Archon hits snags while drilling in Lac de Gras

Drilling by Archon Minerals (ACS-V) in the Lac de Gras area of the Northwest Territories has been halted following the testing of only one target.

Archon had set about testing some 22 geophysical pipe-like targets, which BHP Billiton‘s (BHP-N) Canadian diamond division had identified on the WO group of claims, directly south of the Diavik diamond mine project. However, minimal snow cover made it impossible to move the track-mounted drill rig from site to site without disturbing the tundra, which is prohibited under the land-use permit.

The only target tested (and with negative results) was a lake-bottom gravity-low drilled off the winter road.

Archon intends to resume drilling in late May or early June using a helicopter-supported rig.

Last fall, BHP flew its proprietary Falcon gravity and magnetic survey over the northern part of the 560-sq.-km WO claim block. Using results from the survey, together with reinterpreted geophysical and kimberlite indicator mineral data made available by Kennecott Canada Exploration, BHP identified 22 potential kimberlite targets. Three of the targets are designated “high priority” and occur in a cluster of 11 targets within a 4-km radius of the known diamondiferous pipes DO-27, DO-18 and DO-29. One of the priority targets is a non-magnetic anomaly adjacent to DO-29, which was previously tested by Kennecott with two holes in 1993 and one hole in 1998. An 82.7-kg sample of kimberlite from the 1998 hole yielded 11 microdiamonds and one macro exceeding 0.5 mm in at least one dimension. Results are not known for the 1993 holes.

Previously, Kennecott uncovered nine kimberlites on the WO claims, including the Tli Kwi Cho (DO-27 and DO-18) pipes. The WO claims are currently held 55% by DHK Diamonds, 20% by Archon, 15% by Aber Diamond (ABZ-T) and 10% by SouthernEra Resources (SUF-T). Archon will have completed its earn-in once it finishes drill-testing a second target.

DHK Diamonds is a private company owned equally by Dentonia Resources (DTA-V), Horseshoe Gold Mining (HSX-V) and Kettle River Resources (KRR-V).

Under the terms of an agreement in August 2000, Kennecott agreed to relinquish its 40% interest in the WO, DHK and WI property blocks for a 9.9% interest in DHK Diamonds once it went public, or a 40% stake if DHK remained a private company, along with the diamond-marketing rights. DHK was never taken public, and Kennecott later indicated it would exchange those rights for a 1% gross overriding royalty on future diamond production from any kimberlite within the WI, DHK and WO blocks. Dentonia says the letter agreement was modified in August 2001 and signed by all the parties except Aber and SouthernEra. However, Kennecott has yet to transfer its 40% interest in the three property blocks to DHK.

Kennecott, a subsidiary of London-based Rio Tinto (RTP-N), optioned the WO, DHK and WI claim blocks from DHK Diamonds in the spring of 1992 and subsequently discovered 13 kimberlite bodies on the three properties. Both Aber and SouthernEra acquired their respective interests through a common-area tie-in agreement with Kennecott. In March 1993, Kennecott intersected the edge of a kimberlite body while drill-testing the DO-27 target, a promising geophysical and indicator mineral anomaly partly covered by water. The first hole yielded seven micros and three macros from a 15.9-kg core sample. Seven micros and two macros were recovered from 10.5 kg of core from the second hole. It was the third hole that finally went into the guts of the system, returning 48 micros and 16 macros from 60 kg of kimberlite.

North lobe

Kennecott drilled a total of 43 holes to test DO-27, recovering 1,032 micros and 353 macros (including 20 stones greater than 1 mm in one dimension) from 1,307 kg of samples. The Tli Kwi Cho complex refers collectively to the DO-27 and DO-18 pipes, which have a total surface area of 16 hectares. The first hole drilled into DO-18, a large circular north lobe of Tli Kwi Cho, produced 62 micros and 16 macros from 265 kg of core. Kennecott eventually tested the DO-18 portion with 13 holes, recovering 531 micros and 99 macros from samples totalling 1,349 kg.

In the fall of 1992, in a rush to advance the project, Kennecott elected to bypass a crucial mini-bulk sampling step and proceeded directly to an underground 5,000-tonne bulk-sampling program on DO-27. The $10-million undertaking proved a costly gamble for Kennecott and its partners: when disappointing bulk-sample results were released to an unsuspecting market in August 1994, millions of dollars were wiped off the stocks of the Lac de Gras diamond players.

Kennecott extracted 4,261 tonnes of kimberlite from two distinct facies of the multi-phase DO-27 along a horizontal plane at 100 metres below surface. The bulk sample was collected from a Y-shaped drift starting from the eastern outer edge of the body. A total of 3,003 tonnes of pyroclastic and volcaniclastic kimberlite facies yielded 1,079 carats of diamonds, giving an implied grade of 0.359 carat per tonne. The diamonds were valued at US$21.70 per carat. The diatreme facies, represented by 1,258 tonnes of material, yielded just 16.4 carats, for a grade of 0.013 carat per tonne and a value of US$33.50 per carat.

The largest diamond recovered overall weighed 3.6 carats and was valued at US$450-800 per carat.

Aborted plans

Discouraged by the results, Kennecott abandoned the DO-27 pipe. Plans to extract a 10-tonne mini-bulk sample from the land-based DO-18 pipe were aborted in 1996, when a large-diameter reverse-circulation drill program failed to cut through overlying boulders.

Dentonia argues that Kennecott has failed to test the potential of the Tli Kwi Cho complex. It further suggests that the bulk sample was limited in scope and restricted almost entirely to the margin of a black lithic olivine crystal tuff facies, and also that Kennecott failed to sample adequately the “apple green tuff” facies of the southern lobe.

DO-27 is estimated to contain a 23-million-tonne resource of pyroclastic facies material to a depth of 300 metres.

In August 2000, DHK signed a deal with BHP to carry out a Falcon airborne gravity survey over the WI and DHK claim blocks, straddling Lac de Gras. BHP’s work revealed 16 potential kimberlite targets on the DHK claims. Archon drill-tested 14 of the targets by the summer of 2001 without hitting any kimberlite, but earned a 20.4% interest. The two remaining targets lie untested under lake cover. BHP had the right to earn a 51% interest in any new discovery.

A separate agreement was struck with BHP in August 2001 concerning the WO claims. BHP has the right to earn a 54.5% interest by electing to bulk-sample a minimum of 200 tonnes from any kimberlite discovered as a result of the Falcon survey.