The Story of Voisey’s Bay: The Discovery (Part 1 of 3)
Presented by: Equitas Resources, “Nickel exploration in Labrador”
The legendary story of one of Canada’s most significant base metal discoveries happened just before the dawn of the internet era. While some investors recall the sequence of events and the value that was created by Diamond Fields, there are many investors today, both new and old, who are not familiar with the story of Voisey’s Bay.
For this infographic, we have turned to Jacquie McNish’s fabulous book The Big Score, which documents the history of the discovery, biographical elements of Robert Friedland’s life, and the ensuing bidding war between Inco and Falconbridge that led to one of the most spectacular takeovers in mining history. If you like these infographics, then look into buying Jacquie’s book. It was gripping and full of information.
By its very definition, a discovery is the breakthrough action of finding something of value that no one knew existed. Discoveries come in all shapes and sizes – but it turns out many of the very best discoveries happen in the most unsuspecting of conditions.
Labrador is located on the Northeast tip of Quebec in Canada, and it’s in this remote area that the Voisey’s Bay discovery takes place. Labrador is bigger than Great Britain and has over 8,000km of coastline, yet only a population of just 26,700. For context, caribou outnumber people in Labrador by a ratio of 13:1.
In 1985, geologists of the Newfoundland Department of Mines and Energy conducted a survey of one of the most remote parts of Labrador. Voisey’s Bay is 35km from Nain, a small town of 1,000 people.
The team, in a helicopter-supported survey, tested samples in the area, but were not encouraged by the low metal content of the weathered rocks exposed at surface. They left and didn’t look back.
In early 1993, Michael McMurrough of a fledgling company called Diamond Fields Resources was looking for untapped diamond properties to add to the company’s property portfolio. He had heard that a place called “Labrador” had ancient Archean rock formations – one of the earth’s oldest rock groups – where diamonds can form in kimberlite pipes. While Labrador’s wealth in iron ore is well-documented, no diamonds have ever been discovered in the region.
Diamond Fields’ geologist, Rod Baker, was sent to Newfoundland in April 1993 but found that the best diamond prospects had just been staked by two Newfoundlanders. Al Chislett and Chris Verbiski, and their prospecting outfit named Archean Resources, eventually convinced Diamond Fields to pay $372,000 in annual instalments over four years to acquire their claims. Diamond Fields also agreed to pay $500,000 to start an exploration program.
The two prospectors sampled throughout the summer of 1993 without much luck, but they did chip some samples of chalcopyrite, a copper-bearing mineral, from an outcrop. The samples came back with 2% copper, and they pushed for Diamond Fields to put more money into the exploration program.
At this time, Diamond Fields was a fledgling company. Running under Robert Friedland’s umbrella of Ivanhoe Capital, the company had its share of issues. Legal problems were mounting, and the company had finally just raised cash in a desperation move: the company impressed investors with its idea of “vacuuming” diamonds off the seafloor near Namibia.
It was company geologist Richard Garnett that convinced the board of Diamond Fields to pursue the Labrador findings, which he had been tracking. The company eventually was able to allocate $220,000 to Labrador – or 40% of what Chislett and Verbiski recommended for follow-up spending.
In August 1994, the prospectors received more detailed assays from the samples they collected – assays that confirmed a multi-element deposit with cobaltite, copper, magnetite, and exceptionally high amounts of nickel. In fall, the team tried to beat winter by executing the next phase of exploration.
On drill hole number two: they hit. The drill core was yellow – not from gold, but from high-grade massive sulphides. The hole was 33 metres long, and signified that Diamond Fields was finally onto something.
At this point, Robert Friedland reigned in control of the company with one mission: to auction off the discovery for the highest price.
How to Avoid Common Mistakes With Mining Stocks (Part 3: Jurisdiction)
“Location, location, location…”
This famous real estate adage also matters in mining. After all, it’s an industry that is all about the geology—but beyond the physical aspects and the location of a mineral deposit, there are also social and environmental factors that create a mining jurisdiction.
