Shear, Stornoway find big Kahuna diamond (November 26, 2007)

Vancouver — Canadian-focused diamond hunters Shear Minerals (SRM-V, SRMUF-O) and Stornoway Diamond (SWY-T, SWYDF-O) recently turned up a large stone from mini-bulk sampling at their Churchill diamond project in Nunavut.

The 5.43-carat white diamond, recovered from the Kahuna kimberlite dyke, came from second-phase processing of a 400-tonne mini-bulk sample taken earlier this year.

The joint-venture partners note the big stone is a broken piece of an even larger diamond estimated at up to 14 carats — based on the recovery of eight complementary broken diamonds in the same sample.

Some of the other recovered diamond fragments include stones weighing 2.05, 1.54, 1.44, 1.33 and 1.1 carats.

Reconstruction of the diamond will be attempted to determine its original size and also possibly determine why it broke.

Shear and Stornoway have wrapped up processing kimberlite from the Kahuna dyke with results from the final diamond recovery expected in December.

The mini-bulk sample is composed of three separate trench segments taken along strike of the dyke structure. A 107-tonne portion of the 400-tonne sample yielded an initial grade of 0.88 carat per tonne (based on diamonds greater than 0.85 mm).

Kahuna is a roughly 3- to 4-metre-wide vertical kimberlite and is geophysically interpreted to extend about 5.5 km.

The Churchill project covers more than 8,000 sq. km just north of Rankin Inlet on the coast of Hudson Bay. Since 2003, more than 50 kimberlites have been discovered in the region, including four diamondiferous dykes.

Shear, the operator at Churchill, holds 58.14% of the project while Stornoway owns 41.86%. In mid-2007, the partners each bought half of BHP Billiton’s (BHP-N, BLT-L) 12.5% interest for $4 million apiece.

The JV partners got a market boost on news of their most recent find, with Shear closing up 20% at 67 per share and Stornoway inching up a couple of pennies to 74 per share.