BHP disappointed at DHK, WI claims in NWT

Diamond explorer Archon Minerals (ACS-V) has come up empty after drilling 14 geophysical targets on the DHK and WI claim blocks in the Lac de Gras area of the Northwest Territories.

A year ago, BHP Diamonds flew its proprietary Falcon gravity gradiometer survey over the two claim blocks. Using results from the survey in conjunction with reinterpreted geophysical data made available by Kennecott Canada Exploration, BHP identified 22 potential kimberlite targets. The targets were assessed on the basis of size and intensity of the gravity anomalies, topographic expression, and the presence of kimberlite indicator minerals, along with coincident electromagnetic and magnetic anomalies. Three of the targets were considered high-priority.

After Archon drilled the first four targets to no avail, the original 22 targets were whittled down to 16, using stricter geological and geophysical perimeters. Archon tested 14 of these targets, but again to no avail. They appear to be the result of geological formations other than kimberlite. The remaining two anomalies lie untested under lakes on the DHK block.

BHP’s proprietary airborne gravity survey is designed to detect density contrasts. Kimberlites of sufficient size and density are detectable with this technology, as are other geological formations of low density, such as meta-sediments, lake bottom sediments and deep overburden. Some of the targets tested by Archon were magnetic and electromagnetic anomalies, and were recorded concurrently with the Falcon survey and from earlier data. These anomalies were caused by sulphides.

BHP has flown the Falcon survey over the Ekati mine property, resulting in the discovery of several new kimberlite pipes, including the Impala kimberlite, which yielded 72 macrodiamonds and 111 micros from 277.9 kg of sample.

The DHK and WI blocks are held by DHK Diamonds, SouthernEra Resources (SUF-T) and Archon. BHP Diamonds, a division of BHP Billiton (BHP-N), can earn a 35% interest in any new kimberlite discovered as a result of its Falcon survey. BHP will have the right to increase its interest to 51% by completing a 200-tonne mini-bulk test.

Archon maintained its 10% interest in the joint venture by drill-testing the first five Falcon targets solely at its own cost.

DHK Diamonds is a private company owned equally by Dentonia Resources (DTA-V), Horseshoe Gold Mining (HSX-V) and Kettle River Resources (KRR-V). Early last year, Kennecott agreed to transfer its 40% interest in the WO, DHK and WI property blocks to DHK Diamonds, along with a 100% interest in the Pellat lake claims. In return, Kennecott had the right to receive a 9.9% equity interest in DHK, plus an equal amount of warrants, once it acquired a listing on the Canadian Venture Exchange, or a 40% stake if DHK remained a private company. Kennecott, a division of Rio Tinto (RTP-N), has now agreed to convert those rights into a 1% gross overriding royalty on future diamond production from any kimberlite within the WI, DHK and WO blocks.

BHP is in the midst of flying its Falcon survey over the northern portion of the 565-sq.-km WO property, in accordance with an agreement signed by all of the property owners. The WO block covers ground south and southeast of the Diavik diamond mine project, and includes the infamous Tli Kwi Cho (DO27 and DO18) kimberlites.

The WO block is currently held 75% by DHK Diamonds, 15% by Aber Diamond (ABZ-T) and 10% by SouthernEra. By sharing the costs of the Falcon survey with BHP and then drill testing the first two Falcon targets solely at its own cost, Archon will have earned a 13.28% interest in the WO joint venture. BHP, on the other hand, can earn a 54.47% stake only if a new kimberlite is discovered.