Canabrava tests showing

Field geologists with Canabrava Diamond (CNB-V) have discovered the possible source of two diamond-bearing kimberlite boulders found earlier this year by Kennecott Canada Exploration on the Rocky Island Lake joint-venture project in north-central Ontario.

The boulder discovery, along with results from regional and follow-up till sampling, prompted Kennecott to stake more than 400 sq. km of additional ground in 15 townships this past spring. The two kimberlite boulders were discovered several kilometres apart, in the same well-defined indicator mineral train. A 107-kg sample from one of the boulders yielded two macrodiamonds and four micros. (A macrodiamond measures greater than 0.5 mm in at least one dimension.) The stones are described as transparent white fragments. Three of the diamonds display remnant octahedral form, whereas the remaining three are irregular fragments. A 142-kg sample from the second boulder returned a single stone. It is somewhat unusual in that it is deep green in colour.

Crews returned to the field in July and immediately discovered more kimberlite boulders in the vicinity of the original discovery. The boulder train was traced over 8 km back to an outcrop of kimberlitic rock, similar in appearance to the boulders.

Exposure is poor, and further work is being carried out to define the extent and nature of the body. A 120-kg sample was collected from the outcrop, and representative samples submitted for petrological evaluation and microdiamond analysis.

In addition, various kimberlite boulders have been found in eight other areas of the project. Some of these boulders measure up to 2 by 2.5 metres and are angular, suggesting a nearby source. Previous sampling in the project area defined a series of 11 indicator mineral trains. Some of the boulders correlate with these mineral trains, which have yielded highly sub-calcic G10 garnets and favourable chromite and chrome diopside compositions. A further 704 claim units have been staked based on the new boulder discoveries.

Airborne geophysical surveys covering 5,366 line km are being flown over selected areas of the project, and targets identified from the survey will be followed-up on the ground this fall.

Canabrava assumed the role of project operator after amending its Ontario joint-venture agreement with Kennecott in July to cover only the Rocky Lake project and the Pivot Lake claims (originally part of the Whitefish Lake project). Canabrava and Paramount Ventures & Finance (PVF-V) each hold a half-interest in the revised area of interest, affecting some 11,500 sq. km of ground, and have committed to spending a total of $500,000 before the end of the year.

Kennecott will provide a further $350,000 in funding this year, on top of the $800,000 already spent. In addition, Kennecott has committed to spending an additional $500,000 in 2002 in order to test at least 10 targets by drilling or trenching. The wholly owned division of Rio Tinto (RTP-N) retains the right to earn a 60% interest in the project by spending $25 million before June 2006, or by advancing the project to a production decision.