Diamonds Turning Up Down Under

With many of the world’s diamond mines depleting rapidly, the race is on to find replacements.

It’s perfect timing for Lithoquest Diamonds (LDI.V; CWVWF.OB) — because their project in Western Australia shows early indications of hosting a significant new diamond resource.

Dear Fellow Investor,

Many of the world’s most productive diamond mines are in a period of rapid decline.

The following diagram from Bain & Co. tells a compelling story.

While brownfields development at existing mines will fill some of the gap, the picture is clear: The world’s needs to find new diamond mines to bolster existing supplies.

And soon.

One team with a great head start on making a diamond discovery is Lithoquest Diamonds (LDI.V; CWVWF.OB).

The company is headed by Bruce Counts, a man who was heavily involved in the discovery of the prolific Ekati diamond mine in Northwest Territories.

Ekati’s story is instructive on just how lucrative diamond stories can be.

Dia Met Minerals had a 29 percent stake in the project that would become Ekati back in the early 1990s. After the key discovery on the project, Dia Met’s share price multiplied 100 times over — spiking from C$0.65 to C$65.00 in just 18 months.

The company eventually sold its interest in Ekati for close to C$800 million. This is a diamond project so rich that it paid back a hefty capital expense of C$900 million in a mere 18 months!

Now, Mr. Counts and his team at Lithoquest are on the hunt for another big diamond discovery. This time they’re focusing their sights on the Kimberley region of Western Australia.

And for good reason....

Early Signs Of Success

The Kimberley area is home to 70 percent of the kimberlites discovered in Australia.

For those new to diamond deposits, kimberlites are essentially historic volcanoes that originated deep in the earth’s mantle. As their magma rose to the surface it sometimes passed through what’s called a “diamond stability field,” where these volcanoes sometimes pick up economic quantities of diamonds.

As a result, the discovery of a kimberlite (or kimberlites, as they often occur in clusters), is a key marker in the potential discovery of a diamond mine.

Lithoquest has identified a number of separate occurrences of weathered kimberlite on its North Kimberley project. The samples from this effort have yielded kimberlite indicator minerals (“KIMs”) similar to the indicator minerals at Ekati.

The Importance Of Micro-Diamonds

Even more intriguingly, while Lithoquest was testing some of those samples for KIMs earlier this year, it came across micro-diamonds. What made the find unusual is that the process for analyzing a sample for KIMs is different than that for micro-diamonds.

That Lithoquest found micro-diamonds while looking for KIMs was a major proof of concept that North Kimberley might host diamond-bearing kimberlites.

The market quickly endorsed this find by boosting Lithoquest’s share price from C$0.24 to almost C$0.90 after the announcement.

The area that yielded the micro-diamond sample is obviously the company’s highest priority target, but it has found KIMs at each of the four targets identified at North Kimberley to date.

The Drills Hit Kimberlite

Lithoquest didn’t wait long to impress the market with a new discovery: kimberlite.

Two holes drilled in target 1804 yielded kimberlite breccia. Now we wait to see what the lab makes of the core from these holes. Results are expected in the fourth quarter of 2018.

The company plans a follow-up field program that will include additional drilling on target 1804, drill testing of newly developed targets and continued target development.This is a huge project — the whole property spans a massive 1,500 square kilometers.

With the currently producing Argyle mine and the past-producing Ellendale mine located in the Kimberley region, the chances are looking better and better for Lithoquest to make a major discovery at North Kimberley.

The Argyle mine has produced more than 750 million carats of pink diamonds since it began operations in 1983. The Ellendale mine, when it was in production, produced around 50 percent of the world’s fancy yellow diamonds.

With Assays Pending,
The Time To Act Is Now

The assays from will be back from the lab soon on Lithoquest’s new kimberlite target, making now a critical time for potential investors in Lithoquest.

Remember — just the discovery of micro-diamonds in that sample earlier this year was enough to cause the company’s share price to triple.

But that could be just a taste of what will happen if the lab results, in fact, verify diamond-hosting kimberlites at North Kimberley.

Simply put, evidence like that would put Lithoquest officially on the market’s watch list of companies with a potential, new greenfield diamond deposit.

Given the rapid depletion of many of the world’s diamond mines, discovery at North Kimberley could have an “Ekati-like” effect on the company’s share price.

For those who want to speculate on the potential at North Kimberley, the time to do so is now.

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