For those who have heard the name Eira Thomas, and there are very few in upstream diamonds who haven’t, the facts are well known, and perhaps a bit overdone – a 30-something CEO of a publicly traded Canadian exploration company, a geologist and one of the key personalities in the discovery of the Diavik diamond mine in Canada’s Northwest Territories.

 

Although Thomas believes that there is “absolutely” at least one more world-class diamond mine to be discovered in Canada, if not more, at the moment there are only two – Ekati, operated by BHP Billiton and in production since 1998, and Diavik, operational since 2003 and run by a Rio Tinto/Harry Winston joint venture.

 

 

Despite Stornoway’s recent announcements detailing positive outcomes from explorations, the company’s stock still has a long way to go before it recovers from the downward slope it has been on since March 2007.

Thomas confirms that this has been a tough period for all Canadian diamond miners, her company included. “We’ve actually started to react finally,” she says. “It has been a difficult period, not just for Stornoway, but all diamond companies in the Canadian sector. We’ve seen companies ranging from Harry Winston on the high end of the market spectrum, which has seen some difficult times, right through to the smallest junior company that has been trading at 52-week lows.

 

“So Stornoway is no exception; we’ve also lost value in the market, but through this period of active news flow, we’ve started to get some traction.” At the end of January, Stornoway’s stock had reached a one-year low of around 47 cents per share. As of today, they have gained some ground and now hover around the $0.69-$0.72 per share range.

 

Thomas admits that this is “not the performance that we would have hoped for…;” however, don’t expect them to end up on a road like Tahera Diamond Corporation, which on February 6 suspended mining operations at its Jericho mine after running out of cash and being forced to obtain protection from its creditors. “We have cash in the bank and we continue to move forward with all of our plans,” Thomas says matter-of-factly. “We’ve been meeting our milestones, and technical results have either met or exceeded our expectations.”

 

Although she cautions that it’s too early to say whether if situation will improve, Thomas asserts that the Canadian diamond mining sector has finally begun to receive some attention from the investment community.

 

She effuses optimism that publicly traded exploration companies in Canada can generate enough in the way of positive results to cause the investment sector as a whole to sit up and pay attention, while at the same time explaining her opinion on why junior companies – such as Stornoway – have traded so poorly in the recent past.

 

“My view is that we’ve gone through a major commodities boom, with an appreciation in all commodities… there’s been so many short term gains to be had in those markets, that it’s been difficult for the diamond sector to attract the interest of the high-risk investment community. Diamonds require a huge amount of patience. They’re difficult to find, they’re expensive to explore for, so you need to raise a significant amount of capital, and you’ve got to apply that capital over a reasonable amount of time to expect to get any kind of return.”

Despite one vocal manufacturer’s dissenting opinion at the recent rough diamond conference that the looming rough diamond shortage is actually a myth, the general industry consensus is that the amount of rough is decreasing, against an increase in consumer demand. The diamond industry, according to Thomas, is entering its “perfect storm.” Maybe it’s the years spent exploring in the Canadian arctic, but she is not fazed by the looming industry crisis. “We know there’s nothing coming over the horizon that can significantly impact that supply curve, but this is why we think it’s a great time to be exploring for diamonds, finding them and actually getting them into production.”

 

The drive to launch local wealth creation through diamond cutting and polishing, otherwise referred to as beneficiation, has not proved to be viable in northern Canada, to put it delicately. Thomas attributes this to strict financial issues. “We support the idea of creating business opportunities and maximizing business opportunities for local people, but we also think that it has to be a viable business.”

 

One of the main reasons that polishing in northern Canada is not picking up is that aboriginal workers can find much higher paying jobs in other aspects of the diamond pipeline, Thomas asserts. These are business development initiatives such as catering for the mines, supplying fuel and construction – “viable businesses that have the potential to make a lot of money, to grow and to integrate meaningful jobs,” she says.

 

“There are so many different types of benefits that have come out of diamond mining in these communities. Everyone talks about beneficiation as being about cutting and polishing. But I would argue that beneficiation is actually much broader than that. To me, beneficiation is about creating new businesses that have the opportunity to grow and develop and actually survive beyond the end of the mining era.”