Diamond Discoveries International Corporation (DMDD)
Interview with:
John Kowalchuk, CEO
Business News, Financial News, Stocks, Money & Investment Ideas, CEO Interview
and Information on their
American-based, diamond exploration company with six different exploration permits in northern Quebec.

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Diamond Discoveries International’s diamond exploration program in the Torngat region of Quebec, Canada, is emerging as a new kimberlite field with enormous diamond potential

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Diamond Exploration

Diamond Discoveries International Corporation

804-750 West Pender Street
Vancouver, BC V6C 2T7 Canada

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John Kowalchuk
Chief Executive Officer

Interview conducted by:
Lynn Fosse
Senior Editor

April 2004

John Kowalchuk
Chief Executive Officer

John has more than 33 years of mineral exploration experience with both senior and junior mining companies working in Canada, US, Mexico and Chile. He was District Geologist for Placer Dome for over 6 years and was instrumental in the discovery of several world-class mineral deposits in Canada, including the Howard’s Pass deposit on the Yukon/NWT border and the Kerr Copper Gold Deposit at Eskay Creek, BC. John has also served as officer and director for several junior mining companies, including Admiral Bay (ADB—TSXV) and presently on Island Mountain Gold Mining Ltd. (IGM—TSXV) and Castillian Resources Corp. (CT-TSXV).

Company Profile:
Diamond Discoveries International Corporation (DMDD-OTC) is an American-based, diamond exploration company focused on becoming the new leader in the global diamond industry. Diamond Discoveries controls six different exploration permits in northern Quebec (Diamond Discoveries 1-6, permit numbers 1482, 1473, 1483, 1472, 1499 and 1517) that covers 470 sq. kilometers, or 180 sq. miles. Prospecting Geophysics LTD. conducted surveys on two of the controlled permits to date, Diamond Discoveries 1 and 2, permit numbers1482 and 1473.

It can take many years to identify kimberlite targets by first assessing the kimberlite for diamond potential and then obtaining a sample. Kimberlites are found in the world’s ancient shield areas and Canada’s shield is the world’s largest. The Torngat property lies within the Torngat mountain province, in the Orogenic structure. The mountainous terrain is characterized by a crustal thickening that occurred as a result of two easterly continental plates that were pushed together, one on top of the other, about one billion years ago. In the Quebec sector of the Torngat belt, roughly fifty dykes of ultramafic lamprophyre have been mapped. The magnetometer survey has identified evidence of six magnetic kimberlite dykes at the south end of Diamond Discoveries #1. Five of these dykes have just been located and sampled, and samples are en route to testing laboratories for diamond extraction. The other dykes that were indicated by the magnometer survey will also be located and sampled.

Diamond Discoveries has been able to confirm that the claims that they own are located over an ancient archean bedrock in which deep-seated kimberlite dykes have been proven to exist. Adjacent properties have discovered saleable diamonds, and there has been no history of any earlier diamond prospecting on the properties the company owns. Due to the success of the adjacent exploration findings and the team of field expertise the company has behind it with geologist Fenton Scott and consultant Peter Ferderber, Diamond Discoveries is moving forward with optimism in the exploration of their Torngat property.

CEOCFOinterviews: Mr. Kowalchuk, please tell us how Diamond Discoveries got started and the management team you have in place.

Mr. Kowalchuk: “Ted Pangia started the company but he primarily likes to have administrators run the day-to-day part of the business. He asked Tom Kennedy, Ed Williams and me to join the group and to do that. We will be handling the filing and corporate duties. I will also be working with Peter Ferderber on the technical side.”

CEOCFOinterviews: Will you please tell us about your background in mining and how it plays into this new management team?

