Saskatchewan is a province long synonymous with uranium and potash. It may not be too long before diamonds are thrown into the mix.
A 3,050-carat parcel of diamonds recovered by
In addition, WWW International Diamond has determined an “average modelled value” of US$135 per carat (within a range of at least US$110 to a high of US$162), which is a statistically derived number based on the extrapolations that a number of larger-size gem stones will be recovered in a commercial-scale mining operation.
The 3,050-carat parcel was recovered as part of a major underground bulk-sampling campaign on the Star kimberlite, which occurs at the southeastern end of the main Fort la Corne kimberlite field in north-central Saskatchewan. The Star project is wholly owned by Shore and ties on to the southern boundary of the Fort la Corne (FalC) joint-venture area, shared by
The bulk-sampling program involved sinking a 4.5-metre-diameter shaft into the throat of the Star eruptive centre to a targeted depth of 250 metres below surface in order to collect a sample of at least 25,000 tonnes. The vertical shaft was collared less than 100 metres east of the FalC property boundary. A portion of the Star kimberlite is believed to extend on to the neighbouring FalC property based on geophysics response.
The shaft passed through the glacial cover and into the Cretaceous sediments at a depth of 89 metres and reached the sediment-kimberlite interface at 107 metres. A little more than 7,600 tonnes of kimberlite were extracted during the sinking of the shaft. The remainder was mined from drifting on the 235-metre level in what is defined as the Early Joli Fou equivalent kimberlite.
The shaft cut through two main eruptive phases of kimberlite that are believed to be equivalent with stratigraphically defined horizons in the Saskatchewan sedimentary basin, namely the Early and Late Joli Fou formations of the Lower Colorado Group. The upper part of the shaft, from 107 to 171 metres, is in the late Joli Fou stratigraphic-equivalent kimberlite phase. The lower part of the shaft, from 190 to 250 metres, is in the equivalent of the Early Joli Fou. Based on the bulk sample results, there is a distinct grade difference between the Early and Late Joli Fou kimberlite horizons, with better grades evident in the deeper Early Joli Fou phase. However, large-carat stones have been found in both horizons.
Diamond recoveries to date total 3,497.47 carats of diamonds exceeding a 0.85-mm cutoff from the processing of 24,548 tonnes of kimberlite, giving an overall diamond content of 14.25 carats per 100 tonnes. More than 98% of the parcel’s weight consists of diamonds greater than 1.18 mm. Shore is waiting on final diamond recovery results for the last 10 remaining sample batches (nos. 65 through 74), representing an additional 1,520 tonnes of kimberlite from the 235-metre level.
Batch samples from the deeper Early Joli Fou kimberlite alone have delivered 3,302.93 carats of diamonds from the treatment of 19,994 tonnes, for an implied grade of 16.52 carats per 100 tonnes. (By comparison, the shallower Late Joli Fou phase shows a diamond grade of just 2.44 carats per 100 tonnes based on the recovery of 65.24 carats from the processing of 2,676 tonnes of kimberlite extracted during shaft-sinking.)
This translates into US$18 per tonne rock for the higher-grade unit, based on the “actual” US$110-per-carat diamond value, or US$22 per tonne rock using the US$135 “modelled” carat value.
The Star kimberlite has given up large-carat stones in every sample batch of processed kimberlite from the Early Joli Fou phase, the biggest being a 19.7-carat, white-coloured aggregate. The next largest diamond weighs 19.68 carats and shows evidence that it broke off an even larger diamond. The biggest stone recovered from the higher-up Late Joli Fou phase is grey and weighs 5.76 carats.
In total, 179 of the recovered diamonds weigh more than 2 carats each, and 485 diamonds are greater than 1 carat. Of these, 285 are described as white, 94 are off-white, 62 are grey, 30 are brown, 12 are yellow, and two are amber. In all, there are 1,095 diamonds that weigh more than 0.5 carat apiece. A small number of coloured stones, representing 1.5% of the overall parcel, have been recovered, including pinks, yellows, ambers and greens. The largest pink-coloured stone weighed 0.72 of a carat.
