Contact Diamond busy in Timiskaming (June 03, 2005)

Contact Diamond (CO-T) is getting some encouragement from an updated valuation of diamonds from a mini-bulk sample of the 95-2 kimberlite on its Timiskaming project, which straddles the border between northern Ontario and Quebec.

Completed by Aber Diamond (ABZ-T), the new valuation of a 64-carat parcel of diamonds rings in at US$46.50 per carat; a smaller 52-carat sub-sample was valued at US$48.50 per carat. The sub-sample contained only those diamonds exceeding 0.179 carat per stone, and represents 81% of the larger sample’s carat weight. The prices are based on current rough diamond market prices.

Late last year, WWW International Diamond Consultants valued the 52-carat parcel at US$38 per carat, based on their proprietary October 2004 price book; modelled values ranged from US$55 per carat to US$98 per carat, with a best estimate of US$66 per carat. The modelled values are an estimate of the average price that a population of diamonds recovered at production scale would fetch.

“The new valuation suggests that a production-scale diamond price estimate for 95-2 within the top end of WWW’s range of model valuations is warranted, and that an eventual diamond price significantly greater than US$100 per carat may be achievable given continuing strength in the rough diamond markets and the proper recovery of a large stone population in 95-2,” said Contact’s president Matt Manson in a prepared statement.

The company is now considering collecting a larger bulk sample from 95-2.

Meanwhile, preliminary micro- and macro-diamond analysis of material from the KL-01 and KL-22 kimberlite pipes on the Klock property have returned mixed results.

At KL-22, a total of 652 kg of material, predominantly from volcaniclastic kimberlite breccia in the southern lobe, contained 79 diamonds, including 67 micros and 12 macros. The largest stone measures 1.4 mm by 0.39 mm by 0.18 mm.

A 469-kg sample derived from surface pits on KL-01 failed to return any significant diamond counts.

At surface, the pipes measure 6 hectares and 4 hectares, respectively; KL-01 is exposed at surface, while KL-22 is covered by around 25 metres of overburden. Both comprise two distinct intrusive lobes with multiple kimberlite facies.

Contact says diamond distribution in KL-22 is “extremely heterogeneous,” while the association of microdiamonds in the KL-01 discovery hole has yet to be determined.

Contact is in the midst of a $4-million exploration campaign on its Timiskaming properties; the company expects to drill test some 30 targets on the Klock, Cole and Lundy properties in Ontario, and the Baby properties in Quebec.