To the surprise of few and the dismay of
Winspear, operator and 67.76%-owner of the project, had sought to reduce Aber’s interest to 16% over a funding dispute related to the 1999 work program. The company took the position that Aber had elected not to participate because it failed to provide timely written notice (30 days) of its intention to do so, as required by their joint-venture agreement. While this was not done, Aber argued that it had given verbal agreement and was always prepared to fund its share of costs.
The subsequent lawsuit surprised many as the partners seemed to enjoy a cordial relationship in the early days of their joint venture. However, court records show relations deteriorated in 1998, when Winspear decided to treat Aber on a strictly formal basis, but without advising Aber.
The companies met on Dec. 16 of that year to draft the 1999 program, which was unanimously approved by a joint committee. Two days later, Winspear sent Aber a copy of the approved budget but did not include a sign-off sheet, as was used in previous years.
On Jan. 19, Winspear wrote a letter notifying itself, but not Aber, of its intention to fund its share of costs. Then, on March 3, Winspear advised Aber that it intended to fund the 1999 program entirely. Over Aber’s objection, and despite Aber’s having tendered its share of the funding, Winspear then proceeded to carry out the program, which totalled $12.4 million.
Justice Duncan Shaw ruled in Aber’s favour after finding ample evidence that the company intended to contribute its share of costs. And using Dec. 17 as the starting date, he also concluded that the 30-day notice period had run out before Winspear formally confirmed (to itself, on Jan. 19) its intention to contribute to the program.
“In my view, it would be unconscionable to allow Winspear to benefit from Aber’s alleged failure when Winspear committed the same error that it alleges against Aber,” stated Shaw. He ruled that “it would be unjust to allow Winspear to appropriate Aber’s interest. To do so would deprive Aber of the real objective of the contract, which is the potential for future profits if the diamond property proves successful.”
Aber has 30 days to pay Winspear $4 million for its share of 1999 costs, which shouldn’t be a problem as the company had $196 million in its kitty at the end of 1999. Aber was awarded costs and says it retains the right to pursue its pending lawsuit for damage claims against Winspear. Winspear and its legal advisors are reviewing the judgment and will consider the merits of appealing Justice Shaw’s decision.
In the meantime, an advanced exploration program is under way in the Snap Lake portion of the Camsell Lake project, 220 km northeast of Yellowknife. Both Winspear and Aber have committed to funding their respective shares of expenditures for the 2000 program, which is budgeted at a total of $40 million. The program is designed to obtain all information required to support a bankable feasibility study for the NW Snap Lake kimberlite dyke.
“This is a key year in the process of getting to a feasibility study, so we’re going to be interested in the results,” said Andrew Adams, vice-president and chief financial officer of Aber. “There is a lot more work to be done on this project before we can understand its potential.”
Results to date from 189 contiguous drill intersections suggest that the NW dyke is a gently dipping single phase of macrocrystic hypabyssal kimberlite that is relatively uniform in thickness and grade. MRDI Canada, a division of AGRA Simons, has modeled a resource of 21.3 million tonnes of kimberlite grading 1.97 carats per tonne at an average thickness of 2.4 metres, equivalent to 41.9 million carats. For that part of the dyke that exceeds 2 metres of thickness, the indicated resource is estimated at 8.3 million tonnes grading 1.97 carats at an average width of 3.1 metres.
Surface samples collected in 1999 from two pits set 300 metres apart on the subcropping portion of the dyke yielded 10,708 carats of diamonds from 5,996 tonnes of kimberlite. The diamonds were valued at US$105 per carat.
Much of the work in 2000 will involve driving a 1,200-metre-long decline on the NW dyke, some 120 metres beneath Snap Lake, in order to collect up to a 20,000-tonne representative sample of kimberlite from 600 metres of development drift along the downdip extent of the dyke. Of that total, 6,000 tonnes representing three widely spaced, 2,000-tonne samples will be processed on-site in a 10-tonne-per-hour dense media separation plant. Processing is to begin in July or August.
At present, 175 people are stationed at the Snap Lake site. An 85-bed Atco-type camp, with kitchen facilities for 150, has been completed, as has a 3.3-million-litre storage tank fuel farm. A 900-metre airstrip is expected to be ready by mid-April. At last report, the decline had been driven 50 metres beyond the collar, and an office-dry area was operational.
Winspear is carrying out exploration drilling to test the outer limbs of the NW dyke. A 10-hole program targeted the downdip extensions along the previously defined southeastern and eastern limits. One hole intersected 8.82 metres of dominantly hypabyssal kimberlite with associated kimberlite breccia, while four other holes encountered intervals ranging from 2.59 to 3.36 metres.
Another 10 holes are to test the downdip extension of the kimberlite dykes found in the southeastern arm of Snap Lake. When ice conditions are no longer suitable for drilling, the rigs will move to the northern shore to undertake 2,400 metres of infill work.
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