From The Sunday Times, October 7, 2007
Tony Allen-Mills in northern Quebec
The bug that bit Eira Thomas was a passion for exploration that has turned her, at 38, into Canada’s Queen of Diamonds.
THEY call it the high-end stone game. Somewhere out there, in a desolate corner of an unexplored wilderness, lies the next great diamond mine. They are looking for it in the harshest deserts of Africa. The Russians think they might find it under the Arctic. Recently I met a woman who had already found one great mine in Canada, and thinks she may find another.
When Eira Thomas was six, her Welsh geologist father took her prospecting in Canada’s Northwest Territories, a 400,000 square mile expanse of lakes, forests and mountains inhabited mainly by mosquitoes. “Not a lot of kids get a chance to explore the tundra,” she said. The mosquitoes failed to put her off. The bug that bit her was a passion for exploration that has turned her, at the age of 38, into Canada’s Queen of Diamonds.
Twelve years ago, when she was a newly-qualified geologist working for her father’s company, she transformed the world’s $13 billion (£6.4 billion) a year diamond industry with her discovery of the high-grade deposit that eventually became the fabulous Diavik mine. It took years and millions of dollars to develop, but Diavik helped to turn Canada into the world’s fourth-largest diamond producer, behind Botswana, Russia and South Africa. It also provided morally impeccable, high quality gems untainted by conflict or blood.
Thomas has since become one of the world’s most accomplished players in the hunt for high-end stones. But in the past decade there has not been another Diavik-sized discovery, by her or anyone else. It may not be immediately apparent from the shop window of the local high-street jeweller, but the global supply of diamonds is beginning to shrink – just at precisely the moment when the newly-prosperous middle classes of China and India are acquiring the money to buy them. “By 2012 there’s going to be a significant shortage of large stones,” said Thomas. “It’s a seller’s market, and that bodes well for us – if we can find them.”
The other day we went out to look for them. As the chief executive of the Stornoway Diamond, Thomas flew me and a small group of mining analysts to inspect her latest prospect at a remote drilling camp in northern Quebec. For an hour-and-a-half we droned over the Quebecois pine forests in a small seaplane. There are no airstrips in this part of the world. No towns, no roads, no people. Just millions of square miles of woods and mountains and frigid lakes, with the faint yet electrifying possibility that beneath one of those countless rocks might lie a seam of volcanic kimberlite – the diamond prospector’s holy grail. As we flew steadily northward, Thomas pointed out of the window, and the plane banked sharply over yet another lake. On the far shore stood a few red cabins and some large white tents. This was Stornoway’s Foxtrot property, acquired in the hostile takeover of a rival mining concern last year.
Thomas was keen to show us the kimberlite outcrop that Stornoway hopes to develop into Quebec’s first diamond mine. But we hit a snag on our way to the sloping shaft that winds 750 yards underground to a jagged stab of diamond-bearing rock thrust upwards by volcanic eruptions hundreds of thousands of years ago.
Maggie, the camp dog, was barking furiously at a nearby storage tent. Suddenly there was a huge crash and a large black bear hurtled out of the tent. Visitors scattered as the bear galloped heavily across the road, pursued by the snarling dog. Scavenging bears are the least of the problems of mining in this part of the world. All equipment has to be brought in by seaplane or helicopter. Cranes, bulldozers and drilling rigs have to be dismantled then reassembled on site. At Foxtrot they transported and rebuilt a Dense Media Sepa-rater – the heavyweight crusher and sorter that carries out the first crucial operation in retrieving diamonds from rock.
It’s a dangerously expensive business. According to Thomas, the developers of Foxtrot have so far spent £38m on prospecting and drilling over the past 10 years, and they have yet to sell a single diamond. But a few weeks ago, Stornoway issued the results of the first bulk kimberlite sample to be processed from the camp’s most promising outcrop, known as Renard 3. From about 2,000 tonnes of mined rock, the company extracted almost 2,700 carats of diamonds – a highly respectable success rate. Among them was a single 10-carat stone, the biggest Stornoway has mined so far.
“These pipes are consistently spilling out large diamonds,” Thomas boasts happily. “We wanted to prove that the nice-looking diamonds (originally found in geological samples on the property) weren’t just flukes. And we’ve done that”.
This summer, independent analysts will be examining Foxtrot’s mining samples to provide investors with an informed view of how rich the kimberlite vein really is, and how many carats it might eventually yield. “If you’re going to build a billion-dollar facility to shift that stuff, you’d better have a pretty good idea of exactly what’s there,” said Graeme Currie, a Vancouver-based mining analyst. Nor does the risk stop with a favourable report. Thomas already knows that Renard 3 is not a Diavik-sized strike. It’s a “good medium-sized resource,” she said. “But it’s got to be mined prudently and managed well with minimised costs to maximise the value of the resource.”
