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Stock Watch
Dentonia et al. expand focus on old play
Dentonia Resources Ltd (C:DTA)
Shares Issued 57,764,911
Last Close 4/5/2006 $0.19
Thursday April 06 2006 - Street Wire
by Will Purcell
Adolf Petancic's Dentonia Resources Ltd. could see its DO diamond project expand northward this year. The company and its partners are busy with a bulk sample of the core of the DO-27 pipe, but intriguing diamond counts from DO-18 offer new hope for a kimberlite immediately to the north. The pipes are part of a complex once called Tli Kwi Cho. That project seemed dead in 1994, after an underground bulk test of the northeastern part of DO-27 by Kennecott Canada Exploration Inc. flopped. A flicker of hope remained for DO-18, but a 1996 mini-bulk test seemed snuffed out any lingering interest there as well.
The DO-27 story found new legs when Peregrine Diamonds Ltd. decided to take a chance on a new drill program. A mini-bulk test last year delivered enough promise to warrant a much larger look this spring. DO-18 is now producing new signs of sparkle as well. That should lead to a new drill program this year, according to Mr. Petancic and Dr. Alan Carter, Peregrine's chief operating officer. A new target between DO-18 and DO-27 could expand the hunt further, according to Mr. Petancic.
Who's who in the zoo
Mr. Petancic long touted the old Tli Kwi Cho play as worthy of a second look, but few paid him much mind after the disastrous bulk sample bust. Dentonia's shares crested at $10.75 in the heyday of the hunt during the early 1990s, but a share cost just four sad cents by late 2001. |
The arrival of Mr. Friedland and Peregrine sparked new interest, and the new mini-bulk test of DO-27 provides vindication for Mr. Petancic. The Vancouver-based lawyer turned stock promoter is now finding it much easier to line up new believers in the old play today as a result.
That is fortunate, as the bulk sample is putting considerable pressure on Dentonia's treasury. The program carries a budget of $12.5-million, and Dentonia's share of that would come to over $800,000, based on its 6.67-per-cent interest in the project that it holds through a one-third share of DHK Diamonds Inc.
Cash is no great worry for now, as Dentonia completed a $3.07-million private placement late last year. The company sold 6.26 million flow-through units at 20 cents each and 12.2 million regular units at a quarter apiece. Thanks to the secrecy afforded by the regulators, the identities of most of the 153 buyers remain hidden. We do know that Dentonia insiders accounted for a paltry 316,667 shares, and 24 named pro group investors picked up about 2.53 million units. In all, they account for just 15 per cent of the new shares.
Fortunately for investors who are curious about Dentonia's bigger backers, Mr. Petancic was less secretive. He said that Stu Blusson and Ross Blusson were among the bigger buyers, adding that they might come close to holding a combined 20 per cent of Dentonia's outstanding shares. "Stu became half a billionaire with his 10 per cent of Ekati," Mr. Petancic said, adding that Ross Blusson was "the most successful penny stock player I know."
There is no doubt that the old Tli Kwi Cho pipe and the surrounding property intrigued Stu Blusson and his brother Ross. Their Archon Minerals Ltd. worked the play for a time and earned a 13.275-per-cent interest in the project containing the DO-27 and DO-18 kimberlites.
At last report, Mr. Petancic and his five-man board held roughly 2.5 million of the 57.7 million Dentonia shares currently outstanding. Ron McMillan, a Victoria-based geologist and a Dentonia director since 2004, led the way with just under a million shares. Mr. Petancic's held just over 800,000 shares as of last fall.
The new counts
Peregrine and its DO partners drilled seven new holes into the DO-18 part of the complex last fall, sending just over one tonne of material off for diamond recovery. The rock produced 3,030 diamonds, including 1,735 that remained on a 0.106-millimetre sieve. That latter number works out to just over 1,650 stones per tonne.
The diamond counts were sparkling, but the size distribution of the parcel falls well short of what the partners found in DO-27. The 1,735-stone parcel included 180 diamonds large enough to sit on a 0.30-millimetre mesh, and that works out to about 10.8 per cent of the parcel. The 78 diamonds that remained on a 0.425-millimetre sieve provided 4.7 per cent of the haul.
