Ashton boosts Canadian diamond spending

Australian diamond producer Ashton Mining plans to spend at least $1.3 million, or about 20% of its diamond exploration budget, to evaluate targets in Canada this year, says Chief Executive John Robinson. The company may also open a Canadian office.

After burrowing through a mountain of property submittals from Canadian juniors, the 40%-owner of the Argyle diamond mine has teamed up with Pure Gold Resources (TSE) and KWG Resources (ME) to explore for diamonds in the Northwest Territories, Alberta and the James Bay lowlands of northern Ontario. “Our move into Canada was encouraged by the Dia Met-BHP discovery,” said Robinson, who spoke to The Northern Miner from New York City. Ashton is increasing its exposure to diamonds while reducing gold investments, according to the company’s annual report. Chairman Sir Leslie Froggatt says the shift will help the company conserve funds to support an “increased spread of diamond exploration activity and to prepare for new developments that may arise from this activity.”

Last year, the diamond and gold producer realized a net income equivalent to $31.1 million, up from $18.5 million the previous year. Ashton’s share of diamond sales from Argyle, the world’s largest diamond mine, reached $178.5 million. Most of the mine’s gem quality diamonds are sold to De Beers’ Central Selling Organization, as are about 78% of its near-gem and industrial diamonds.

In the Northwest Territories, Ashton recently financed a 3,000-line-km survey over Pure Gold’s Humpy Lake and Winter Lake properties, about 145 km west of Lac de Gras, and is now poring over data in search of kimberlite drill targets. Geochemical results to date have been encouraging.

Robinson said Ashton’s Canadian budget will increase if exploration results warrant further spending.

This year, Pure Gold will spend more than $1 million on property acquisition and sampling on its one million acres of ground in the Lac de Gras area. Ashton has the option to finance target evaluation, drilling and bulk-sampling in exchange for a 51% interest in the pipes it chooses to sample.

Ashton also holds an option on Pure Gold’s four million acres in the Peace River area of Alberta.

The KWG deal, whereby Ashton can earn a 50% interest in the James Bay lowlands project, is subject to Ashton being satisfied with “certain technical aspects of the project.”

Ashton is also participating in a more advanced exploration project in northern Michigan and Wisconsin with partner Crystal Mining and Dow Chemical. The group has outlined 14 kimberlite pipes, seven of which are diamond-bearing, on the property this year.

Although he said the Lac de Gras play looks encouraging, Robinson will not comment on the economic potential of the area until he sees a better statistical representation of the diamond-bearing pipes.

To evaluate kimberlite pipes with confidence requires a minimum sample of about 3,000 carats, he said.