So what does it all mean, and just how representative is the bulk sample of the Star kimberlite? Shore drifted laterally out from the shaft into the kimberlite at the 235-metre level away from the FalC property boundary in northeasterly and southwesterly directions, guided by the results of surface and underground drilling. The drifting is confined to an area measuring 175 metres north-south and 150 metres east-west. The lateral development at this level is constrained by the kimberlite-country rock boundary, which is perhaps more than 100 metres radius out from the shaft. The underground bulk sample was recovered from a portion of the Star kimberlite, whose footprint represents less than 30 million tonnes, states Kaiser in a recent report.
Shore’s George Read, vice-president of exploration, says the higher-grade Early Joli Fou phase accounts for as much as 80% of the overall 300-tonne mass of the Star kimberlite. Kaiser is not as optimistic: “If you look at Shore Gold’s published cross sections of the Star kimberlite, it is really hard to come up with more than 100 million tonnes of decent-grade material.”
In a Daily Letter analysis, Canaccord Capital’s Graeme Currie derived a net present value of U$321 million or a value-per-share of $5.65 at a 10% discount rate using the US$135-per-carat modeled value for a proposed 45,000-tonne-per-day open-pit mine with a lifespan of 14 years. Curries makes several assumptions based on a 225-million-tonne resource grading 15 carats per 100 tonnes, with projected capital expenditures of US$650 million.
With the valuation now in hand, Read expects prefeasibility work will soon begin proving up a mineral reserve for the Star kimberlite. As part of this work, a further 10,000 tonnes of kimberlite will be collected, and preliminary engineering and environmental studies will begin.
Fort la Corne
The US$110-per-carat Star evaluation is great news for the neighbouring FalC joint venture, whose land holdings total 225 sq. km and contain 63 known kimberlite bodies, rivalling some of the biggest kimberlites in the world. Individually, they range from 3 to 250 hectares in surface area, with 47 of the kimberlite bodies each exceeding 25 hectares for a total surface expression of 23 sq. km.
“We know that this kimberlite field is the largest in the world, containing some 10 billion tonnes, a resource of staggering proportions,” says Robert McCallum, president of Kensington. Forty-five of the FalC kimberlites have proved to be diamond-bearing, and 30 have yielded larger-size microdiamonds longer than 1 mm in at least one dimension.
De Beers is the operator of the joint venture, with a 42.25% stake; Kensington owns an equal percentage; Cameco holds 5.5%; and
The Saskatchewan diamond play dates back to 1988 when De Beers, then operating as Monopros, discovered a small kimberlite body that turned out to be a large piece of glacial erratic. Spurred on by rumours of kimberlite discoveries, a large st
aking rush ensued, and close to 2 million acres were scooped up near Prince Albert. Using the results of a regional aeromagnetic survey flown by the Geological Survey of Canada in the late 1960s, Uranerz Exploration & Mining keyed in on a number of magnetic signatures in and around the Fort la Corne provincial forest. An airborne magnetics survey completed over the main cluster of GSC anomalies revealed 29 discrete targets. Geophysical surveys would later reveal 71 magnetic anomalies exhibiting kimberlite-type signatures in the Fort la Corne project area.
“These kimberlites stand out well against the background of the sedimentary basin we’re in,” said Andrew Williams, FalC’s senior project manager, during a site visit last fall.
Uranerz partnered with Cameco in 1989 to create the FalC joint venture. A first pass of shallow exploration rotary drilling hit kimberlite in each of the seven targets drilled that year. The drilling sampled only the upper few tens of metres. An undisclosed number of microdiamonds were recovered from five of the seven kimberlites in chip samples collectively weighing less than 100 kg. The stones were small but generally appeared to be of gem quality. Seven larger diamonds exceeded 1 mm in at least one dimension.
De Beers joined the joint venture in 1992 under a 3-year earn-in agreement. The joint venture was again amended in 1995 to include Kensington, which became an equal partner by spending $3.4 million over three years. The current ownership is the result of dilution clauses in the joint-venture agreement. The FalC joint-venture partners had spent about $30 million on exploration up to the beginning of last year.