Peregrine had more size success with its DO-27 tallies. The company processed 1.27 tonnes of kimberlite taken from four holes drilled into the central core of the pipe. The rock produced 3,821 diamonds, including 2,596 that met a 0.106-millimetre cut-off. That pointed to just over 2,000 stones per tonne, just marginally more than the company is finding in DO-18.
The size distribution from DO-27 was markedly better than that of its northern sister. Dentonia and its partners recovered 501 stones on a 0.30-millimetre sieve and the haul accounted for about one-quarter of the 2,596-stone parcel. Nearly 13 per cent of the DO-27 diamonds also sat on a 0.425-millimetre mesh.
Those proportions suggest a particularly coarse size distribution curve, and some larger gems confirmed that. The rock produced 32 diamonds large enough to sit on a 0.85-millimetre mesh. Those stones weighed 0.937 carat, suggesting a grade of about 0.75 carat per tonne. Peregrine's 151-tonne mini-bulk test revealed a grade of about 0.90 carat per tonne, including a result of about one carat per tonne in the central core.
The weaker size distribution curve in the DO-18 samples support is decidedly more pessimistic. The rock contained just four diamonds larger than a 0.85-millimetre sieve, and they weighed 0.10 carat. That points to a grade of about 0.10 carat per tonne.
That would be insufficient to support a mine, but Dentonia and its partners would not need a huge grade to make the rock economic if it can make a mine at DO-27. The latter body lies under a shallow lake, but DO-18 is largely a land-based kimberlite, and that would help keep costs down. As a result, the pipe will see a new drill program this summer that will seek zones with better grades.
The companies noted four distinct phases of kimberlite in DO-18, but there are no dramatic grade variations evident in the diamond counts. Peregrine collected about 700 kilograms from the dominant phase, and the rock produced results comparable with the average for the entire sample.
A second phase of kimberlite accounts for about 20 per cent of the rock within DO-18, but the diamond recoveries and size distributions were comparable with the sample average there as well. The two remaining phases account for about 10 per cent of the kimberlite in DO-18, but the samples are too small to reveal any sharp differences in the counts or size distributions. As a result, the diamond content in DO-18 seems quite consistent across all the rock types.
Not as consistent are the conclusions resulting from earlier exploration. There was one mini-bulk test of DO-18 and the result was decidedly unspectacular, although accounts of the diamond content vary. At the time, Aber Diamond Corp. said the test contained just 0.10 carat of diamonds. Peregrine now suggests the test returned a grade of 0.09 carat per tonne. Based on a sample weight of 6.88 tonnes, the rock contained diamonds weighing 0.61 carat.
Either way, the result was clearly disappointing. Further, the location of the hole is uncertain and the type of kimberlite encountered is unclear, although the original test called the material volcaniclastic kimberlite. The uncertainties leave Dentonia and its partners looking for better grades at DO-18.
The disappointing mini-bulk test in 1996 was likely the last straw for Kennecott. Mr. Petancic said the company could have increased its share of the project to 70 per cent, had it completed a 10-tonne test, but drilling difficulties and the lowly result intervened. Kennecott eventually transferred its interest to DHK Diamonds Inc.
Another DO-18 curiosity stems from geochemical work completed in 1994. An assessment of peridotitic garnets pointed to a maximum grade of 1.5 carats per tonne at DO-27 and a value of up to three carats per tonne at DO-18. The mini-bulk test of DO-27 supports that assessment, but nothing found so far comes anywhere close to the rosy prediction for DO-18. That is not surprising, as geochemical work is at best just a rough guide to grade.
Dr. Carter noted that the DO-18 diamond counts were "not as good as DO-27," but he thinks it is worth a closer look. Peregrine may collect a small mini-bulk sample from DO-18, as its larger drill rigs will be stuck at the site for the summer. If so, the partners would aim for about 150 carats. That would likely take a significant amount of kimberlite.
As well, the area between DO-18 and DO-27 offers an enticing drill target for Mr. Petancic. He thinks the corridor between the two bodies could prove to be a third pipe. "We could be drilling all summer." Dr. Carter also thinks the area is worthy of drilling. If they are right, the DO-27 project could expand northward regardless of the results at DO-18.
Dentonia was unchanged at 19 cents Wednesday, on 13,000 shares.
© 2006 Canjex Publishing Ltd.
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