Ekati’s success fuels Great Canadian Diamond Play

A variation of DeBeers’ marketing moniker “diamonds are forever” might well apply to the diamond exploration sector: for many investors, it seems that “diamond exploration is forever,” given the time frame from exploration to discovery and mine development. Nonetheless, diamond mines generate some of the highest margins in the minerals industry, and, for most investors, the wait is worth it.

The Ekati mine, 300 km northeast of Yellowknife, N.W.T., was the first significant diamond producer in North America. The race for second place is really between the Diavik project of Rio Tinto and Aber Resources (abz-t) and the Snap Lake discovery of Winspear Resources (wsp-v).

Development costs for Diavik are estimated at $1.3 billion — well above what was originally projected. Despite the positive economic impact the project will have on the Northwest Territories, Diavik has been unable to secure an environmental agreement for its proposed development, which appears to be at the mercy of multi-party interests.

Winspear’s Snap Lake project will leave a much smaller footprint than Diavik, and this, theoretically, should simplify the permitting process considerably. Indeed, collection and evaluation of environmental and geotechnical data from the project area are sufficiently well-advanced to support the submission of an environmental assessment report early in the second quarter of this year, says Winspear.

In the meantime, Winspear is proceeding with an advanced exploration program at Snap Lake in support of a “bankable” feasibility study. The work program includes the extraction of a 20,000-tonne bulk sample from the gently dipping NW dyke beneath Snap Lake. A 1,200-metre-long decline will be collared on the NW Peninsula in order to gain access to the dyke. One of the program’s objectives is to convert inferred kimberlite resources exceeding 2 metres in thickness to indicated resources in areas accessible by the decline.

Drifting at right angles from the production-sized decline will provide three 2,000-tonne bulk samples at predefined intervals for the company’s dense media separation plant. This plant was purchased from Tahera Resources (TAH-T) for $2.3 million and was previously used at the Lupin mine, where a 6,000-tonne bulk sample from the NW Peninsula was processed in 1999.

Snap Lake

Winspear plans to carry out a 10,000-metre diamond drilling program at Snap Lake to explore the downdip portion of the dykes in the southeastern arm of the lake. This program will help determine what additional kimberlite resources occur in this portion of the property.

Previous drilling in this area indicated the presence of additional kimberlite dyke material of potential economic thickness (comparable to the NW dyke). No significant attempt has been made to test the downdip extension of these dykes or establish their relationship with the NW dyke. More than 1 km separates the nearest intersection on the NW dyke from dyke-related drill intersections in the southeastern arm.

In 1999, Winspear Spun Off Its Non-Core Exploration Properties Into Diamondex Resources, Which Spent $1.2 Million During the Year, Collecting More Than 1,500 Till Samples From Four Active Exploration Properties, Including Its Wholly Owned Hilltop Property. Southernera Resources (SUF-T) and Vaaldiam Resources (VRL-A) (Formerly Noble Peak Resources) Hold An Aggregate 20% Interest in the Cache Property Claims, Which are Scattered Throughout the Hilltop Project Area.

Till sampling on the Hilltop property has defined a zone of elevated indicator mineral counts in a 10-sq.-km area. These elevated values occur within a regional background of scattered values that rarely exceed two indicator mineral grains per sample. “At this stage, results being obtained from the Hilltop property are unusual and promising,” reports Diamondex.

Indicator mineral sampling was carried out last year on the Carat property, which is under option from Tyler Resources (TYS-T), and also on the Char property, which is subject to an option agreement with International Riley Resources (IRR-V) and ITL Capital (ICL-V).

Buffalo Hills Craton

While the Northwest Territories remains the undisputed leader in terms of significant diamond discoveries, other parts of Canada are getting some attention as well. In Alberta, the Buffalo Hills Craton has absorbed a significant amount of diamond-related exploration dollars, with Ashton Mining of Canada (ACA-T) leading the field.

Having discovered several diamondiferous pipes of marginal economic interest, Ashton is starting to reduce its massive landholdings in Alberta. This year the company is focusing its efforts on five targets in northern Alberta. Ashton’s partners include Alberta Energy and Pure Gold Minerals (pug-t), which hold varying interests in different land packages.

Diamond exploration in Alberta has been hampered by extensive overburden and by a general lack of outcrop, which usually don’t pose problems in the Northwest Territories. Most of the anomalies drilled by junior companies in Alberta proved to be concentrations of magnetic sands (placer effect), or else were simply unexplainable. Undeterred by this problem, several companies managed to find pipes under extensive overburden by employing innovative geophysical techniques and interpretive methodologies.

For the most part, the Alberta diamond play has boiled down to the Calling Lake area, near Little Slave Lake. Buffalo Diamonds (BUFD.U-C), which has been working in the area for more than two years, recently completed a helicopter-borne magnetic survey on its Calling Lake properties. Approximately 1,300 line km were flown at a 12-metre spacing, covering 36 potential kimberlite targets. Eight drill targets have been selected, seven of which are in Calling Lake.

All of the targets are associated with intersecting geological structures and are proximal to the highly anomalous quantities of diamond indicator minerals recovered from the shoreline of Calling Lake, including 62 of the 66 G10 garnets recovered from the property.

One of Buffalo Diamonds’ most advanced properties, Varlaam, is held under option from New Claymore Resources (NCS-V). The latter has been one of the largest landholders in the Alberta diamond play.

Ontario prospects

Northeast of Wawa, Ont., Canabrava Diamond (CNB-V) and Paramount Ventures & Finance (PVF-V) are involved in a diamond exploration joint venture with Kennecott Canada Exploration, a division of London-based Rio Tinto. Called the Ontario Joint Venture, it comprises more than 200,000 ha of staked and leased land and includes Canabrava’s wholly owned Whitefish Lake project, as well as the KAP and Rocky Island Lake projects, which are owned 50-50 by Canabrava and Paramount. Kennecott has the option to earn a 60% interest in the Ontario Joint Venture by spending $25 million within seven years, or by advancing any one of the projects to a production decision, whichever occurs first. Kennecott, as operator, must spend $1.5 million on exploration before Dec. 10, 2000.

Canabrava recently expanded its land position in the eastern Superior Craton of Ontario and Quebec by acquiring the Frontenac project, comprising approximately 1,800 ha of mining claims in 12 properties within an area that spans 4,500 sq. km. Each of the properties acquired covers either known kimberlite bodies or well-defined targets, based on indicator mineral and/or geophysical anomalies. Five targets are drill-ready and will be tested as soon as a rig can be mobilized.

The company is headed by Rory Moore, who played a major role in the discovery of the diamond pipes that constitute the Ekati mine. Canabrava is 54%-owned by Vancouver-based Southwestern Gold (SWG-T).