De Beers committed to Kennady Lake

In an attempt to enhance the economics of the Kennady Lake project in the Northwest Territories, De Beers Consolidated Mines (DBRSY-Q) will carry out additional bulk sampling of the two highest-value pipes as part of a $10-million winter program.

A further 1,000-1,250 carats will be recovered from each of the Hearne and 5034 kimberlite pipes. By recovering a larger number of diamonds, De Beers hopes to increase the confidence level of its scoping study model. Earlier this year, the South African major tabled a study that examined both open-pit and underground mining options. Open-pit mining was proposed for the 5034 and Hearne pipes, along with a high-grade zone within the top 140 metres of the Tuzo pipe, and while the recent study agrees that this is the most economic scenario, it also states that the deposit lacks the critical mass to achieve the 15% rate of return required to proceed to feasibility.

Partner Mountain Province Mining (MPV-T) says it would take only a 15% increase in diamond values to put the project over the minimum threshold.

Situated 120 km southeast of Lac de Gras, Kennady Lake comprises a portion of the AK-CJ claims, held 51% by De Beers Canada Exploration, 44.1% by Mountain Province and 4.9% by Camphor Ventures (CFV-V). De Beers can boost its interest to 60% by advancing the property to commercial production.

Last year, De Beers collected bulk samples from a cluster of four pipes, including 5034, Hearne, Tuzo and Tesla. While results were encouraging for the 5034 and Hearne pipes, the grade and carat values for the Tuzo pipe were less than anticipated.

A total of 1,044 carats of diamonds was recovered from 609 tonnes of drill sample from the 5034 pipe; the Hearne pipe yielded 856 carats from a 469-tonne sample; Tuzo returned 540 carats from 523 tonnes of kimberlite; and Tesla yielded 64 carats from 184 tonnes of sample.

De Beers used these results, together with mini-bulk sample and microdiamond results, to model grades for the 5034, Hearne and Tuzo pipes. Diamond values were based on the 1999 bulk samples.

The 5034 kimberlite contains a modeled resource of 12.5 million tonnes to a depth of 300 metres grading 1.64 carats per tonne at an average value of US$63 per carat, or US$103 per tonne. The 5034 kimberlite is subdivided into four lobes based on internal geology. The north lobe extends partly under land.

The Hearne pipe hosts 7.2 million tonnes grading 1.71 carats per tonne at US$65 per carat, or US$111 per tonne. Hearne consists of a northern and southern lobe, which have been further subdivided into multi-phases.

The Tuzo pipe contains 14.9 million tonnes grading 1.22 carats per tonne at US$43 per carat, or US$52 per tonne. An upper high-grade zone hosts a modeled 1 million tonnes grading 2.7 carats per tonne at US$47 per carat, or US$127 per tonne.

The Tesla pipe is the smallest of the four pipes sampled, with an estimated resource of 4.6 million tonnes grading 0.35 carat per tonne. Valuations of the 1999 bulk sample were never reported, but Mountain Province has alluded that they were in line with a previous valuation made on the 1998 mini-bulk test of US$96 per carat, equivalent to US$34 per tonne. Tesla is regarded as uneconomic.

The Hearne, Tuzo and Tesla pipes all lie within a 1-km radius of the 5034. The deepest points of the pipes are covered by 5-15 metres of water. Exploration drilling in the spring of 1999 encountered a fifth kimberlite body, called Wallace, between the Hearne and 5034 pipes. The discovery hole yielded 72 micros and nine macrodiamonds from 40 kg of kimberlite. De Beers believes the maximum dimension of the Wallace kimberlite is unlikely to exceed 60 metres.

During the spring of 2000, De Beers drilled 23 holes into 19 lake-covered geophysical targets. Eight of the holes intersected kimberlite. The most significant discovery was the Kelvin kimberlite, 9 km northeast of Kennady Lake and 3 km southwest of the diamond-bearing Faraday kimberlite.

Two holes returned kimberlite intervals of 40 and 23 metres; a third missed. Though actual dimensions remain unclear, a 3.3-metre-thick kimberlite dyke was discovered 200 metres south of the Kelvin body.

A further 20 km northwest of Kennady Lake, a land-based target on the north shore of MZ Lake was drilled to a depth of 35 metres. The hole intersected a 1.7-metre-thick interval of kimberlite, as well as five separate kimberlite stringers up to 0.7 metre thick. This target sits 300 metres northwest of previously discovered kimberlite dykes.

This summer, De Beers collected 670 additional till samples at closer spacing near the most promising clusters of indicator mineral trains.

The winter program of bulk sampling starts in mid-February. The drilling of five large-diameter holes into each of the 5034 and Hearne pipes is expected to recover 1,400-1,700 tonnes of kimberlite and generate 2,000-2,500 carats.

Mountain Province recently raised $2.2 million through a private placement of some 2.7 million units priced at 60 each. De Beers took down the first tranche of almost 2 million units for $1.1 million in proceeds. The second tranche was sold to three placees who bought a total of 1.8 million units, equivalent to proceeds of $1.1 million.