Nunavut’s Pelly Bay area shows diamond potential

A new kimberlite camp is emerging in the Canadian Arctic as Indicator Minerals (IME-V) has discovered several large, pipe-like kimberlite bodies during a summer drilling campaign on the Darby project in eastern Nunavut.

Indicator has successfully intersected kimberlite at each of the five geophysical targets tested to date — Iceberg, Inferno, Stealth, Skyy and Prince. A priority target at Darby is the Iceberg kimberlite, defined by a large magnetic feature measuring 11 hectares at surface and where kimberlite float and numerous G10 pyrope garnets, with favourable diamond inclusion chemistry, were recovered down-ice in till samples.

The Iceberg kimberlite was tested with two angled holes spaced 490 metres apart on opposite sides of the lake-covered target. The first hole, collared on the northeast side of the anomaly and angled at minus 50 southwest, intersected 221 metres of continuous kimberlite under 27 metres of overburden. The hole was shut down while still in kimberlite. A second hole, spotted on the southwest side of the anomaly and drilled at minus 60 to the northeast, returned 194 metres of continuous kimberlite.

Indicator minerals and mantle xenoliths are present in the core. More than 500 kg of core is available for microdiamond analysis. Till samples taken immediately down-ice from the Iceberg target in 2005 contained some of the best indicator mineral chemistry and the highest grain counts from the project to date.

A second magnetic anomaly, dubbed Inferno, was tested with a single hole angled at minus 60 that cut through 9 metres of overburden to intercept 167 metres of continuous kimberlite. The hole ended in kimberlite. The Inferno geophysical anomaly is 3.5 hectares in size.

A 60 angled hole into the Stealth target encountered multiple intercepts of kimberlite, the thickest being 98 metres long. A single hole on the Skyy anomaly, angled at minus 55, yielded a 51-metre-long intercept of kimberlite. The Prince target was tested with a vertical and near-vertical hole; both intersecting 17 to 21 metres of kimberlite under 4 metres of overburden.

“The anomalies tested to date represent a fraction of the targets identified by the existing airborne geophysical survey, which only covers 20% of the property,” says Bruce Counts, president of Indicator.

Samples from each of the kimberlites will be analyzed for microdiamonds, and undergo petrographic studies and indicator mineral analysis. Results are expected in the fall.

The Darby project covers more than 1,600 sq. km of mineral claims and prospecting permits, centred 120 km southwest of the coastal community of Kugaaruk (Pelly Bay) in Nunavut. Indicator Minerals holds an 80% stake in the project, with the Hunter Exploration Group, a private exploration and staking syndicate, holding the rest. The Hunter Group is carried through to completion of a bankable feasibility study.

Teck deal

In early June, Teck Cominco (TCK.A-T, TCK-N) struck a deal with Indicator to earn a 51% controlling interest in the project by spending $14 million over four years. Upon earn-in, Teck will be obligated to carry Indicator’s remaining 29% share of exploration expenses through to production on a project loan basis. Indicator will be required to repay the loan only in the event that the project produces cash flow. In addition, Teck must spend at least $2.5 million yearly to advance the project. Indicator is currently the operator under a service contract that is renewable annually.

The Darby project is part of a large package of ground that Indicator originally acquired from the Hunter Group in early 2004 based on promising results from regional till sampling conducted the previous summer across parts of the Boothia Peninsula, Committee Bay and Chesterfield Inlet areas. Reconnaissance sampling produced several samples containing high- interest kimberlite indicator minerals, such as lherzolite garnet, manganese ilmenite, chrome diopsides and olivine.

During the 2004 season, Indicator collected roughly 1,200 heavy mineral samples from its holdings in eastern Nunavut. The sampling revealed anomalous concentrations of kimberlite indicator minerals in three key project areas — Darby, Barrow Lake and Sanagaak. These project areas are scattered amongst the holdings of De Beers and Diamonds North Resources (DDN-V, DNORF-O).

Indicator’s sampling results followed on the heels of the fall 2004 discovery of diamond-bearing kimberlite boulders and float by Diamonds North on a neighbouring package of claims, northeast of Darby.

