Shear, Stornoway find big Kahuna diamond (November 14, 2007)

Vancouver – Canadian-focused diamond hunters Shear Minerals (SRM-V, SRMUF-O) and Stornoway Diamond (SWY-T, SWYDF-O) turned up a large stone from mini-bulk sampling at its Churchill Diamond project in Nunavut.

The 5.43-carat white diamond recovered from the Kahuna kimberlite dyke came from second-phase processing of a 400-tonne mini-bulk sample taken earlier this year.

The joint venture partners note the big stone is a broken piece of an even larger diamond estimated at up to 14 carats based on recovery eight complementary broken diamonds in the same sample.

Some of the other recovered diamond fragments include stones weighing 2.05, 1.54, 1.44, 1.33 and 1.1 carats.

Reconstruction of the diamond will attempted to determine its original size and also possibly identify the cause of its breakage.

Shear and Stornoway have wrapped up processing kimberlite from the Kahuna dyke with results from the final diamond recovery expected in December.

The mini-bulk sample is composed of three separate trench segments taken along the strike length of dyke structure. An initial grade of 0.88 carat per tonne (based on diamonds greater than 0.85 mm) was recently tabled on a 107-tonne portion of the 400-tonne sample.

Kahuna is a roughly 3-4 metre wide vertical kimberlite dyke and is geophysically interpreted to extend about 5.5 km.

The Churchill project covers over 8,000-sq. km just north of Rankin Inlet on the coast of Hudson Bay. Since 2003 more than 50 kimberlites have been discovered in the region including four diamondiferous dykes.

Shear holds 58.14% of the Churchill diamond project and is operator while Stornoway owns 41.86%. In mid-2007 the partners each bought half of BHP Billiton‘s (BHP-N, BLT-L) 12.5% interest for $4 million apiece.

The JV partners got a market boost on the large diamond news with Shear closing up 20% in November 14th trading to post an 11 gain to 67 per share while Stornoway notched up a couple of pennies to 74 per share.