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Diamonds & Specialty Minerals Summary for Aug. 7, 2014

2014-08-07 19:17 ET - Market Summary

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by Will Purcell

The diamond and specialty minerals stocks box score for Thursday was a lethargic 54-48-158. The TSX Venture Exchange gained three points to 995 while diamond prices inched higher. Lukas Lundin's Lucara Diamond Corp. (LUC) fell one cent to $2.68 on 559,000 shares. Lucara will release the financial results for its second quarter next week. The company, which spent $200-million buying the Karowe kimberlite and building a mine in the late 2000s, could earn nearly that much per year as the mine has been yielding larger and better diamonds than had been expected. Ron Roda's Alabama Graphite Corp. (ALP) gained 1.5 cents to 24.5 cents on 2.90 million shares. There has been no news since last week, when the company said softer rock at the top of its Coosa graphite deposit would be cheaper to mine than the deeper material.

Kenneth MacNeill and George Read's Shore Gold Inc. (SGF) gained 1.5 cents to 29 cents on 233,000 shares after it submitted its final environmental impact statement (EIS) for its Star-Orion South diamond project, east of Prince Albert in central Saskatchewan. Mr. Read, Shore's senior vice-president and unwavering optimist, says the 8,600-page document "represents a huge amount of work." That seems an understatement uncharacteristic of a fellow often prone to exaggeration, but Mr. Read quickly reverts to form, calling the filing of the EIS "another major milestone on the route to the development of a world-class diamond mine in Saskatchewan." It has been quite a route -- a rout for many -- as Shore began the environmental approval process six years ago and the trip is not yet complete. The EIS, already discussed and questioned nearly to death by the public over the past few years, will once again be released by the bureaucrats for public comment. Hopefully interested individuals have exhausted their inquisitiveness and formal approval for Star-Orion South is now on the horizon. Shore's plan calls for a mammoth mine processing 45,000 tonnes of kimberlite per day, more than Diavik, Ekati, Snap Lake and Gahcho Kue combined. The mine will nevertheless take 20 years to churn through the 279-million-tonne reserve, which contains 34.4 million carats of diamonds assuming Mr. Read's various fudge factors and escalators are accurate. Mr. Read is already thinking farther afield, perhaps because Shore is not any closer to arranging financing for its $2-billion diamond mine. He says the company also has a "target for further exploration" of about one billion tonnes of kimberlite that could contain anywhere between 52 million and 90 million carats. Mr. Read cautions investors that the rock is "conceptual in nature," but of course Shore's laggard share price reminds investors that a Star-Orion South mine remains entirely hypothetical at this stage.

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