A main cluster comprising 52 of the FalC kimberlites form a 32-km-long, north-northwest, elongated trend, 65 km east of Prince Albert. The other 11 kimberlites are grouped together in a satellite cluster a further 60 km off to the northeast, near Snowden. The FalC joint venture originally held 69 kimberlite bodies, but its holdings were trimmed in recent years and some of the lower-priority satellite kimberlites in the Weirdale and Foxford area were sold off to Shore Gold.
In 1999 and the early part of 2000, De Beers conducted an extensive review of each kimberlite body in an effort to determine targets going forward. Four kimberlite targets (122, 140/141, 148 and 150) were selected for continued evaluation on the basis of kimberlite mass, microdiamond content and overall economic potential.
By the end of 2003, systematic core drilling and large-diameter, reverse-circulation (RC) bulk-sample drilling showed that these huge kimberlite bodies were geologically complex. “Although they are on average of somewhat low grade, a number of the kimberlites do contain within them zones of higher-grade interest,” said Williams. Much of the work in recent years had focused on delineating and sampling of the various units in the complex 140/141 kimberlite body, which is now modelled to contain 494 tonnes of kimberlite alone.
The 140/141 body has yielded the largest diamond recovered to date by the FalC joint-venture: a 10.23-carat stone found during bulk-sample drilling in 2002. Although described as complex and partially resorbed, with evidence of internal twinning and local concentrations of inclusions, it clearly shows the potential for big-carat stones. A 3.33-carat gem-quality diamond was recovered from a 2001 large-diameter hole on the 140/141 kimberlite. De Beers valued this stone at US$390 per carat.
The higher-grade sections of the 140/141, 148 and 122 FalC kimberlite bodies are modelled to contain anywhere from 29 to 156 million tonnes of kimberlite at predicted grades ranging from 7 to 16 carats per 100 tonnes. Together, these units of “higher interest” contain an estimated 369 million tonnes at an average modelled grade of 10 carats per 100 tonnes, equivalent to 37 million carats, using a bottom stone cutoff of 1.5 mm.
In 2004, there was a shift in thinking. “Rather than focusing on a single kimberlite, our strategy going forward will be to identify and locate the higher interest zones within those kimberlites of significant size, such as twenty-five hectares,” explained Williams. “Then we can consider all of those higher-interest units as perhaps one large resource.”
The goal is to outline a resource containing 70-100 million carats.
The partners boosted spending in 2004, carrying out a fall and winter drilling campaign budgeted at $7.6 million, their largest program to date. Thirty-nine broadly spaced core holes were drilled on kimberlite bodies 140/141, 122, 120, 147, 121 and 221, to provide a better geological understanding.
The program included 10 large-diameter RC holes positioned on higher-grade zones in kimberlites 140/141 and 122. In all, 752 tonnes of material were extracted from the 140/141 body, and 707 tonnes collected from kimberlite 122. The aim is to recover at least 100 carats of diamonds from the higher-grade units for preliminary valuation.
This year, De Beers and Kensington are embarking on an unprecedented campaign of exploration drilling, having approved a $26-million program for 2005. The FalC joint venture holdings cover some 20 larger kimberlite bodies within a 5-km radius in the southern portion of the claims. Four of these bodies (140/141, 122, 148 and 150) were extensively explored from 2000 to 2004; three more (120, 147 and 121/122) were drilled in 2004. The remaining 13 bodies will be tested with up to 10 core holes each to determine any units of higher-grade interest. The 2005 program assumes there will be additional follow-up core drilling and mini-bulk RC sampling on some of these bodies. The FalC partners also intend to begin delineating the extent of their portion of the Star kimberlite.
The 2005 program is part of a larger plan to advance the project to a prefeasibility decision in 2008.
“Canada is key to De Beers’ long-term plan for continued rough diamond supply, and should the Fort la Corne kimberlites prove economic, they have the potential to make a significant contribution to narrowing the supply-demand gap,” states Richard Molyneux, president of De Beers Canada.
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