Ashton Mining pulls out of James Bay camp

After exploring the James Bay diamond region of northern Ontario for more than three years, Ashton Mining of Canada (TSE) has decided to sell its stake in the area to KWG Resources (TSE) for $1 million.

Ashton President David Hurburgh says there are several reasons why the company is relinquishing its 51% interest in the joint venture with KWG, including disappointing results and excessive exploration costs.

“We gave it a good shot, but from our test work . . . the diamond counts just aren’t high enough to make that property fly,” he says, referring specifically to the Kyle Lake No. 1 kimberlite discovered by Ashton, KWG and Spider Resources (ASE) in 1994. “And from our experience, northern Ontario has some of the most expensive drilling conditions in Canada.” He added that target selection in the James Bay area relies entirely on geophysics. Ground conditions preclude the use of indicator minerals, the exploration tool of choice for most diamond explorers.

Despite Ashton’s rebuff, KWG and Spider are continuing work on the Kyle Lake No. 1 kimberlite. Recently, the partners announced the recovery of 226 additional diamonds from the tailings of last year’s bulk sample. Drilling with the aim of procuring a 20-tonne bulk sample is under way.

Under the terms of the sale, KWG will pay Ashton $1 million over a 4-month period for its 51% interest in the James Bay joint venture. Ashton will retain a 25% clawback right into any diamondiferous discovery, excluding the Kyle Lake No. 1 kimberlite. If KWG makes a discovery, Ashton will have the option of exercising that right by reimbursing KWG 300% of exploration and evaluation costs.

Ashton will use the proceeds to work its properties in the Northwest Territories. “We consider the Northwest Territories to be the most prospective area in the world,” Hurburgh asserts.

Ashton has just moved a drill to the NOT No. 1 project held by Noront Resources (VSE) and Pure Gold Resources (TSE) in the Lac de Gras area of the Northwest Territories. The major expects to drill four targets selected on the basis of positive surface sampling results. Ashton is earning a 50% interest in the 40,500-hectare property.

Ashton’s parent, Ashton Mining of Australia, also holds diamond properties in Australia and Europe. Recently, the parent signed an agreement with AfriOre (VSE) to earn an interest in the Kareevlei Wes and Skietfontein properties in South Africa. Ashton has agreed to finance percussion drilling on a magnetic anomaly and, if results warrant, a 20-tonne bulk-sampling program. At that point, Ashton can earn a 51% interest in the properties by spending $1 million by June 30, 1997.