While conducting a 2-day visit to the Amaruk project in the Pelly Bay area, Diamonds North field crews uncovered numerous kimberlite boulders and float fragments while investigating two separate areas where a high number of indicator mineral grains had been recovered from the initial till samples. In one area, boulders of kimberlite were found at five discrete sites, forming a 2.3-km-long corridor. A 287-kg sample taken from the boulders contained seven small microdiamonds.

“Data collected on the Darby and Barrow projects, coupled with the discoveries made by BHP Billiton and Diamonds North in 2004 suggests that the Kugaaruk area will yield significant diamond discoveries and Indicator Minerals is one of the few companies with a strategic land position there,” Counts stated at the start of the 2005 field season.

Follow-up work on the Darby project in summer 2005 resulted in the discovery of three distinct kimberlite float trains in the central and northern half of the claim block. Another 211 till samples were collected to help prioritize some of the high-interest airborne anomalies in advance of this summer’s drilling.

The recent success at Darby has prompted Teck to increase this year’s exploration budget to $3 million to accommodate additional drilling and airborne geophysics. One of the three kimberlite float trains discovered in 2005 is outside the current airborne data. A high-resolution magnetic and electromagnetic survey is being conducted adjacent to last year’s survey.

“The supplementary drilling demonstrates our commitment to advance the project quickly,” said Counts in a statement. “It will give us our first indication of the size and shape of the kimberlites and a sound basis for estimating the diamond content of these two bodies. This additional information will be important in making the decision to move forward with additional exploration on Iceberg and Inferno.”

Separate from the Darby joint venture is the Barrow project, held 80% by Indicator and 20% by the Hunter Group. Barrow is 15 km south of the Kugaaruk hamlet and comprises 445 sq. km. Some of the indicator minerals recovered from the 2004 till samples were shown to have diamond inclusion chemistry, including several high-chrome composition G10 pyrope garnets. During the course of the 2005 summer program, diamond-bearing kimberlite float was found in the vicinity of one of the high-priority airborne geophysical targets. A single microdiamond measuring 0.55 by 0.42 mm in its two longest dimensions was recovered during the indicator mineral analysis of a 6.7-kg sample of the kimberlite, which was described as a medium- to coarse-grained macrocrystic hypabyssal phase.

Caustic fusion analysis on a 25.5-kg sample taken from the same site returned an impressive 105 microdiamonds exceeding 0.105 mm in size. A single stone, caught in the upper 0.6-mm square sieve division, measured 0.84 by 0.7 by 0.38 mm. The next two largest stones measured 1 by 0.5 by 0.4 mm and 0.78 by 0.58 by 0.5 mm. (See Table 1.)

Indicator is currently trading around 76, with 48.2 million shares outstanding or 65 million on a fully diluted basis.

Elsewhere in the area, Diamonds North first identified the Kugaaruk or Pelly Bay area as being highly prospective for diamonds based on its own northern initiative reconnaissance program and initially staked a key 1,690 sq. km in fall 2003, forming the core of the Amaruk project. Through an arrangement with BHP Billiton (BHP-N), Diamonds North leverage
d its holdings into a 32,670-sq.-km (8 million acres) joint-venture project, which has since been reduced to about 18,200 sq. km (4.5 million acres).

BHP Billiton Diamonds walked away from the joint venture in February after spending close to $10 million on exploration over the past two years.

“That was a surprise to us, but I guess big companies do have changes of strategy,” Mark Kolebaba, president of Diamonds North, said earlier this year at the Prospectors and Developers Association of Canada conference. “There has been no drilling on the project and we’ve got some very good diamond results.”

BHP Billiton retains a 2% gross overriding royalty on any future diamond production.

BHP’s exploration work involved the collection of more than 5,900 till samples, 23,000 line-km of helicopter-borne magnetic and EM geophysical surveys, and first-pass ground prospecting, which helped Diamonds North trim off some 3 million acres (12,140 sq. km) from the project holdings. The project area was systematically sampled on anywhere from a 4 by 5-km grid down to a 1 by 2-km grid in 2004, with further sampling in 2005.

“We’re seeing, across the property at a lot of locations, very nice low-calcium, high-chrome G10 pyrope mineral chemistry,” Kolebaba explained.

There is also an eclogitic component to the indicator minerals that has emerged from last year’s sampling results.

“It tells us that we have potential for two mantle diamond sources, an eclogitic and perioditic, and that can have a substantial effect on the grade of any kimberlite in the region,” he said.

