EXPLORATION ROUNDUP — Ashton expands exploration in Alberta — Loon Lake, Birch Mountain among joint-venture plays

The discovery of diamond-bearing kimberlites in north-central Alberta by Ashton Mining of Canada (ACA-T) has spawned a province-wide area play.

Since it began drilling geophysical targets in January on the Buffalo Hills property, the company has discovered 15 kimberlite bodies. Initial microdiamond analysis indicates that 10 of the kimberlites are diamondiferous. Results are pending for the most recent discovery, dubbed K91.

Encouraged by the initial results, Ashton collected mini-bulk samples from the K14 kimberlite complex, as well as from the K5 and K6 pipes, for macrodiamond analysis.

The K14 complex was first thought to be three separate pipes, but delineation drilling suggests K14, K14B and K14C represent multiple phases of a single, irregular and complex body that measures 400 by 400 metres on surface. According to Ashton, drilling shows an extensive, thick apron of tuffisitic crater facies kimberlite extending north and east of kimberlite K14.

Ten core holes, drilled into K14B and K14C, returned intervals of kimberlite measuring between 26 and 102 metres long. All the holes bottomed in mudstone.

Drilling in the central phase of K14 has confirmed kimberlite to a depth of at least 200 metres; the discovery remains open. The K14 is covered by just 7 metres of overburden and has a geophysical signature measuring 300 by 200 metres.

A mini-bulk sample of 27.42 tonnes was recovered from seven

reverse-circulation drill holes and five surface pits from the K14 kimberlite. The holes were drilled vertically to an average depth of 90 metres across a 150-metre-wide section in the south-central part of the main anomaly at 25-metre spacings. The 8.17 tonnes of kimberlite collected from the drilling yielded 2.99 carats of diamonds larger than 0.8 mm, for a preliminary grade of 0.36 carat per tonne, or 36 carats per 100 tonnes.

Results from the seven holes varied from 0.07 to 0.88 carat per tonne, indicating a high variability in diamond content from hole to hole.

The remaining 19.25 tonnes of bulk sample were collected from surface pits positioned across a 50-metre-wide section of the anomaly, 75 metres north of the drill holes. In total, 1.87 carats of diamonds larger than 0.8 mm were recovered from the 19.25-tonne portion of the bulk sample, equating to a grade of 0.01 carat per tonne, or 10 carats per 100 tonnes.

In all, 4.86 carats of diamonds were recovered from the 27.42-tonne K14 mini-bulk sample. The five largest stones weighed 0.6, 0.3, 0.28, 0.21 and 0.18 carat, representing 1.57 carats. Many of the diamonds were reported as colorless, though some colored “fancy” stones were present.

Ashton interprets the results as an encouraging sign that kimberlite K14 contains commercial-size diamonds. Before their grade and quality can be determined, however, considerably larger samples are required.

Further results are pending for:

* a 10-tonne mini-bulk sample collected from K14B;

* a 5-tonne sample taken from kimberlite K5;

* an 8.5-tonne sample pulled from K6; and

* an undetermined amount from K14C.

Kimberlite K14B previously yielded 2 macros and 55 micros from 78 kg of material recovered from surface test-pitting, whereas K14C returned 4 macros and 152 micros, excluding a high number of fragments, from an 89-kg drill sample. The fragments represent larger stones smashed during the drilling process and illustrate nugget effect in the kimberlite.

The K5 kimberlite previously returned 1 macro and 74 micros from a 300.8-kg sample, and K6 yielded 5 macros and 53 micros from 321.5 kg of sample. (A macro is defined as equal to, or greater than, 0.5 mm in at least one dimension.)

The Buffalo Hills project is a joint venture involving Ashton, Alberta Energy (AEC-T) and Pure Gold Minerals (PUG-T). Ashton is the operator and can earn a 42.5% interest in the original 1.4-million-acre project from Alberta Energy by spending $5 million on exploration. Pure Gold holds the right to a 15% interest.