Mr. Kowalchuk: “My career started with Placer Development, which became Placer Dome, one of the larger gold mining companies in the world. I spent sixteen years with them in two stages. My last six years was a management position, supervising an exploration office out of Whitehorse, Yukon. At that time, when you worked for a senior mining company, they had large exploration staffs and you had a mentoring program within the company where you worked with senior geologists. Placer Development had one of the most effective exploration staffs in the nineteen seventies of any company in the world and that will stand up to anyone’s scrutiny. We worked with an integrated exploration program. We integrated geophysics, geochemistry and geology, which were very closely integrated with the engineering group. We were good at finding things and developing them to a certain stage. There was very good communications with the engineering group so that we could put mines into production quickly. In the eighties, mining companies changed and I was an old timer then. The company’s staff was much smaller then and they were looking in third world countries. My experience with Placer was one of the best learning experiences anybody could have; anyone that has worked in a big organization and has worked their way through it has had a good mentoring group. I am familiar with all aspects of exploration and I am familiar with much of the engineering aspects of what makes a mine. In 1993, I joined the Yukon government for three years, which was an interim thing so that I could stay home with my kids; my children at that time were teenagers. I learned how the government operates and what the restrictions in government are, so that when people get frustrated, I understood why we had to do things a certain way to keep everything transparent and open, and you cannot play favoritism. When I came back to Vancouver in 1996, I worked with several junior companies and started to learn how they had to operate to raise money. When the mining industry collapsed, all the markets went into high-tech. I thought it was a bit unfair in some ways because there were many more scams in the high-tech industry than in mining. I think my experience is well rounded. I am director and officer of a few Canadian junior companies as well and I know what they want to put into production. They need to survive and produce share holder equity through capital gain.”

CEOCFOinterviews: What attracted you to Diamond Discoveries? 

Mr. Kowalchuk: “What attracted me was the property; I really like the property in the Torngat Mountains. The Torngat Mountains are in the north and not nearly as isolated as the diamond mines that we already have in Canada. They have deep-sea access through the Abloviak fiord that comes right to the edge of the property. They have already found diamonds in the surface samples of two of the dykes and they have found fifty dykes in several kimberlite pipes and those have the correct indicators for diamond mineralization. I thought it was exciting to be involved with a project that could develop into another diamond mine in Canada.”

CEOCFOinterviews: Will you tell us about the process from having the property to when it starts to produce, and where are you in this process?

Mr. Kowalchuk: “The process takes deep pockets and a lot of patience because it is a relatively long process. In this case, we short cut the process because we were able to prospect and find the dykes right on the surface. The first objective is to do a large amount of heavy mineral sampling. You do not just send these out for assays like you do gold or silver, but you have to do an extensive process to separate all of the minerals. You have to do a concentration process to pick up the heavier ones and then someone personally picks out the Garnets and Olivine and the very specific minerals that you are looking for. You then prepare those samples and have a microprobe analysis of each of the mineral grains individually to determine their chemistry. These mineral grains are indicating that there is a kimberlite pipe or dyke around somewhere. You then follow the mineral train up on all these samples and then you determine if it is just a kimberlite pipe or if the chemistry of these minerals indicates diamonds. In our case, much of that process was shortened because we were able to see the dykes on the surface and following the dyke’s long surface, we were able to find circular features where we found definite pipes. We were also able to sample the specific rock units and then to a separation of the mineral grains in those and were able to tell if they were kimberlite or not and whether they had the potential to carry diamonds. Through each of these procedures, it takes 3-5 months time from taking your samples and getting your results.”

CEOCFOinterviews: Why does it take so long to get the results?

Mr. Kowalchuk: “This process is so long because it takes a long time to do it and there are only six or seven labs across Canada that can do that. You have to have people that are capable of identifying the minerals. It is very labor intensive. Analyzing a sample can cost 500 to 1000 dollars. The taking of the samples is much the same as in other explorations, but it is the long lead-time for analysis and interpretation before you get to a drilling stage. Right now, we are at the stage where we have several targets to drill plus drilling of the dykes that we already know. We have fifty dykes on the surface and we could drill any of those where they are. We have several pipes that we know of, which we can drill. We can also take samples on these, and we do a caustic fusion analysis where the rock is actually dissolved so only the diamonds are left and we can count the diamonds that are left; we can actually do that from small bulk samples on surfaces as well. That process takes three or four years and Diamond Discoveries has only been in the process for three years.”

CEOCFOinterviews: Has the Company’s financing changed recently?

Mr. Kowalchuk: “We made an agreement with May Davis Group in January of this year, which was on a best-efforts process to provide us with two million US dollars over a twelve-month period. Just two weeks ago, we received the first 250 thousand dollar trench in that two million dollar financing. We expect to receive another 500 thousand dollars by the end of April and we will receive other amounts as our price moves. We hope to have that two million before the summer and we will be working on other financing. Now we can focus on the corporate, administrative and technical sides. We have arranged for other groups to look at financing too, so we expect to have significant financing this spring so we can start the programming in June.”

CEOCFOinterviews: Has there always been an interest in diamonds or is this particularly a good time for the investment community to be interested?

