BHP identifies 22 targets in Lac de Gras area

BHP Diamonds, a division of Australia-based BHP (BHP-N), has identified 22 potential kimberlite targets on the DHK and WI joint-venture claim blocks in the Lac de Gras area of the Northwest Territories. The findings are based on the results from a revolutionary Falcon gravity gradiometric survey flown this past autumn.

In conjunction with the gravity survey, BHP carried out its own magnetic survey and reinterpreted earlier geophysical data made available by Kennecott Canada Exploration. The targets have been assessed on the basis of size and intensity of the gravity anomalies, topographic expression, and the presence of kimberlite indicator minerals and/or coincident electromagnetic and magnetic anomalies. Three of the targets are classified as first-priority (all are on the DHK block), whereas six others are regarded as second-priority.

The boundaries of the DHK and WI blocks are adjacent to the southern outer edge of the Ekati diamond mine’s Buffer zone. The two properties cover 283 sq. km and host four kimberlite pipes known to be diamondiferous.

BHP Diamonds can earn a 35% interest if joint-venture partners DHK Diamonds, Archon Minerals (ACS-V) and SouthernEra Resources (SUF-T) discover a new kimberlite on the basis of the Falcon gravity data. BHP will have the option to earn a further 16% by bulk sampling any new pipes that are discovered.

Archon can maintain its 10% working interest in the joint venture by drill-testing the first five Falcon targets, whereas DHK Diamonds and SouthernEra will maintain their respective interests of 29.25% and 9.75% by contributing proportionately after the first five targets are tested.

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

Listing planned

In February 2000, DHK entered into an agreement with Kennecott whereby the Rio Tinto (RTP-N) subsidiary transferred to the junior its 40% interest in the WO, DHK and WI property blocks and a 100% interest in the Pellat Lake claims. In return, Kennecott will receive a 9.9% equity interest in DHK Diamonds provided it acquires a listing on the Canadian Venture Exchange on or before Aug. 11, 2001.

If DHK fails to go public by that date, Kennecott will acquire an additional 30.1% interest in DHK at a cost of $1, to hold, in total, a 40% stake. Kennecott retains a 2% production royalty on the 13 known kimberlites on the WO, DHK and WI claim blocks and a 1% royalty on the one kimberlite dyke known to exist on the Pellat Lake property, 30 km north of Ekati. Kennecott also retains the diamond sales rights concerning the known kimberlites, with the exception of DO-27 and DO-18 (collectively known as Tli Kwi Cho).

DHK Diamonds formed a partnership with BHP in August to carry out an airborne Falcon gravity survey over the DHK and WI blocks. BHP had suggested conducting the Falcon survey over the northern part of the WO property. However, Aber Diamond (ABZ-T), which holds a 15% interest in the WO block, would not agree. Under a separate, farm-out agreement, Archon can earn a 25% interest in any kimberlite it discovers on the WO claims, excluding certain areas around previous discoveries.

Traditionally, airborne geophysical surveys are magnetic, with follow-up gravity surveying being done on the ground. Described internally at BHP as “the Holy Grail of exploration,” the Falcon gravity gradiometer technology is a new proprietary system done from the air instead of the ground. It is designed to detect variations in the density of surface and sub-surface rocks. Such variations may be indicative of the presence of kimberlite pipes, especially pyroclastic or crater facies kimberlite, which may manifest themselves as negative gravity anomalies. Kimberlites are of very low density, compared with the surrounding country rock. These kimberlites may have been missed in earlier geophysical surveys, owing to the absence of electromagnetic or magnetic signatures.

Quick turnaround

The Falcon gravity survey is economic, provides a quick turnaround time for results in comparision with either ground or helicopter-supported surveys, and can also survey under water. It has a depth penetration of some 500 metres. The tool is unique in that it can be flown anywhere.

BHP has flown this system over the Ekati mine property. Out of five Falcon gravity targets drill-tested last summer, two were confirmed as kimberlites.

The Falcon survey was developed for the U.S. military by Martin Marietta as a means of determining positioning for launching of missiles from submarines. The U.S. government spent about $400 million developing the technology. BHP holds a five-year exclusive licence, with the option of a 2-year extension.

BHP is reported to have flown demonstration surveys in the Kimberley diamond region of Western Australia over prospects held by three junior companies, including Thundelarra Exploration (TLX-V) and Australia-listed Striker Resources and Diamond Rose.