Issue link: http://resourceworld.uberflip.com/i/460990
20 www.resourceworld.com F E B R U A R Y / M A R C H 2 0 1 5 WHILE BOTH coal and diamonds are made of carbon, their difference is more than just appearance. Currently, coal prices are down along with increased supply and a lower demand. On the other hand, diamonds are in demand while supply is dwindling. According to the recent Global Diamond Report 2014 by Bain & Company, the global diamond market's rollercoaster ride since 2008 has moderated and is now on a path of sustainable growth across its value chain. The report states that in 2013, rough diamond sales increased by 2% while four out of five major producers increased their revenues by 5-16%. The cutting and pol- ishing sector reported a 4% rise in revenues to about $22 billion with retail sales of dia- mond jewelry rising an estimated 3%. The most important aspect for investors to understand is that diamond projects are valued in a different manner compared to other mineral projects. For example, gold is gold and trades the same everyday and everywhere at a spot price. With diamonds, their value is determined by what are known as the four Cs: colour, clarity, carats and cut. There are five carats in a gram. Cut refers to polished diamonds where the cut- ting and polishing process is designed to maximize brilliance by cutting diamonds in such as way as to make light bounce from facet to facet into the heart of the diamond and outward through the crown. For investors, the value of a diamond deposit is determined by the dollar value per carat, per tonne. Diamond grades are often reported in carats per hundred tonnes. A rough diamond is valued prin- cipally based on the two C's – colour and clarity. For example, the Misery kimberlite pipe at the Dominion Diamond corp. [DDC-TSX] majority-owned Ekati Mine in the Northwest Territories hosts 3.0 million tonnes of probable reserves grading 4 car- ats per tonne at $105 per carat for a value of $420 per tonne of ore. At the lucara Diamond corp. [LUC-TSX, Botswana, Sweden] Karowe Mine in Botswana, indi- cated resources at the Centre Lobe grade 20 carats per hundred tonnes (cpht). It's a big world out there – so where would be a good place to prospect for dia- monds? Dr. Edward Schiller, who was in charge of the first drill to intersect a kim- berlite pipe in Canada for Dia Met Minerals back in 1991, explains. "We now know that diamond-bearing kimberlites are found beneath Precambrian cratons or shields that form the nucleus of continents. The older cratons, more than 2.5 billion years and tectonically stable, are the best places to explore." Diamonds are most commonly hosted within kimberlite pipes, a type of breccia often roughly shaped like a giant carrot. Diamonds are not born in kimberlite. The molten kimberlite forces its way up from deep in the Earth, transporting existing dia- monds toward the surface. "This is based on a principle established by a British professor Clifford (the Clifford Rule) that inspired the Russians to initi- ate an exploration program for diamonds at a time when Russia had insignificant production," Schiller added. "An aggres- sive diamond exploration program was prompted by President, Nikita Krushchev, in the mid-1950s that led to the discov- ery of diamonds in western Yukutia. Apparently, Krushchev was told that Russia had a stable, ancient Precambrian shield so he commanded his geologists to find diamonds. This effort was successful and DIAMOND STOCKS NEED TO BE EVALUATED DIFFERENTLY THAN OTHER MINERAL PROjECTS. Understanding Diamond Exploration by Ellsworth Dickson Dominion Diamond's Ekati diamond mine located in the Lac de Gras area about 310 km northeast of Yellowknife, Northwest Territories. Production began in October 1998. Photo courtesy Dominion Diamond Corp.