CMKM Sees Old Gem Play Make Final Flop

by Will Purcell
Canada Stock Watch
January 28, 2008

Forgotten diamond counts from the Carolyn kimberlite in Saskatchewan provide should allow shareholders of CMKM Diamonds Inc. to accept that Urban Casavant's 2004 diamond promotion was a flop. The Pink Sheets dog of dogs routinely traded billions of shares daily during the spring and summer of 2004 while Mr. Casavant's pitch worked investors into frenzy. Word that Carolyn was diamondiferous propelled CMKM to a market capitalization several times higher than the combined market value of Shore Gold Inc. and Kensington Resources Ltd., each top Saskatchewan gem hunters with a good supply of large gems.

CMKM's leaky promotion began to founder several days later when CMKM's partners revealed the disappointing diamond details -- after prompting from the Canadian regulators. Nevertheless, it took more than a year, reams of unfavourable press and a Securities and Exchange Commission revocation to kill Mr. Casavant's promotion for good. Some of CMKM's dogged shareholders kept the faith that Carolyn would still sparkle, but new numbers clearly paint the oft-tested pipe as a diamond woofer.

The numbers

The promotional jig was up when Rick Walker's United Carina Resources Corp. and Consolidated Pine Channel Gold Corp. revealed that 386 kilograms of Carolyn kimberlite contained just two tiny diamonds weighing a total of 0.000005 carat, stones that deserved the microdiamond moniker like few others.

Saskatchewan gem hunters typically report macrodiamond grades in carats per hundred tonnes, probably to avoid the negative connotations of an occasional zero after a decimal point. Even that approach fails at Carolyn, which yielded nary a macrodiamond, and offered a total microdiamond grade of 0.001 carat per hundred tonnes, a result still overloaded with zeros.

CMKM's shareholders had a few days to enjoy the rosy hue of Mr. Casavant's flimsy diamondiferous proclamation before Mr. Walker burst their bubble, and many refused to believe the diamond details emanating from north of the border. When shareholder denial and anger inevitably gave way to bargaining, investors rested their hopes on core samples still safely locked away. Even that faint flicker of hope faded when CMKM's piece of the play lapsed.

Years passed with no further word, but United Uranium Corp. and Star Uranium Corp. drove what seems the final nail into Carolyn's coffin in a Jan. 22 press release. The successor companies to United Carina and Consolidated Pine Channel said they processed the samples in 2006, but Mr. Walker did not release the results. The new crew, led by Eric Wray, said the remaining 210 kilograms of rock contained six microdiamonds.

The discouragement

That smattering of gems is better than CMKM's first result, but it still yields a laughable grade. Based on typical weights for diamonds recovered on the sieves, the latest parcel of grit from Carolyn weighed about 0.0003 carat. That yields a microdiamond grade of 0.14 carat per hundred tonnes, not to be confused with Shore's average of 0.14 carat per tonne for commercial diamonds larger than one millimetre.

With CMKM gone, United Uranium and Star Uranium each own a 50-per-cent interest in the Carolyn pipe. They say they are "currently assessing exploration results to date," but there is precious little sparkle to assess from the pipe, originally named Smeaton because of its proximity to the little Saskatchewan town.

Mr. Casavant renamed the pipe in 2004, presumably after his wife, but the new moniker did not erase previously disappointing results dating back to the mid-1990s. Swannell Minerals Corp. tested the body in 1996 and found nothing, and Mr. Walker's two companies failed to find anything promotable in 2000.

CMKM, which on one memorable day traded more shares than all the other companies on all the other stock exchanges in the world, combined, last traded on the Pink Sheets in the fall of 2005, with a share price as puny as its diamonds.

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