Since 1915, the Northern Miner weekly newspaper has chronicled Canada’s globally significant mining sector.
Perseverance may not always find its reward, but for a mining man and explorationist that knows the North, the development of the Diavik diamond mine in the Northwest Territories is a rich reward for persevering for 30-odd years in the Arctic.
Grenville Thomas, our Mining Man of the Year, was the original driving force behind the Diavik project, now under development by Diavik Diamond Mines, a subsidiary of Rio Tinto (RTP-N), and Aber Diamond (ABZ-T), the company Thomas founded. As an explorationist, entrepreneur, and a well-liked and well-respected mining man, Thomas is seeing a long career culminate in one of the biggest successes in recent Canadian mining history.
Welsh-born Thomas came to Canada in 1964 as a young mining engineer and worked for Falconbridge, first at its Sudbury operations and later at the Giant gold mine in Yellowknife. Setting up shop as a consultant, he became a specialist in mineral projects in the Northwest Territories and ultimately assembled a stable of his own properties.
Thomas incorporated Highwood Mines (later Highwood Resources) in 1975, and by 1979 it was a publicly traded junior, with three of Thomas’s Territories prospects — the Thor Lake rare-metals deposit, the Thye Lake copper-nickel deposit, and the Victory Lake massive sulphide property — as its principal assets.
By this time, Thomas was operating out of Calgary, where he founded Aber Resources in 1980, launching it as a public company three years later with Highwood as the principal shareholder. Originally, Aber held exploration licences in Thomas’s native Wales as well as ground in the Northwest Territories, but soon the company became a Territories specialist. It optioned the Sunrise base metal deposit to Noranda and the High Lake project in the Coronation Gulf area from Kennecott, and had a piece of every major Territories land play in the 1980s.
By the early 90s, Thomas had moved to Vancouver to concentrate on the Aber Resources projects, most of which were in the Territories. (Highwood passed to other management: ultimately Royal Oak Mines became a major shareholder, and when Royal Oak went bankrupt in 1999, its 35% share was sold to Dynatec.)
It was as president and chief picket-sharpener of Aber that Thomas made a late-1991 staking pact with Christopher Jennings, Earl Curry and Robert Gannicott to tie on to ground around Charles Fipke and Stewart Blusson’s newly announced diamond discovery at Lac de Gras. In the depth of the Territorial winter, the syndicate chased after De Beers stakers, picking up a large land package on the southern part of Lac de Gras.
Their quickness off the start line gave Aber, and later Jennings’s SouthernEra Resources (SUF-T), a commanding position among the junior explorers in the Territories diamond rush of the early 90s. Aber soon did a land deal with Kennecott and in October of 1992 drilled its first magnetic anomaly, intersecting the first of seven kimberlite intrusions.
The widely held opinion that Fipke and Blusson had staked all the good ground (the “Fipke Curse”) disappeared; from then on, Aber and SouthernEra were in the thick of Territories diamond exploration. Even an embarrassing miscue — when diamonds from a drill bit made their way into a sample and were briefly mistaken for microdiamonds in the rock — only caused Aber a brief stumble.
With the 1994 discovery of Diavik’s A-21 and A-154 pipes — credited in part to Thomas’s geologist daughter Eira and her co-worker Robin Hopkins, who spotted the original drill holes — Thomas’s company joined Fipke and Blusson’s Dia Met Minerals as a success story of the diamond rush.
It was a good thing, too, as Kennecott was just finishing bulk sampling on Aber and SouthernEra’s Tli Kwi Cho kimberlite, a little to the southeast of Diavik. Tli Kwi Cho, named for its obvious magnetic anomaly, had promised much in drill core, but an underground bulk sample delivered little. With Tli Kwi Cho a bust, Kennecott could turn its attention to A-154, and in 1995, Kennecott came back with a bulk-sample grade of 4.5 carats per tonne.
Development work over the succeeding five years put a bankable feasibility study in the partners’ hands. They made a production decision at the end of 2000, with the aim of bringing Diavik into production in 2003.
Construction of the mine at Lac de Gras is about 60% complete. A significant milestone was passed last October, when a dyke embankment around the A-154 kimberlite pipe — the first of four Aber and Kennecott plan to mine — was finished. The main processing plant building is up and covered, and the mine has its sewage- and water-treatment plants, as well as much of its other infrastructure. The company has a US$230-million credit facility and just over $150 million in cash to finance the rest of construction.
Aber has made a significant bet on the future of branding in the diamond market, a bold move for a new producer, but one that is cut from the same cloth as Thomas’s prospecting heritage. The company’s deal with Kennecott differs from the usual production joint venture in that Aber’s 40% share of production comes as rough, rather than as a cheque from the operator, and this control over marketing is part of a strategy to develop a vertically integrated diamond producer.
Aber is also in the forefront of another emerging pattern among small diamond producers: the downstream affiliate. In July 1999, high-end jewelry manufacturer and retailer Tiffany & Co. bought 8 million shares of Aber for $104 million, giving it a 14% stake, and the two companies concluded an agreement that diverts part of Aber’s rough production direct to Tiffany for the first 10 years.
Aber’s sales to Tiffany will be at a discount to the open-market price, but better than a producer would get in the traditional rough market. The prices Tiffany pays will be based on the values Aber receives on parcels of similar quality sold on the open market. Tiffany agreed to a minimum purchase of US$50 million annually, but both parties expect the jeweller will want more than the minimum. Aber has another agreement, with Antwerp diamantaire Overseas Diamonds, to take some of the remaining Diavik production.
Thomas’s new company, Navigator Exploration (NVR-V), re-assembles the old Aber prospecting team. Eira Thomas is president, Robin Hopkins vice-president, and Robert Gannicott sits on the board of directors.
Navigator’s current hopes are pinned on projects in the Northwest Territories and in the James Bay area of northern Ontario. On the Kat project, part of the Severn joint venture with Rory Moore’s Canabrava Diamond, Navigator discovered a diamondiferous kimberlite in the early part of the year; although diamond counts from the pipe were ultimately discouraging, the partners are continuing the hunt on the rest of their northern Ontario holdings.
Thomas, the old-time Yellowknife staker, also has a deal for ground in the North Slave craton, adjoining Ashton Mining’s Kikerk Lake property, host of the Potentilla kimberlite discovery.
And in a demonstration of how things go around and then come around, Navigator closed a deal with Highwood Resources last June giving it an option to earn a 51% interest in part of Thomas’s old Thor Lake property. Lakefield Research recently completed a series of metallurgical tests on a Thor Lake bulk sample.
Thomas, known to be a rugby enthusiast, may not have scored his last try yet.