BHP resumes drilling at Lac de Gras play

Sources close to the Lac de Gras diamond play in the Northwest Territories say BHP Minerals Canada has resumed drilling on the property.

They say the senior is testing a 100-acre target from a barge on one of the lakes that dot Dia Met Minerals’ (VSE) 850,000-acre claim block. BHP declined to comment on the rumor, but confirmed that summer drilling is part of the Lac de Gras exploration schedule.

Meanwhile, another cash-rich subsidiary with foreign connections is taking a large ground position in the area through option agreements with a number of juniors. In the latest of a string of deals, Kennecott Canada, a subsidiary of RTZ (NYSE) of London, has taken an option on 541,000 acres held by Kalahari Resources (VSE).

Lying 30 miles south of the BHP-Dia Met diamond discovery, the AY claims are under option from R.T. Heard & Associates. Kalahari can earn a 100% interest in exchange for cash payments totalling $330,000, 800,000 common shares and certain royalties.

In order to earn a 70% stake in Kalahari’s option interest, Kennecott must pay the Vancouver-based junior $330,000 up-front and spend enough money on the claims to satisfy assessment requirements estimated to be about $2.2 million during the 2-year option period.

If a production decision is made, Kalahari can elect to take a gross overriding royalty (GOR) of 1% in exchange for every 10% drop in project participation. The junior is also entitled to a 2.5% net smelter royalty. Calgary-based Argus Resources (ASE) has also finalized an option agreement with Kennecott. In order to earn a 70% interest in a 169,615-acre block and a 865,803-acre block, Kennecott must spend $1 million per year over a 4-year period. Argus has a 50% interest in the 169,615-acre block and an agreement to acquire a 2% GOR on the larger block.

Through agreements with Kalahari, Argus and several other juniors, Kennecott has gained access to at least three million acres of prospective ground around Lac de Gras.

Soil sampling to follow up geophysical survey results on the Argus ground is under way.

Exploration is also scheduled to resume shortly on Barexor Minerals’ (ME) 33,000-acre Aylmer Lake property, southeast of the discovery. Chosen for its morphological similarities to the Dia Met property, its proximity to a crustal dome and the presence of diabase dyke swarms, the property contains magnetic lows that are said to be similar in appearance to the Dia Met discovery.

Barexor can earn a 100% interest in the project by making payments of $50,000, issuing 750,000 shares and spending $750,000 on exploration over three years.

The company is currently assembling staff for a $200,000 soil sampling program, supervised by President Michael David.

Further north, Kingswood Resources (ASE), formerly Kingswood Exploration, is planning to begin sampling geophysical targets on a 51,831-acre property just east of Echo Bay Mines’ (TSE) Lupin mine. Kingswood optioned the property from Acadia Mineral Ventures (TSE) and Contwoyto Goldfields (ASE). Kingswood says it has identified 42 targets, about half of which have a distinctive electromagnetic response that could represent kimberlite. The targets are structurally controlled in a southeast direction coinciding with an arm of Contwoyto Lake and on strike with the BHP-Dia Met diamond discovery. The property also contains gold targets.