Common Mistakes With Jurisdiction
We’ve partnered with Eclipse Gold Mining on an infographic series to show you how to avoid common mistakes when evaluating and investing in mining exploration stocks.
Part 3 of the series focuses on six signals investors can use to gauge a company’s preparedness for the jurisdictions they operate in.
#1: Geological Potential: Methodical Prospecting or Wild Goose Chase?
It all starts with a great drill result, but even these can be “one-off” anomalies.
Mineral exploration is a methodical process of drawing a subsurface picture with the tip of a drill bit. A mineral discovery is the cumulative effort of years of research and drilling.
The key to reducing this geological risk is to find a setting that has shown previous potential and committing to it. Typically, a region is known to have hosted other great discoveries or shares a geology similar to other mining districts.
Signs of Methodical Prospecting:
- Lots of geological indicators
- Potential for further discovery
- Sound science
#2: Legal Environment: Well-Paved Path or Minotaur’s Maze?
Now that you have identified a region with the prospective geology you think could host a discovery, a company will have to secure the permits to explore and operate any further.
However, a management team that cannot navigate a country’s bureaucracy will face delays and obstacles, costing investors both time and money.
Without clear laws and competent management, a mining company’s best laid plans become lost in a maze with legal monsters around every legal corner.
Signs of a Well-Paved Highway:
- Existing laws encourage mining investment
- Relatively low bureaucracy
- Well-established permitting process
- Legacy of mining contributing to economy
#3: Politics: Professional Politics or Banana Republics?
A good legal framework is often the outcome of politics and stable governance—however so is a difficult legal framework.
The political stability of a nation can turn on one election and so can the prospects for developing a mine. An anti-mining leader can halt a mining project, or a pro-mining leader can usher forward one.
A positive national viewpoint on mining may be enough to lure investment dollars, but local politics may determine the success of a mining company.
Signs of Professional Politics:
- Positive history with mining companies
- Politically stable jurisdiction
- Rule of law respected
- Changes in government have little effect on the mining industry
#4: Infrastructure & Labor: Modern or Medieval
Sometimes it is the discovery of valuable minerals that spurs national development, but this can also happen the other way around, in which development can encourage mineral discovery.
A mining company looking to build a new mine in a country with a tradition of mining will have an easier time. Access or lack thereof to modern machinery and trained employees will determine how much money will be needed.
That said, if a company is looking to develop a mining project in a new mining region, they must be ready to help create the skills and infrastructure it needs to mine.
Signs of a Modern Jurisdiction:
- Developed roads to access and support operations
- Trained labor for staffing and development
- Well-established grid lines and back-up power systems
#5: Community: Fostering Friendship or Sowing Enemies
Mining operations have a significant impact on the local community. Good companies look to make mutually beneficial partnerships of equals with local communities.
Ignoring or failing to respect the local community will jeopardize a mining project at every stage of its mine life. A local community that does not want mining to occur will oppose even the best laid plans.
Signs of a Friendly Relations:
- Operations bring community together
- Local history shows support for mining
- Understanding of local concerns and regional variety
- Company contributes to economic growth and health of the community
#6: Environment: Clean Campsite or One Night Party
There is no way around it: mining impacts the environment and local ecosystems. But, mining operations are a blip on the radar when it comes to Earth’s timeline.
Mine sites can again become productive ecosystems, if a company has the capacity and plan to mitigate mining’s impacts at every stage of the life of a mine—even beyond the life of a mine.
Signs of a Clean Campsite:
- Development plan mitigates environmental damage
- Well-planned closure and remediation
- Understand how communities use their environment
Bringing it together: ESG Investing
These six points outlined above point towards a more complete picture of the impacts of a mining project. Currently, this falls under what is labeled as Environmental, Social and Governance “ESG” standards.