A number of the tills were highly anomalous in kimberlite indicator minerals, returning in the thousands of mineral grains from 10-15 kg samples. The sampling helped define at least three large anomalous regions including a southern-central area measuring 75 by 30 km, a northwest target (55 by 15 km) and a northeastern Simpson Peninsula target (65 by 45 km). Neither the northwest or northeast anomalous regions have been flown with geophysics.

The Simpson Peninsula is underlain by Archean rocks covered with carbonates.

“It’s a very different mineral dispersion and this is something that we would like to fly and see if we can come up with another kimberlite field on our property,” Kolebaba said.

Diamonds North recently optioned the northwestern portion of the Amaruk project to International Samuel Exploration (SAZ-V, SAZEF-O), which can earn a 30% interest in the newly named 4,047 sq. km (1 million acres) Ualliq project by issuing 2 million shares and spending $3 million on exploration over the next four years. The 2006 exploration program will include the first detailed geophysical survey and additional detailed sampling.

Southern-central field

Prospecting in 2005 around select till sample sites along the 75-km-long southern-central field identified the outcropping Umingmak kimberlite and 15 local kimberlite float occurrences. Samples weighing between 25 and 100 kg were collected from five of the kimberlite occurrences for microdiamond analysis, while samples from nine of the occurrences were analyzed separately for indicator minerals.

Umingmak is exposed in three outcrop showings within a topographically low, overburden-covered area. Based on magnetic surveying, Umingmak could be at least 275 by 120 metres in size. The discovery was described as an olivine-rich macrocrystic kimberlite, with lots of visible chrome diopsides and purple-coloured garnet, plus ilmenite.

Kimberlite samples totalling 602 kg were taken from two surface showings 50 metres apart on Umingmak. They held 167 microdiamonds exceeding 0.105 mm in size. The biggest stone, measuring 1 by 0.78 by 0.38 mm, was the only diamond caught on the 0.6-mm sieve.

The results from four other kimberlite occurrences included a 96.9-kg sample from the WMC float area that delivered 148 microdiamonds and showed a favourable distribution trend towards larger stones. A lone diamond measuring 1.1 by 1.05 by 0.95 mm was recovered in the 0.85- to 1.05-mm size fraction sieve.

More than 23 km east of the WMC showing is the WCA kimberlite occurrence, which returned 150 microdiamonds from a 168-kg sample, including six larger stones in the 0.6- to 0.85-mm sieve size. The site of the WA1 kimberlite float, 17 km west of WMC, yielded 45 microdiamonds from a 134-kg sample, while a 96.5-kg sample of WA2, 2 km from WA1, held 54 microdiamonds. (See Table 2.)

“The quality of these microdiamonds is really high,” Kolebaba noted. According to independent consultants Mineral Services Canada, a high percentage of the Umingmak and WMC microdiamonds are white or colourless, in favourable octahedral crystal forms and of high clarity.

A $2-million summer exploration program under way at Amaruk will include more detailed till sampling and grid prospecting, along with airborne geophysical surveys over the eastern and western regions. Some 15 to 20 targets in the south-central block are scheduled to be drill-tested using a reverse-circulation rig sometime in August.

Diamonds North shares, with 39.5 million issued, or 50.8 million fully diluted, are trading around $1.20.

Table 1: Microdiamond Results from Barrow Kimberlite Float

Sieve Size	#Diamonds
+1.180 mm	0
+0.850 mm	0
+0.600 mm	1
+0.425 mm	6
+0.300 mm	18
+0.212 mm	16
+0.150 mm	19
+0.105 mm	45
Total Diamonds	105

Sample Wt. 25.5 kg

Table 2: Microdiamond Results For Amaruk Kimberlite Float

	WMC	Umingmak	WCA	WA1	WA2
Sieve Size	#Diamonds	#	#	#	#
+1.180 mm	0	0	0	0	0
+0.850 mm	1	0	0	0	0
+0.600 mm	2	1	6	0	0
+0.425 mm	0	5	6	3	0
+0.300 mm	8	12	8	2	2
+0.212 mm	23	24	27	7	8
+0.150 mm	60	59	39	17	14
+0.105 mm	54	66	64	16	30
Total Diamonds	148	167	150	45	54
Sample Wt.(kg)	96.9	602	168	134	96.5