Know Everything About historical problems and current challenges that
face the sapphire and colored gemstone mining communities
Socially
responsible investing has evolved and gradually worked its way to
higher prominence in the financial industry during recent years, as
has corporate social responsibility in the commercial and industrial
sectors of the economy. That has certainly been the case when it
comes to mining companies and developing mineral resources, most
notably in the case of conflict, a.k.a. “blood” diamonds.
The role
mineral resource development plays in financing repressive,
authoritarian regimes is coming up again in light of recent protests
by Buddhist monks and others in Myanmar and their violent suppression
by the country’s military government. Myanmar produces more than
90% of the world’s rubies—a trade estimated to be worth
US$2.1 billion wholesale according to MVI Marketing Ltd.
research—and it has also long been the world’s largest
miner and exporter of jade, primarily to China.
Mining
companies like Vancouver’s True North Gems (TSX:TGX), which is
working to develop a ruby and sapphire resource in Greenland, can
play a role in breaking the dominance of governments such as
Myanmar’s, the world’s largest supplier of rubies and
sapphires, as well as jade.
Myanmar’s
military government has made a concerted effort to gain control of
the country’s lucrative gem trade during the past two decades,
jeweler, Fair Trade and human rights advocate Ben Leber of Leber
Jeweler Inc. told Resourcex.
“At
present, gemstones are the regime's third largest export, netting
close to US $300 million, although the unofficial number is no doubt
higher. At present, the military government controls a majority share
of every gem mine, controls distribution of licensing and permits, as
well as runs the gem auctions in Rangoon. While there are
‘partners’ in the mines, these are most often government
officials or close allies of the regime.”
Campaigning for Fair Trade
Prominent
jewelers, such as Tiffany’s in 2005, have come out, instituted
policies stating that they will not purchase rubies and other
gemstones produced in Myanmar and have joined campaigns against them.
Jewelers such as Leber have joined organizations like the US Campaign
for Burma, the American Gem Society and the Council for Responsible
Jewelry Practices.
While the US
has instituted a trade embargo on Myanmar, the EU has not. Recently,
some of Britain's leading jewelers have been accused of helping keep
the military dictatorship in power by trading in the country’s
“blood” rubies.
According to
one news report, Asprey, Cartier, Leviev and Harrods are selling
Myanmar’s rubies and gems in their central London stores, with
some items priced as high £500,000. British Foreign Office
sources indicated shortly after news reports broke that Gordon Brown
was pressing the European Union to introduce tougher sanctions
against Myanmar that would prohibit sales of its gems in Britain.
"A gift
of a ruby is meant to symbolize love, but if it comes from Burma the
true price is paid in blood and oppression," said Mark Farmaner,
acting director of Burma Campaign UK. "Any rubies on sale in the
UK will have been purchased at some point from the military and so
will be helping to fund that regime."
An Alternative Emerging in Greenland
If development
plans work out, alternative sources for rubies and sapphires—both
varieties of corundum—will emerge in the next few years,
offering gemstone buyers and the jewelry industry and alternative
source of rubies without the moral stain Myanmar gems carry.
Vancouver’s
True North Gems on Oct. 9 announced that it had successfully
collected its third, 27.8 tonne bulk sample from Greenland’s
Aappaluttoq ruby and pink sapphire resource from the company’s
Fiskenaesset Ruby Project, thereby completing its 2007 field sampling program.
Fiskenaesset
has thus far yielded individual rubies
and pink sapphires
weighing more than 80 grams, or 400 carats. Rarer than diamonds,
rubies and pink sapphires are valuable gem materials. Although prices
vary greatly depending on quality, independent valuations have put a
wholesale value of US$3,220 per carat on a 0.69 carat ruby from
Aappaluttoq and a US$460 per carat value on a 0.96 carat pink
sapphire from Aappaluttoq.
“Our
primary focus as a company is now to get a bankable report done on
our main occurrence, and the work this summer was the first major
step on that route - our past work has shown we have something worthy
of advancement, and the feasability will tell us the economics,”
said True North president Greg Fekete.
The company
during the past two field seasons has amassed 120 tonnes of
mineralized surface material from Aappaluttoq. A total 3.6 tonnes of
samples have been sent to Fiskenaesset for processing True
North’s gravity concentration plant. Management expects to issue
a report shortly.
Blasted out of
a bedrock Host Zone from within tightly folded zones of phlogopite
and pargasite-enriched alteration using focused, low-intensity
blasting to control grade and width, the latest bulk sample will
yield an analysis of gemological criteria and gemstone conditions
that would occur under typical mining conditions, according to
company information. The data collected will also enable comparison
with grade and stone distribution gathered from the earlier 2006 and
2007 of the bulk samples that were collected using chain saws and chisels.
“The only
assessment that can be made about the value of the stones, our
current inventory or any eventual production at this point is that
the sheer quantities of gem grade material recovered from bulk
samples indicates the potential exists for a commercial operation
that would defined by high operating margins, low capital costs and
high internal rates of return,” True North co-founder, chairman
and CEO Andrew Lee Smith, told Resourcex.
“The
actual magnitude of the project value is dependent on a series of
variables such as stone size, yield on cutting, and aspects of
statistical distribution and quality—know as the ‘stone
curve’—that are being defined through manufacturing
experiments that are ongoing.”
developing Fiskenaesset
True North
worked up a CAD 3 million budget for the 2007 field season at
Fiskenaesset, the objective being to deliver a Preliminary Assessment
of the Aappaluttog ruby and pink sapphire occurrence. This includes a
5,000-meter diamond drilling program, as well as additional bulk
sampling and geological mapping.
“We are
currently in the process of preparing a Preliminary Assessment
(scoping study) that will be authored by Wardrop engineering who have
provided the independent oversight of the exploration program and
will complete the report by end of the first quarter of 2008,”
Lee Smith elaborated.
Compiling
technical, valuation and marketing information True North has been
preparing with companies including MVI Marketing and Wardrop
Engineering, the report will a first assessment of the project’s
economic parameters, according to Lee Smith.
Accomplishing
this will demonstrate that the risks associated with marketing,
manufacturing and technical aspects of the projects are manageable
and leave financing and project/permitting, political risk as the
main areas to be addressed,” he explained.
Assuming a
positive Preliminary Assessment, management is working up a 2008
feasibility program with an estimated cost between US$10-15 million.
If all these pieces fall into place, True North anticipates moving
the project into pre-production in 2009 and starting full-scale
production by 2012.
This article
is intended for information purposes only, and is not a
recommendation to buy or sell the equities of any company mentioned
herein. It is based on sources believed to be reliable, but no
warranty as to accuracy is expressed or implied. The opinions
expressed in the article are those of the author except where
statements are attributed to individuals other than the author, in
which case the opinions are those of the individual to whom they are attributed. |
