Robin Dow

Despite recent success in discovering small diamonds, Patrician Diamonds Inc. (TSX-V: PXC) is looking to consolidate its shares and change its name, as it prepares for a rash of similar consolidations in the junior mining industry in a difficult market.

The Ottawa-based junior mining company said it is looking to ask shareholders to exchange one new share for 10 old shares, and to change its name to Diamond Exploration Inc.

Patrician's shares have hovered around the four- to five-cent mark in the past three or four months, despite its positive August announcement that it had recovered six microdiamonds from samples of the Hillside kimberlite deposits from its Doctor Lake mine in the Northwest Territories.

CEO Robin Dow told the OBJ that most junior mining companies have been hit with drastic decreases in their stock values in the past year, and matters have not been helped by the recent roiling of the financial industry in the United States. He estimated that the junior mining industry has been down by around 60 per cent since March 2007, with a dramatic drop of 30 to 50 per cent between July and September of this year alone.

"When Goldman Sachs is threatened with bankruptcy, no one cares about a penny stock for a company with a market capitalization of less than $5 million," he said.

As such, Patrician wants to consolidate its shares to shore up its stock price ahead of what it expects will be a huge crush of similar moves by other junior mining companies next spring. The name change, Mr. Dow explained, is part of the regular consolidation process, and it's easier to completely change the company's name and offer a "new program" rather than try to work around the Patrician name.

"The junior market is bottoming right now (but) ... the market will start looking back at our end of the business in Q2 of next year, so we want to be prepared for the turnaround," Mr. Dow said. "It's a difficult situation, but we're not alone."

He noted that despite the depression in Patrician's stock price, the company's future is looking bright, especially with the Doctor Lake discovery, which he said was the first diamondiferous kimberlite recovered in the area.

"Several companies, including De Beers, have spent $30 million to $40 million drilling for diamonds directly north of us, and they haven't found any yet. Now we have the opportunity to find another half-dozen diamonds on our property," he said, adding that the company will continue drilling there next spring in the hopes of finding enough diamonds to develop into a full mining project.

Patrician is also currently developing a new project for early 2009 field work, the company said.

The company currently has 67,998,148 common shares outstanding, with 99,723,248 outstanding that are fully diluted. Following the consolidation, Patrician would have 6,799,814 common shares outstanding and 9,972,324 fully diluted shares.

The fate of Patrician's share consolidation strategy will be determined at a special shareholders' meeting on Dec. 1, the company said.

Shares of Patrician fell another 1.5 cents at 10:18 a.m. Wednesday morning on the TSX Venture Exchange, to 2.5 cents.

"People just have to be patient with the market and value will return," Mr. Dow added.