Canada’s diamond mines are running dry, Randy Turner, president, CEO and director of Canterra Minerals, told Diamond Investing News. That’s why he’s heading back to the Northwest Territories to explore.

Randy Turner is perhaps best known for his involvement in the discovery of the Snap Lake diamond mine in Canada’s Northwest Territories. He and his team at Winspear Diamonds made the find back in the 1990s, and De Beers bought the company’s 67-percent interest in Snap Lake for $305 million in 2000.

It’s now been over a decade since De Beers took over, and Turner is ready to try his hand at diamond exploration in the Northwest Territories once again. This time, he’s at the helm of Vancouver-based Canterra Minerals (TSXV:CTM).

To find out why Turner made the decision to return to the field, Diamond Investing News went to him with a few questions. Here’s what Turner had to say.

From rush to bust

Understanding why Turner has shifted his attention back to the Northwest Territories requires some knowledge of the — surprisingly short — history of Canadian diamond mining.

It all began in late 1991, when Chuck Fipke reported that he had found diamonds in the Lac de Gras area of the Northwest Territories. That, said Turner, “triggered a massive staking rush” that ended with “over 300 companies staking land.”

“We all became instant diamond experts,” he added.

Driving the enthusiasm was the fact that diamonds were “a brand new commodity … something that people didn’t really understand.” Ultimately, many companies were financed, pulling the floundering junior resource market out of the doldrums.

However, that good fortune was not to last. Shareholders began to grow frustrated with the length of time it took to make discoveries — “to find a diamond mine, to put it into production, is a very long timeframe,” Turner explained. “Probably 15 years or more, if not longer.”

Gold was also partially to blame. “Everybody knows gold,” Turner said, “anybody can look in the newspaper, anybody can look on Kitco and see what the price of gold is.” Diamond pricing is less transparent — “you can look at the polished price of diamonds, but you can’t look at the rough prices.”

As a result, “with gold heading to $1,900, everybody was into gold and other commodities, and left behind was diamond exploration.” By the time 2004/2005 rolled around, it had “really [fallen] off a cliff.”

Diamond mines running dry

Of course, a lack of exploration means few new discoveries. And few new discoveries means a dearth of producing mines.

That, said Turner, is a problem given that Canada’s diamond mines are aging. Ekati has been going since 1998, he noted, Diavik since 2002/2003 and Snap Lake and the Ontario-based Victor mine since 2008.

“Eventually these mines do come to an end,” Turner explained, “so if we’ve only got ones like [Mountain Province Diamonds’ (NYSEMKT:MDM) Gaucho Kue] coming onstream now, how many more years of exploration do we have to replace those that are being mined out?”

Canterra jumps in

Turner didn’t offer a hard answer to that question, but the implications are clear: Canada needs diamond exploration companies, and it needs them in fairly short order.

That, of course, is where Canterra comes in.

Explaining the company’s game plan, Turner said that starting in July it will be exploring five properties in the Northwest Territories. Three of those properties were acquired through staking earlier this year, while two are properties the company acquired in 1999 and 2000; they were expanded during this year’s staking.

The reason for the mix, according to Turner, is that “you can only hold land in the Northwest Territories for 10 years … unless you take it to a mineral lease.” That “means you have to survey it, [which] becomes very expensive.”

Canterra’s willingness to pay that expense speaks to its confidence in the properties. Indeed, the press release announcing the company’s return to diamond exploration states that the two previously held properties “were maintained by the Company due to their considerable potential for the discovery of new diamondiferous kimberlites.” (Click to watch a kimberlite animation on Canterra’s website). 

That said, Turner seems confident about the other three properties as well. “Back in the 1990s it was a major land grab. You’d stake whatever you could because it was a big staking rush,” he said. “Now it’s target specific. We went out and staked these particular blocks because we feel confident in the mineral chemistry that we know from it and from the geophysics and understanding the whole geological structure of the area.”

This summer’s exploration work will include “geochemistry and sampling, some geophysics,” said Turner. “Ultimately, what we’re going to do is get drill targets. We think that at the end of this program, the end of this summer, we’ll have defined some drill targets based on what we know to date.”

Competing with the best

Of course, Canterra is not alone in the Northwest Territories. Its main competitors, according to Turner, are Margaret Lake Diamonds (TSXV:DIA), which “has a significant land package” whose “main claim block adjoins Kennady Diamonds’ (TSXV:KDI) property,” and North Arrow Minerals (TSXV:NAR), “which has land further to the north and is adjoined to the Ekati area.” Mountain Lake Minerals (TSXV:MOA) and Archon Minerals (TSXV:ACS) are also in the area, he said.

Of those companies, North Arrow and Archon are notable for the experienced people on their management teams. Those include North Arrow’s Gren Thomas, who was part of the Diavik discovery, and Stu Blusson of Archon, one of the original finders of Ekati. “There’s some very good people, very good explorers out there,” Turner commented.

That may sound intimidating, but he believes Canterra measures up. After all, his own team includes “two board members that sat for the discovery and development of the Ekati mine,” while “the other directors were all involved with the discovery of the Snap Lake diamond mine.”

“I’d look at the people with a proven track record,” he commented, “because it’s a very small window of explorers that now have a tremendous knowledge of diamonds that we didn’t really have back in the 1990s, we’ve gained it all through trial and error and through discovery.”

Canada’s stake

Unfortunately, while those companies certainly have the expertise to succeed, they don’t necessarily have the funds. Turner ended the conversation by emphasizing his earlier point that in recent years, Canadian diamond exploration has suffered as “risk capital has gone into gold, uraniumcopper and silver, into a lot of foreign jurisdictions.”

Continuing, he said that risk capital “should really be refocused on companies that are serious explorers that have a track record in the diamond business, and that’s really I think the essence of this story.”

If that doesn’t happen, there will be tangible consequences — namely, a fall in Canada’s standing as the third-largest diamond producer. “If Canada wants to continue to be number three in the world, it has to be spending lots of money on new discoveries,” Turner concluded.


Securities Disclosure: I, Charlotte McLeod, hold no direct investment interest in any company mentioned in this article.

Related reading:

Diamond Mining in Canada

Diamond Mining Hopefuls Follow North Arrow to Saskatchewan


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