New diamond province emerging in Europe

A new diamond province is quietly taking shape in Finland, where AIM-listed European Diamonds (EPD-LSE) is drill-testing several targets discovered by a combination of surface sampling and geophysics.

A trio of drill rigs and two excavator sampling teams are currently testing the company’s main project, near the village of Lentiira, about 500 km northeast of Helsinki and close to the eastern Finnish border with Russia. Results are expected by the end of the summer.

What has company officials excited is a combination of excellent geochemistry at Lentiira and its proximity to the rich Grib diamond pipe in the Archangel area of northern Russia. Both regions are within the Karelian Craton and/or Kola-Kuloi cratons, which straddle the Russia-Finland border.

“We’re in an emerging diamond province that has had little publicity up until now,” said Chairman Anthony Williams during a routine visit to Paris, where he and President Roy Spencer were meeting with investors. “We hope to have sufficient encouragement from this phase [of drilling] to outline bulk-sample targets.”

The Geological Survey of Finland discovered diamond indicator minerals in the area as early as the mid-1990s, but follow-up work to test for potential kimberlite bodies was inconclusive. A few years later, the survey returned to the site and took several larger till and lamproitic dyke samples. Most of the till samples contained kimberlite indicator minerals, while the dyke samples proved rich in chrome spinels and contained other diamond indicators, including chrome pyropes and chrome diopsides.

In 1999 Roy Spencer, a former De Beers geologist credited with discovering the Grib pipe in Russia, decided to investigate further. He formed Ilmari Exploration Oy, now a wholly owned subsidiary of European Diamonds, to examine the diamond potential of the area.

By the end of 2000, the new company had secured a 1,200-sq.-km land package. A sampling program, including thousands of glacial till and drill samples, followed. The samples contained several indicator minerals suggestive of diamond-bearing kimberlites, including G-10 garnets and high-chrome chromites. In May 2001, the company discovered the first macrodiamond in a till sample and, a few months later, the first diamondiferous kimberlite rocks.

The encouraging results prompted European Diamonds to boost its landholding to 24 sq. km and intensify the work program. Samples of up to 80 kg returned large quantities of G10 pyropes. So far, drilling has focused on kimberlite dykes or fissures up to 12 metres wide and up to 10 km long, but geophysical evidence suggests there are also pipe-like structures in the area.

Nevertheless, investors sent the price of the company’s shares below 75p (US$1.23) this spring from a 52-week high of 179p (US$2.95) in 2002 after the company released its progress report for 2002. At presstime, the stock had recovered somewhat to about 90p (US$1.48). But until it finds a diamondiferous pipe, the company’s goal of building Europe’s first diamond mine remains elusive.

“Most of the structures we were drilling last fall were linear structures, but the geophysics is throwing up some interesting anomalies en echelon to the linear structures that are being tested right now,” said Williams. “By the end of the summer, we hope to have some answers.”

At the eastern end of the property, field crews have followed up eight airborne electromagnetic targets with ground geophysics. Drilling is under way, and samples of about 100 kg are being taken from each kimberlite and sent for analysis.

On a regional scale, the company is sampling a G-10 kimberlitic train on another area of northern Finland and following-up with airborne geophysics.

The Karelian craton, covering more than 300,000 sq. km in Finland and western Russia, is nearly the same size as the Slave craton in the Northwest Territories and shares the necessary characteristic for diamond prospectivity: a thick crust (more than 200 km) of Archean age rocks. The craton is dissected by large, mantle-tapping fractures believed to be responsible for introducing the kimberlites.

The Lentiira area, where European Diamonds holds its claims, consists of granitoid-greenstone rocks that are locally strongly deformed. According to U-Pb zircon ages, the peak magmatic activity occurred 2,800-2,650 million years ago. Quaternary interpretation of the sandy glacial tills overlying the Archean rocks indicates that the ice moved from west to east, which suggests that the source of diamonds found in glacial sediments in western Russia may have their source in Finland.

The proximity to the Grib pipe discovered by Spencer in western Russia is also encouraging. Grib has an estimated resource of about 98 million tonnes of kimberlite to a depth of 500 metres, containing 67 million carats of diamonds at an average mining grade of 69 carats per 100 tonnes and an average value of US$79 per carat — a huge deposit by any standard.

Archangel Diamond (AAD-V) discovered Grib in 1996. The Canadian junior has spent US$19.3 million exploring the Verkhotina licence, 115 km northeast of Arkhangel’sk, to earn a 40% interest in the project. However, work on Grib was suspended in mid-1999 as a result of a dispute between Archangel and its Russian joint-venture partner, Arkhangelskgeoldobycha. The dispute has yet to be resolved and is awaiting a decision by a court in Stockholm.

European Diamonds is well-financed for the expensive work of diamond exploration. In March, the company completed a 1.5-million (US$2.48 million) financing to continue work at Lentiira and complete some regional exploration in other parts of Finland. The financing consisted of a private placement of two million ordinary shares at 75p (US$1.23) per share, plus one warrant for every two shares subscribed. Each warrant entitles the holder to subscribe for one share at 115p (US$1.90) per share.

Also active in Finland is Vancouver-based Poplar Resources (PPX-V). The company’s property covers ground in central Finland, to the south of European Diamonds’ land package. Ashton Mining discovered 20 kimberlites in the area, including several diamond-bearing bodies, but moved on after determining that the finds were uneconomic. Poplar is reassessing the pipes, led by Exploration Manager Walter Melnyk, who was the project manager on the Snap Lake diamond project in the Northwest Territories, which is being developed by De Beers.

— The author is a Toronto-based freelance writer specializing in mining and environmental issues.