The partners share ownership of an additional 4.4 million acres of surrounding ground, including the Loon Lake, Birch Mountain, Muddy River and Rabbit Lake properties, where exploration expenditures are shared proportionately. A further 22.5 million acres, known collectively as the Caribou Hills properties, are held 49% by Pure Gold, 25.5% by Ashton and 25.5% by Alberta Energy.

Formed in 1993, Ashton Mining of Canada is a 62%-owned subsidiary of Australian diamond producer Ashton Mining, which holds a 40.1% interest in the Argyle diamond mine in northwestern Australia.

NWT experience

Ashton Mining of Canada has explored for diamonds in the Northwest Territories, the Upper Peninsula area of Michigan, Wisconsin and Illinois, and the James Bay Lowlands of Ontario and Quebec. The Vancouver-based company also participated in a bulk-sampling program on a diamond-bearing lamproite pipe in the Crater of Diamonds state park in Arkansas.

In the latter part of 1996, Pure Gold and Ashton were approached by Alberta Energy with geophysical data from the Buffalo Hills area of Alberta — data that revealed distinct circular anomalies with characteristic pipe-like signatures.

Although diamonds had previously been found in several stream sediments in Alberta, the province’s kimberlite potential was not fully appreciated until 1994, when Monopros discovered the Mountain Lake kimberlitic stock intrusive near Grande Prairie. Monopros is the exploration arm of De Beers Consolidated Mines (DBRS-Q) of South Africa.

An option agreement was signed in October 1996 and high-resolution magnetic airborne geophysical surveys were flown over selected areas of the property.

Ground magnetic surveys then further defined the anomalies in preparation for drilling, which began in early 1997.

Previously, a province-wide sampling program by the Alberta Geological Survey had revealed 328 possible pyrope garnets present in two glacial till samples taken from the same site on the Buffalo Hills property. Initial electron microprobe analysis of 35 of the grains revealed that 27 were G9s.

Unlike the Northwest Territories, where till sampling has proved an effective tool in tracing kimberlite indicator minerals back to their source, sampling in northern Alberta has been less than successful; this is due, in part, to the complex glacial sequences and the till cover’s variable depth.

During Ashton’s initial winter drilling program, 10 isolated magnetic anomalies in a 100-sq.-km area were tested, and all were found to represent kimberlite bodies. An 11th kimberlite was uncovered as additional sites were being bulldozed for summer drilling.

The kimberlite rocks are described as olivine-dominated, fragmental and tuffisite volcaniclastics representing crater (upper level) and possible diatreme facies.

Much of Ashton’s success in northern Alberta is due to airborne magnetic geophysical surveying. Thick, flat-lying Devonian and Cretaceous-age sedimentary formations are predominant throughout the region and provide a contrasting background to the variable magnetic signatures characteristic of kimberlitic intrusions.

Ashton has focused its search in the Buffalo Head Archean craton, a Precambrian basement formation believed to be one of the oldest terrains in Alberta. Wayne Hillier, vice-president exploration, says he abides by “Clifford’s Rule,” which states that economic diamond mines occur only on Archean cratons.

“Basically, you wouldn’t go into juvenile terrains looking for diamonds,” he says. “That rule may someday be proved wrong, but for now it’s holding.” Ashton has tried to acquire land along the Peace River Arch, an important domal structural area of uplift in the Buffalo Head craton. The underlying basement of the Peace River Arch consists of a series of Archean and Proterozoic tectonic domains. During a succession of uplifts and collapses through time, several important fault structures developed, which may have assisted or controlled the kimberlite emplacement.

These fault structures trend northeast and northwest, and form a detectable pattern over the crest of the Arch.

Between 70 and 80 targets on Buffalo
Hills have yet to be investigated.

Airborne geophysical surveys have been completed on some of the properties immediately surrounding the Buffalo Hills, and Ashton is just beginning to review that data. Over the next several months, airborne geophysics will be carried out over most of the 28-million-acre land package.

Work programs and budgets for 1998 are being discussed by the partners.

Hillier says further work on the K14 kimberlite complex will probably include a bulk sample.

Ashton has almost 26.3 million shares outstanding, or 27.9 million fully diluted, with working capital of $25.1 million.