In a part of the world where there are almost no roads and no nearby source of power, that isn’t going to be easy. Key to the Foxtrot project will be the construction of an all-weather road stretching hundreds of miles through the wilderness. Difficult decisions await Thomas on whether the road should be paved or unpaved; whether it should take a shorter route northward to link up with existing roads feeding a giant Quebec hydro-electric project; or a longer route southward through territory owned by Cree Indians who are keen to benefit from the project. Then someone will have to pay for it. The Quebec government controls a 50% share in the Foxtrot project.
The woman who has become Canada’s most glamorous miner is equally at home in a boardroom or a sub-Arctic swamp. Photographed recently for a prestigious American glossy magazine, Thomas wore a beautiful strapless emerald green ball-gown that contrasted perfectly with her unkempt mane of red hair and the diamonds she wore on her pale neck and wrist. She is the only woman in the world who can claim to wear diamonds from a mine she discovered. Beneath the gown, she wore gumboots. “I spend a lot of time on the business side, visiting boardrooms, talking to investors, raising capital,” she explains. “But I also have the opportunity to pull on my boots and see this incredible wilderness. I like to be connected to the boardroom and the project at the same time – it’s a nice balance.”
It was in the icy wastes of the Northwest Territories that she made her most famous strike. She was working for her father, Grenville Thomas, a Swansea geologist who grew up on a housing estate and emigrated to Canada in search of his fortune in the early 1960s.
A television documentary on his daughter shows her wading through blizzards of mosquitoes as she prospects around Lac de Gras, the lake that concealed Diavik. “People have quit jobs over bugs,” she shrugs. “They are certainly not my favourite thing. But mosquitoes come with the territory.” Yet Thomas refused to quit even when other geologists told her there was no point in drilling further in that area. From a combination of aerial surveys and geological analysis, she identified a kimberlite pipe that turned out to be one of the world’s richest. A dyke was built, part of the lake drained, and Diavik now yields 8m carats a year. Yellowknife, the nearest Canadian city, is riding the crest of a diamond boom.
Thomas’s find made her rich, but not as rich as she might have been. Her father’s comparatively small company, Aber Diamonds, had no chance of raising the hundreds of millions of dollars needed to develop a major mine on its own. It was ultimately Rio Tinto, the global mining giant, that acquired a majority share in Diavik and reaped most of its rewards.
The experience left Thomas determined to build her own company to see her projects through from discovery to production. With Stornoway, she aid, “we wanted to be in charge of our own destiny”. As luck would have it, the world diamond shortage has created an opening for smaller-sized mining companies to compete with the big guns. Stornoway is busily snapping up properties that are too small to interest the diamond majors such as Rio Tinto, BHP Billiton and De Beers but which, with careful management, might still be highly profitable given forecasts of growing demand.
When Thomas is delivering her Powerpoint presentation to a room of mining analysts, it’s hard not to be impressed. She is tall, soft-spoken and in full command of her material, whether she’s talking about the north anomaly, hypabyssal dyking or projected daily tonnage rates.
She is single and accustomed to being the only woman in any room full of miners, but she said she has never felt at a disadvantage because of her sex. “I’ve always been treated very well,” she said. “Part of it was growing up round my father, who has been in the industry for years.”
Yet not even Thomas’s persuasive combination of feminine charm and scientific savvy can diminish the risks of diamond investment. Less than 2% of kimberlite finds turn out to be rich enough to mine. “In the old days you could find kimberlite and your stock would go nuts,” said a Stornoway spokesman. “But now people realise the production timeline is much longer for diamonds [than other minerals].” It can take seven to ten years to turn a kimberlite find into diamond production.
Thomas admitted to being “a bit frustrated” that Stornaway’s stock has been languishing on Canadian exchanges despite its announcements of promising results from the Renard find. “We released news of that 10-carat stone and nothing happens. It’s a bit strange.” Part of the problem is that diamond prices are not listed on exchanges like commodities such as gold or silver. There are 6,000 different grades of diamonds and no easy way for investors to keep track of value. Lurking at the back of many worried minds is the fear that there are no more great mines to be found – and that the industry may be in its death throes.
Then there’s the challenge from synthetic diamonds, and the threat that the “forever” cachet of the real thing might wear off in coming years. De Beers continues to do its best to persuade us that diamonds will always be a girl’s best friend, but the investors who pour millions into new mining ventures are not romantic types. They might get a quicker return from gold or uranium.
A major diamond find – a new Diavik – would obviously silence the cassandras, revitalise investor interest and thrust Stornoway’s stock skyward. Foxtrot’s more modest resources may not make Thomas a billionaire, but good results from her samples this summer will enable her to keep looking elsewhere.
“I definitely think there’s a potential for more large discoveries,”she said. “Canada’s just too big a place, and frankly we haven’t made a dent on the exploration side. We found the easy ones, but it remains a great place to look.”