Mining companies are the forefront of a big push to adopt these types of considerations into their business, because they directly affect natural and human environments.
ESG is no longer green wash, especially for the mining industry. Companies that understand and apply these concepts in their business will have better outcomes in the jurisdictions they operate within, hopefully offering investors a more successful venture.
Geology does not change on the human time scale, but bad management can quickly lose a good project and investor’s money if they do not pay attention to the other attributes of a jurisdiction.
Silver Bulls: Visualizing the Price of Silver
Silver has always proved its value throughout history. From ancient coins to jewelry, silver retains its value and goes through tough times.
Silver Bulls: Visualizing the Price of Silver
Silver has always shown its value throughout history. From ancient coins to its use as a global currency during the Age of Discovery, silver has circulated the world to become an important financial asset. Its value continues to shine in the era of the modern finance industry.
Today’s infographic comes to us from New Pacific Metals and it takes a look at the bull markets in silver prices and the future of silver.
Silver Bulls: 1967 to Today
The late 1960s marked the beginning of the end for silver as currency, but also the start of its use in protecting and securing wealth.
In the United States, silver certificates were issued by the Treasury until late 1963, when the $1 Federal Reserve Note was released into circulation. After this, the remaining silver certificates were still redeemable for silver, but this practice ended in 1968.
Since then, silver has had several bull markets in which prices have increased—or as some silver aficionados may argue, the relative value of fiat currency has decreased.
|Percentage Gain||Price Range (USD)*||Duration|
|Silver Bull #1 (1967-68)||49%||$12.50 - $18.58||13 months|
|Silver Bull #2 (1971-74)||274%||$8.45 - $31.59||27 months|
|Silver Bull #3 (1976-80)||544%||$18.40 - $118.50||48 months|
|Silver Bull #4 (1986-87)||40%||$12.47 - $17.48||12 months|
|Silver Bull #5 (1993-95)||39%||$6.47 - $9.00||27 months|
|Silver Bull #6 (2001-11)||827%||$6.01 - $55.69||113 months|
|Silver Bull #7 (2015-Present?)||90%||$15.04 - $28.53||56 months|
*Inflation-adjusted data using CPI from BLS, LBMA Monthly prices
That said, not all silver bull markets are the same, nor do they necessarily coincide with bull markets in the price of gold.
Performance: Gold vs. Silver
Despite being often referred to as “poor man’s gold”, silver has actually outperformed gold in five of the six previous bull markets for gold and silver.
There are two ways to look at how silver prices performed during these timeframes:
- We can compare silver price performance to corresponding peaks and troughs of the gold price
- We can also look at silver prices based on its own peaks and troughs, irrespective of gold
Often, gold prices move first with silver prices quickly following—but then, silver can outperform gold on its own timeline.
|Gold Performance||Silver Performance||Silver Performance|
|Based on gold's peaks and troughs||Based on silver's peaks and troughs|
|Silver Bull #1||40%||-17%||100%|
|Silver Bull #2||455%||144%||432%|
|Silver Bull #3||715%||912%||977%|
|Silver Bull #4||78%||27%||94%|
|Silver Bull #5||28%||63%||75%|
|Silver Bull #6:||636%||904%||45%|
Source: CPM Group (Nominal data)
More recently, prices of silver have been on an upward trend since 2015 and some would say we are in a new bull market for the precious metal. For however longer, it is anyone’s guess.
The Future of Silver?
While the future price direction of silver is difficult to predict, this doesn’t diminish the increasing importance of silver’s role as a metal in an electrified future.
As you can see in the demand breakdown below, silver is not only precious—it is useful:
|Silver Demand (2019)||Millions of Ounces|
|...of which Photovoltaics||98.7|
|Net Physical Investment||186.1|
Source: Silver Institute
While silver’s uses and applications continue to grow, silver remains a safe haven investment from political uncertainty and economic distress—all while being a cheaper and better alternative to gold.
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