De Beers finds base metals in northern Ontario

When it comes to new discoveries, expect the unexpected.

While exploring for diamonds in the western James Bay Lowlands of northern Ontario, De Beers stumbled across some sulphide mineralization on ground held jointly by Spider Resources (spq-v) and KWG Resources.

This past spring, the Canadian exploration division of De Beers failed to encounter any kimberlite while drill-testing 13 targets at the Spider 3 project. However, one of the reverse-circulation (RC) holes intersected an 8-metre sulphide section of intermediate-to-mafic volcanics running 1.61% copper, 0.34% zinc and 0.13% lead, plus 0.13 gram gold and 9.9 grams silver per tonne, at the bottom of the hole. The 8-metre section included half a metre of 7.09% copper, 4.67% zinc, 2.68% lead, 0.76 gram gold and 150.6 grams silver.

The magnetic anomaly tested by this single RC hole appears to be northwest-oriented and elongated; it measures 220 metres long and 60 metres wide. The vertically drilled RC hole punched through 11 metres of overburden, followed by 11.5 metres of Paleozoic limestone and minor clay, before hitting a mineralized 8-metre section of shistose volcanics. The volcanics are variably replaced by pyrrhotite and chalcopyrite mineralization. Since no kimberlite was encountered and the magnetic anomaly was explained by the presence of sulphides, De Beers shut down the hole while still in mineralization.

The Spider 3 project covers a 70-by-180-km area of interest 150 km west of De Beers’ advanced-stage Victor diamond project in the Attawapiskat region. Spider 3 is held jointly by Spider Resources, with a 49% interest, and KWG, with 51%. Between 1995 and 1997, the pair spent a total of $1.4 million on regional mapping and heavy-mineral sampling, in addition to a widely spaced low-level aeromagnetic survey. The geochemical samples were analyzed for kimberlite indicator minerals, as well as multi-element suites.

“We started picking up some anomalies in copper, lead and zinc, and various other metals in certain areas,” Neil Novak, Spider’s vice-president of exploration, tells The Northern Miner.

In April 2000, De Beers signed a confidentiality agreement with the pair and undertook a due diligence investigation that identified more than 20 priority diamond targets in the area of interest. Before signing a formal agreement nearly a year later, De Beers staked those targets and created the property base for the joint venture.

Under the joint-venture agreement, De Beers can earn an initial half-stake in the Spider 3 properties by spending $1.5 million on exploration before mid-April 2003. This can be increased to 60% in return for the expenditure of $4 million over the following four years.

In a separate venture last March, Spider and KWG staked a 55-claim property covering a grassroots-type copper/nickel/platinum-group-element target in the southern portion of Spider 3, near Highbank and Fishbasket Lakes. The property covers a layered anorthositic intrusion complex identified years ago by government geologists. Aurora Platinum (ARP-V) quickly followed and staked ground near Spider and KWG’s claims. De Beers’ base metal discovery occurs in a separate belt of rocks a further 30-40 km to the north.

Over the summer of 2001, De Beers explored the Spider 3 properties with low-level magnetic and electromagnetic helicopter-borne surveys, while conducting regional mapping and geochemical sampling. The company mobilized a RC rig to the property in March 2002 and drilled 13 targets without intersecting any kimberlite. Novak says De Beers has met its earn-in obligations for a half-interest in Spider 3.

After a lot of chalcopyrite was found in the one hole, De Beers’ field geologist sent off a couple representative samples to Bondar Clegg for analysis. These yielded values of 1.1% and 1.27% copper, in addition to anomalous zinc and lead. Based on the initial positive results, De Beers had 12 samples, representing the entire drill hole, analyzed. Novak says the first couple of metres of the mineralized section are heavily oxidized, suggesting the presence of an oxide cap and an underlying sulphide zone.

De Beers will hand the discovery over to Spider and KWG in exchange for a royalty interest, which is being negotiated. “It was not a high priority as far as De Beers was concerned,” says Novak, “because it wasn’t their mandate to look for base metals.”

Spider and KWG proceeded to stake a substantial land package around the discovery.

“The land position that was there was a couple of small claims designed to cover the kimberlite target only,” says Novak. “I wasn’t comfortable with that, so we kept it quiet while we started a staking program.”

De Beers has identified a second geophysical anomaly nearby.

The initial plan is to re-finance both Spider and KWG using flow-through funds. Spider has 116.9 million shares outstanding and trades at around 5-6. Diagem International Resource (dgm-v) is a major shareholder of KWG, with a 38.9% stake.

Novak wants to the confirm the RC results by diamond drilling three or four holes in the main discovery and one hole in the satellite geophysical anomaly. Novak has had access to all of De Beers’ geochemical data from the property, including a mobile metal ion (MMI) sampling survey over the target.

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