Mr. Kowalchuk: “Until diamonds were discovered in Canada in the Northwest Territories, no one had followed the process. De Beers had done a lot of work and they were secretive about their strategy and they had quite a bit of knowledge. Chuck Fipke spent three years just doing sampling and everyone thought he was a kook except for the people that financed him; he was stretched for money until he found the pipes and diamonds. There was never a large focus in Canada before that happened. It was because of this discovery of diamonds in the Canadian shield of Northern Canada that there has been a great influx of diamond exploration in Canada by Canadian companies. There has been a great exchange of technical information between companies; Canadian junior companies are required to release all their technical information. There has been a great influx of knowledge about how diamonds occur, what to look for, how they are found and the technology has blossomed since 1998. Because of that, in Canada there has been a big growth in the diamond industry. I think Diamond Discoveries is one of the few of the North American OTC companies that are actually into the diamond exploration field. Recently there has been a problem with conflict diamonds and there has been a stress on the marketing of clean diamonds.”

CEOCFOinterviews: What are conflict diamonds?

Mr. Kowalchuk: “In Africa, many diamonds come from rivers, and they are used or sold to diamond buyers and they end up in the general diamond market. The proceeds from selling these diamonds found in the African countries are used to finance revolutions and terrorist activities. Many of the revolutions in Uganda and the Congo are significantly financed through the sale of these diamonds. There has been a large marketing push to make sure the diamonds are clean and not to support all of the financing of revolutions. If diamonds come from Canada, we know they are clean. As with any commodity, Canadians and Americans are much more comfortable when they have a supply source from a stable country where they are not going to be held up for ransom.”

CEOCFOinterviews: Does being an OTC company make a big difference to the investment community and do you find that to be helpful?

Mr. Kowalchuk: “I am just learning about OTC companies; I am quite familiar with the Canadian Stock Exchange/Venture Exchange. I think it could be a much larger market and if we could get Americans turned on to diamonds, like the Canadians are with the TSX Venture Exchange market, then we could have a huge market. It is a very high value commodity. There are many Americans investing in Canadian diamond companies; TSX Venture Exchange. It is more of a difficult process for Americans to invest in the Canadian market than the OTC.”

CEOCFOinterviews: Besides the OTC listing, why sets Diamond Discoveries apart from other diamond companies?

Mr. Kowalchuk: “We are in the early stages and we already have diamonds. We know some of our dykes are diamondiferous and we suspect because of many indicators, that our pipes will be too. In most cases in diamond exploration, you go into this area that has fifty to a hundred ft. of glacial tilt covering everything and you follow samples, look at your physical anomalies and then you drill blind. We found all of the dykes by prospecting. We were able to go to the next stage of checking the content much easier than drilling blind geophysical targets and hoping one of them might be a kimberlite pipe. Logistically, for a diamond mine, we are close to the coast so, we can be serviced by seasonal ships coming in from the south. We are in one of the best provinces to work; we are provided with much support and it is just excellent. We do not have land claims issues to worry about and we do not have significant environmental problems as long as we operate a clean operation. Having such good exposure of the kimberlites and the fact that we already have diamonds on the property, the permitting processes are swift and there is technical and economical support. It is just a matter of taking a sample, drilling and locating the pipes or phases of the pipes, and we have all indications that we will come up with significant diamond counts.”

CEOCFOinterviews: What should shareholders and potential investors remember most about Diamond Discoveries and what should they know that they may not realize when they first look at the company?

Mr. Kowalchuk: “I think that with all mining projects and companies, the primary focus should be on the quality of their assets. This diamond property that we have in eastern Quebec is, as far as I can see and I have looked at several diamond projects in the last five years, one of the quality diamond properties in North America. Once you look at the asset itself, you look at the team and their ability to raise money and their ability to run a clean ship. In our team, Tom Kennedy is chairman and director and handles basic administrating, and he has extensive junior company experience. He is a lawyer and was fellow prosecutor for the Vancouver Securities Commission, so he knows what we can do and what we should not do. Being a lawyer, he knows what is required to keep things clean. We also have Ed Williams who is a CFO down in Georgia and he is extremely competent and very knowledgeable of OTC issues; he handles all of our accounting. We have a competent team. As far as money raising is concerned, we have Ted Pangia who has extensive contacts in New York City and in Europe, so he was able to raise money to do work in 2001-2002 when most mining companies were unable to raise money and were in a survival mode. Now, with the mining industry coming along, just about any mining investment is going to do well unless you have a completely incompetent group. This group is extremely competent and I think as a team we will be very successful.”


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