Pure Gold recently completed an amalgamation with Cayo Resources and now has 24.9 million shares outstanding and working capital of $1.2 million. The company also holds a 75% interest in the 10.1-million-acre Lethbridge property, subject to a 25% earn-in option held by CaribGold Resources (CG-T). Reclamation Management (RMLL-C) holds the remaining 25%.

The Lethbridge property includes a portion of the Sweetgrass Arch in the southern part of the province, which is underlain by the Hearne Province craton. Alluvial diamonds have been found in the claim group.

High-resolution aeromagnetic data from the property indicates the presence of more than 50 circular magnetic targets.

Pure Gold also holds the 9.3-million-acre Edmonton property, which straddles the North Saskatchewan River from Lake Wabamun to the Saskatchewan border.

In 1993, a local prospector discovered a 0.392-carat diamond and 16 smaller stones in a gravel-sampling program along the banks of the North Saskatchewan River.

While Ashton has enjoyed tremendous success in Alberta, Kennecott Canada has not. Earlier this year, Kennecott, a wholly owned subsidiary of Rio Tinto (RTP-N), unsuccessfully tested eight magnetic targets on the Masumeka property in the west-central part of the province, with 20 drill holes totalling 2,344 metres.

Masumeka is one of six property blocks in the Hinton area. These are held under various participating interests by New Claymore Resources (NCS-V), Montello Resources (MEO-V) and Troymin Resources (TYR-V).

Working under an option to earn a 60% interest in the package of properties, Kennecott had identified more than 40 “kimberlite-like” airborne magnetic targets. Eleven of these targets were classified as high-priority after completing follow-up detailed ground geophysical surveys.

Earlier stream-sediment sampling on the Masumeka property had yielded 24 microdiamonds and numerous olivine, chromite and pyrope garnet indicator minerals.

New Claymore President Anthony Rich says Kennecott’s drilling showed only sandstone, with no explanation for the magnetic response. Kennecott recently relinquished its option on the properties in exchange for a 1-year right-of-first refusal.

A privately owned oil and gas company recently allowed the joint venture partners to review airborne magnetic geophysical and seismic data from the entire block of properties. The partners have elected to use the geophysical data and are proceeding with a $250,000 helicopter-supported drill program.

New Claymore will act as operator. The oil and gas company receives a 10% carried interest and $600,000 in stock.

Rich says 16 targets with associated seismic features are identified. Crews are currently in the field, following up with ground geophysics. The initial drill program will test seven targets that are situated on:

* the Masumeka property, held 55% by New Claymore, 35% by Montello and 10% by Troymin;

* the Berland property, held 60% by New Claymore, 30% by Montello and 10% by Troymin; and

* the Kakwa-Simonette property, which has the strongest target and is shared equally by New Claymore and Montello.

New Claymore also holds more than 7 million acres of permits in the Buffalo Head craton. Airborne magnetic surveys have been completed on 2.5 million acres, of which 1.5 million acres are under option to Meteor Minerals (MMI-A), Lucero Resource (LCR-V), Primero Industries (PMI-V) and Everest Mines & Minerals (EVR-V).

Meteor optioned a half interest in two permit blocks — the 360,000-acre Carmon Creek prospect, southwest of Ashton’s discovery, and the 300,000-acre Fahler prospect, adjacent to Monopros’ Mountain Lake kimberlite.

Everest and partner Blackrun Ventures (BKV-V) jointly optioned a 50% interest from New Claymore in three blocks of properties; the 165,000-acre Lubicon East prospect south of the Buffalo Hills block, plus the 230,000-acre Burnt River and 230,000-acre Horseshoe prospects to the north.

The juniors hold other ground in the region. Redwood Resources (RDW-A) holds an option to earn up to a 50% interest in the 4 million acres of ground held by Montello Resources in the Buffalo Hills area. Troymin’s holdings in the region total approximately 1.5 million acres.

Lucero optioned a half interest in two permit blocks — the 160,000-acre Lubicon West prospect, south of Ashton’s kimberlite discovery, and the 230,000-acre ITS prospect, north of the discovery. Primero Industries optioned a half interest in the 250,000-acre Peace River prospect, 37 miles southwest of the Buffalo Hills project.