Partners hit by RAM results (April 22, 2005)

Investors hammered shares in Contact Diamond (CO-T) and Trigon Exploration Canada (TEL-V) on April 22, after the partners said that drilling on their 870-sq.-km RAM project, 140 km north of Yellowknife, failed to encounter any kimberlite.

Project operator Trigon recently completed 13 reverse-circulation holes to test 10 separate geophysical targets on the eastern portion of the property; all of the holes came up dry. Previous heavy mineral sampling had identified several kimberlite indicator mineral trains (including G10d garnets) in the area. Trigon believes the indicators are derived from local kimberlite bodies with subtle geophysical expressions.

Originally, the drill plan called for 15 “high confidence kimberlite targets” to be tested; the last five targets were abandoned owing to the similarity of their geophysical signatures to other fruitless targets.

Despite the poor results, Trigon believes further exploration work is warranted.

Contact Diamond owns 51% of the RAM project; operator Trigon owns the remaining 49%. Contact can boost its stake to 65% by funding another $3 million worth of exploration.

The RAM project is situated on the Slave Craton, about 85 km southwest of De Beers’ Snap Lake diamond deposit, and the Gahcho Ku diamond deposit owned by De Beers (51%), Mountain Province Diamonds (MPV-T), with 44.1%, and Camphor Ventures< (CFV-V), which holds the balance.

Trigon is currently planning the next stage of exploration, which will focus on tightening up till sampling to more precisely define the potential source areas of the kimberlite indicator mineral trains; field reconnaissance aimed at finding kimberlite float at the heads of the trains is also planned. A second drilling campaign is slated for completion before yearend.

Shares in Contact Diamond were off 9, or more than 14%, at a new 52-week low of 55 in early afternoon trading in Toronto on April 22; Trigon was off 8.5, or nearly 27%, at a year low of 23.5 in Vancouver.