-----------------------------------------------------------Rating: "A" -- the obsession, hard work, heartbreak and good luck
required to make a multi-billion dollar discovery. Highly
recommended.
This is the story of the discovery of the Ekati diamond mine, in the
Barren Lands of the Northwest Territories, by Chuck Fipke, Hugo
Dummett, and others.
Hugo Dummett signed on with Superior Oil in 1978 to prospect for
diamonds in North America, just as the science of using indicator
minerals -- pyrope garnets, chrome diopside and chromite -- for
diamond exploration was being worked out. Superior started
prospecting around Arkansas's Crater of Diamonds -- now
inconveniently a State Park. Hugo and Mike Wolfhard hired Chuck
Fipke and his crew to sample the area. Lots of fun with jungly brush
and shotgun-toting landowners... Hugo even tried to sweet-talk Gov.
Bill Clinton into leasing him the park!
Fipke is a poster child for the space-case prospector-geologist, but he's
smart, has a sharp eye and was an *amazingly* hard worker. But a
*terrible* boss -- he drove his workers to exhaustion, and wouldn't
take elementary safety precautions, even on helicopter-supported
work. It's remarkable he didn't kill anyone [note 1].
The road to Ekati was not direct. Superior's exploration program (and
their competitors') went down the usual side tracks and dead ends --
including rediscovery of the salted site of a 19th century diamond
fraud. Then -- just as Fipke & company were developing some truly
good-looking Barren Lands prospects -- Mobil Oil bought Superior,
and summarily axed all Canadian exploration. Thud.
Fipke and Dia Met scrambled for money from family, friends and
penny-stock speculators, raising enough to stake a sizeable claim-
block near Lac de Gras, in the trackless barrens a couple hundred
miles northeast of Yellowknife. Then the money was gone, and none
of the pros were interested in Dia Met's "moose pasture." Bankruptcy
loomed -- but Dummett landed a new job with BHP, with a healthy
budget, and he quickly leased the Fipke-Dia Met ground.
Word of the BHP deal brought De Beers, Corona and others into the
area, but the *real* excitement started when BHP's first drillhole
found diamonds -- lots of diamonds! Despite strenuous secrecy
efforts, the word got out -- as it always does -- and the Great Diamond
Rush of 1991 was on! Tundra was staked by the township, and Dia
Met stock, which sold for 50c. a share in mid-91, hit $67 by the end of
1992. Fipke and his partners were paper billionaires.
The Ekati mine was commissioned in late 1998. Capital cost was
US$700 million. Sales of US$448 million (FY 2001) yielded gross
earnings of $285 million (!, EBITDA = earnings before interest, tax,
depreciation & amortization = gross profit). Mine life is expected to exceed
25 years.
District exploration costs (1989-98, Ekati-Diavik district, all companies)
exceeded US$500 million(!). A second mine, Diavik (Rio Tinto-Aber),
inconveniently located directly under Lac de Gras, is scheduled to go
into production in 2003 at an estimated capital cost of US$885 million.
Serious money is involved here. [Financial data from BHP 2001
annual report, and various web reports. Don't expect much financial
information in the book. Google is your friend.
Fipke & his longtime partner, geologist Stewart Blusson, each retain a
10%(!!) interest in the Ekati mine. (Blusson later gave $50 million to
UBC, his alma mater). When the big bucks rolled in, Fipke's marriage
fell apart, his brother sued him (as did many others), and his son
stopped speaking to him. The Big Strike had its costs.
The book's meandering start might put you off, but don't be
discouraged -- Krajick has a fine story to tell, and once he get's rolling,
this is strong stuff. No geologist who's worked in exploration -- or
anyone with a taste for an old-fashioned strike-it-rich story -- should
miss this one .
____________
Note 1) There was fatal helicopter crash at the BHP camp in 1992,
while Fipke was project manager. The apparent cause was pilot error
-- flying without reeling in the sling-line -- but Fipke wasn't directly
involved.
Happy reading!
Peter D. Tillman
Consulting Geologist, Tucson & Santa Fe (USA)
