder Services, one of two main proxy advisory services, has recommended against a wholesale change to Nickel 28's board, as proposed by the Pelham group. Mr. Milewski, executive chairman, was beside himself with glee. He gushed that ISS "saw through Pelham's distraction tactics to conclude that Pelham has no plan for Nickel 28 and failed to make a convincing case for wholesale board change." He was also pleased that ISS acknowledged that the company's existing board and management "play a vital role in managing the Ramu project." Meanwhile, Pelham is carrying on with its bid, urging shareholders to vote using its proxy form. The matter should be settled at the mid-June meeting. Don Bubar and Zeeshan Syed's Avalon Advanced Materials Inc. (AVL) closed unchanged at 10.5 cents on 716,000 shares. The company has new assays from its Separation Rapids lithium project in Northern Ontario, with hits of up to 1.56 per cent lithium oxide over 47.7 metres in one of the last four holes. The last of the holes also got Avalon's spirits soaring, as it confirmed mineralization from surface to a depth of 566 metres at a similar grade and thereby nearly doubling the potential depth of the deposit. Rickardo Welyhorsky, chief operating officer, gushed that the drill results "truly demonstrate what our team has always believed -- the resource at Separation Rapids is potentially much larger than what is currently understood." And so, he and his crew are no less than "extremely excited" to begin the next drilling program, which he says will reveal the true potential of Separation Rapids. Mr. Syed, the company's president, then chimed in with the obligatory jargon. As a consequence of a refreshed strategic plan, he intoned, he and his crew "are delivering on key milestones and accelerating developments at Separation Rapids," concluding not only that "Ontario continues to be well positioned as an international economic hub within the critical minerals value chain," but that Avalon is "poised for growth to help support that important mandate." Mandates, hubs and positioning aside, Avalon has a significant resource at Separation Rapids, although it cheers a potential doubling through continued drilling to a conceptual exploration target of between 15 million and 20 million tonnes grading between 1.2 and 1.6 per cent lithium oxide. Proving this will take deeper drilling, and the company says between 10,000 and 30,000 metres of drilling may be required. In other words, stay tuned. Eric Krafft's Leading Edge Materials Corp. (LEM) was unchanged at 16.5 cents on 23,000 shares. The company has assays from samples collected during a trenching program at its Bihor Sud project in Romania, in which it holds a 51-per-cent interest. One can only imagine the glee experienced by the sampling crew upon sighting the available rock to be grabbed, as one of the several new samples topped 30 per cent nickel and another ran 4.71 per cent cobalt. Mr. Krafft, chief executive officer, cheered that the results "highlight the scale and high-grade potential of the Bihor Sud exploration license." The crews have been dealing with radon gas problems underground, but this is a positive sign in that radon is often related to high-grade nickel and cobalt zones, and so channel sampling underground should "now begin in earnest." |
