Denis Hayes is a name that goes a long way back in diamond mining. In the days before the Canadian North was opened up to diamond exploration Hayes was working as broker at Canaccord cutting deals in resources. “I was working with some real guys,” he says. “I was working with Adolf Lundin. I was quite enthralled by the venture capital game.”
Lundin was busy establishing himself as one of the most powerful names in Canadian and international resources, with a focus mainly on oil and base metals. But Hayes’ fortunes took a different turn.
“De Beers was doing work in Canada at the time,” he recalls. “And then Chuck Fipke came along and told me he’d found a diamond. I worked out that if he was right the stock would go to C$100. So I raised him enough funds to drill the first kimberlite pipe in Canada at a share price of C$0.65.”
Fipke’s first drill campaign didn’t quite deliver on its early promise and the excitement died down. But Fipke hadn’t gone away. Hayes takes up the story again: “Eight months later he hit at Point Lake. The stock quickly went to C$92 per share and then was taken out by BHP Billiton.”
Dia Met was eventually sold in a US$692 mln deal, which was a nice result for Hayes, who had underwritten the company in its early days, and a nice result for Fipke too, who kept hold of an interest in the mine that eventually became Ekati and became a mining legend in his own lifetime.
Hayes and Fipke are still in touch. Indeed, it was Fipke who put Hayes in touch with key personnel that Hayes is using on his latest project, the Dala diamond project in Angola, held by Gem International Resources Inc (CVE:GI).
Hayes has just been appointed the chief executive of Gem International, but in reality his involvement goes right back to the beginning.
“I put the whole project together,” he says. “I was working on a project in Namibia for years and after that I stayed in Africa for five years. I stayed in Dar-Es-Salaam at the time when Petra (LON:PDL) had just taken over Williamson. I lived in Dar for quite some time.”
Adding to Hayes’s already impressive diamond experience, his Africa experience was becoming extensive too.
“One of my colleagues was a big diamond dealer in Kimberley,” he continues. “And one day he was saying he pulled US$180 mln of diamonds out of alluvial ground in Angola during the war there.”
At that time Hayes was working on a plan to redevelop the old Robert Victory pipe just outside of Kimberley, although rapidly coming to the conclusion that it was too big a project for a small company to take on.
But it turned out that the Kimberley colleague of Hayes’s still had a line into Angola, and when the old Dala licenses became free the idea began to crystallise that Hayes’s vehicle Gem International could take them on.
“I spend a week there,” relates Hayes. “I was absolutely knocked over by the potential. The garampieros were pulling stones out like you wouldn’t believe. One was a 47 carater.”
At that time, the market was in depression following the onset of the global financial crisis for kimberlite exploration was likely to be a tall order. But raising money for a short-term cash flow proposition of the kind presented by these Angolan alluvials was another matter.
“Alluvials give you cashflow and everyone was looking for cashflow,” says Hayes simply. “We could use the cashflow to look for kimberlites later. And that’s how I sold it.”
Fast forward a year or two and advised by Chuck Fipke, Hayes has now hired old Africa diamond hand Lee Barker to be the key operational man on the ground at Dala. New money is coming into the company, as the recent C$1.2 mln raise demonstrates, and with a few choice samples to take around town, the company ought to be able to raise a whole lot more.
“Right now Lee’s gathering all the data,” says Hayes. “Our focus is to get in there quickly. We’re going to get some samples and we’re going to walk around and get some big financing.”
In terms of diamond exploration Angola is real elephant country, and Hayes is confident the Dala ground has more to it than currently meets the eye.
“From their shape we know the diamonds that we’re getting alluvially come from a kimberlite that’s very close.”
To the north, there’s the Catoka pipe. But the shape of Gem International’s stones is distinctly different from the Catoka stones. The diamonds that we’re finding probably come from our pipes,” says Hayes. “And suddenly you get your C$100 stock again.”