DIAMOND NEWS ROUNDUP — Aber gears up for bulk sampling work at Diavik project

At the Diavik project near Lac de Gras, N.W.T., a 1-km-long decline is being driven to the 155-metre level in preparation for bulk sampling, to begin in the new year.

Aber Resources (TSE) holds a 40% interest, while operator Kennecott Canada, a wholly owned subsidiary of London-based RTZ (NYSE), holds 60%.

Kennecott recently decided to proceed with a $23.5-million underground program on the A-154 South kimberlite pipe.

Surface drilling has delineated a resource estimated at 8.4 million tonnes grading 4.5 carats per tonne to a depth of 250 metres below the lake level. The A-154 South pipe is covered by about 30 metres of water and overburden. Based on an average carat value of $77.68 (US$56.70), A-154 South is valued at $350 (US$255) per tonne.

In order to obtain a definite analysis of the diamond values, a bulk sample of about 3,000 tonnes is required to recover more than 10,000 carats.

Deep drilling will be conducted from underground drill stations during the bulk sampling to determine the grade and tonnage of the pipe between the 250- and 650-metre levels. Aber President Grenville Thomas says the pipe could contain a possible resource of 20 million tonnes if projected to the 650-metre level, giving it a potential value of $7 billion.

Aber’s obligation of the $23.5-million budgeted program is $9.4 million. The company has in the neighborhood of $7 million on hand and expects to do a financing over the course of the year. At present, Aber has 32.5 million shares outstanding.

In a year’s time, Aber hopes to begin a feasibility study leading to production as early as 1988. The capital cost of a 5,000-tonne-per-day operation is estimated at $400 million.

Meanwhile, delineation drilling of the A-154 North and A-418 pipes will continue. The A-154 North hosts a preliminary, drill-indicated resource of 5.3 million tonnes grading 2.2 carats per tonne to a depth of 250 metres below the lake level.

The A-418 pipe, disovered in May, is close to the shore, some 750 metres southwest of the A-154 South pipe. Thomas believes the A-418 has the potential to double the value of the Diavik project, as initial drilling is returning values comparable to the initial results from A-154 South.

Additional delineation and large-diameter drilling is scheduled for the A-21 pipe this winter. To date, the Diavik project has incurred expenditures of almost $13 million.

Elsewhere in the Northwest Territories

An agreement has been reached between Allyn Resources (ASE) and SouthernEra Resources (TSE) whereby the latter can acquire a 45% interest in the 240,000-acre Aylmer Lake South diamond property. Allyn has an option to acquire a 75% interest. To earn its interest, SouthernEra must spend $350,000 in the first year and an additional $3.6 million prior to May 20, 1999.

An airborne magnetometer survey has identified several geophysical anomalies resembling kimberlites, and SouthernEra plans to begin exploration immediately. Drilling is anticipated for early fall.

* Cyclone Capital (VSE) is proceeding with the processing of two bulk samples taken from its 50%-held Nikos property on Somerset Island. About 580 kg of material were sampled from the JP1 and JP2 kimberlite outcrops along the shore of the island. A magnetometer survey indicates the presence of a third anomaly, slightly offshore. The remaining interest in the property is held privately.

Alberta

* Stream sediment sampling on a property block northwest of Hinton has returned a single, clear, octahedral diamond measuring 0.423 mm, along with lamproite indicator minerals.

The property is held 40% by Montello Resources (ASE), 10% by Troymin Resources (ASE) and 50% by Rich Resource Investments, a private company. The sampling program was aimed at assessing an anomaly identified earlier this year through geophysics.

Montello is also conducting ground magnetic and gravity geophysical surveys in an effort to delineate targets in an area where 23 diamonds were recovered from stream sediment sampling in 1994 and 1995. This block of land is held equally by Montello and New Claymore Resources (VSE).

Africa

* Drilling of eight holes (each 1 metre in diameter) has begun on the Kareevlei Wes property of Amarado Resources (VSE). Three of the holes on the South African property have been completed to the base of the calcrete cover which lies above the known diamondiferous kimberlite.

Amarado plans to extract a 400-tonne kimberlite sample in order to establish a preliminary estimate of grade prior to proceeding to a full feasibility study. This material will be processed through a 10-tonne-per-hour plant on site.

Previous drilling identified at least three diamondiferous kimberlites, with a combined surface area of 8.7 hectares clustered within a 700-metre radius, making it the largest untested kimberlite body known to exist in South Africa. To date, 96 diamonds have been returned from earlier drilling, five of which were larger than 0.2 carats. Of those five, four were of gem quality.

Amarado has also commenced an 11,500-line-km aeromagnetic survey on the Gope East property in Botswana. Reprocessing of earlier data on this 9,800-sq.-km precious stone permit has been completed, and several high-priority targets have been identified for follow-up work.

The current airborne program is being conducted over an area from which several macrodiamonds have been recovered.

* A second 40% share of three groups of Tanzanian diamond mining blocks has been purchased by Serengeti Diamonds (VSE), bringing its interest to 80%.

Owner Tanzania Diamond Mines will receive 2 million shares of Serengeti plus payment of US$300,000 within three months.

The properties include known diamondiferous kimberlites being worked by artisanal miners, while more kimberlites have been found in the vicinity.

Included in the deal are seven reconnaissance licences covering 89,000 sq. km, of which 58,000 sq. km have been granted; the remainder are either recommended for grant or are under consideration for grant by the Tanzanian government. All of the reconnaissance licences are favorably situated within the Tanzanian craton, where major mining companies are exploring for diamonds.

* The US$10-million bulk-sampling program of the Saddle Hill diamond prospect in Namibia has entered full-phase testing, and Namco (VSE) reports that early results are “encouraging.” Specific results will be released once sufficiently representative samples have been accumulated.

South African mining authorities have granted Namco subsidiary Nautical Diamonds the 3,500-sq.-km package known as “Sea Area 12 d,” thus doubling Namco’s total holdings. The region lies off the mouth of the Olifant River, between water depths of 200 and 500 metres.

Australia

* A 1.3-tonne sample collected from the top metre of the Bulgurri kimberlite, situated 2.5 km north of the original discovery site at the Beta Creek project in Western Australia, has returned seven diamonds weighing 0.101 carats.

Australian-based Striker Resources and partner Sage Resources (VSE) report that although the sample is too small to have any grade significance, it does extend the length of a kimberlite system to 2.8 km.

Follow-up reconnaissance field work at the project, situated in the Northern Kimberleys, has also identified two additional kimberlites.

Drilling and mini-bulk sampling will attempt to evaluate several targets.