DIAMOND NEWS ROUNDUP — BHP, Dia Met inching towards production

The recent submission of an environmental impact statement by partners BHP Diamonds (a subsidiary of BHP Minerals) and Dia Met Minerals (TSE) sets in motion the permitting process for what could be North America’s first major diamond mine.

Development plans for the NWT Diamonds project near Lac de Gras call for open-pit mining of an initial five diamond-bearing kimberlite pipes (Panda, Misery, Koala, Fox and Leslie), followed by the underground development of at least two of the pipes. It is proposed that five overlying lakes be drained and that one of these be used for tailings disposal.

BHP and Dia Met anticipate construction will begin next summer, upon receipt of approvals and permitting, and that production will get under way by late 1997.

Already, more than $100 million has been spent developing the project, and the capital cost of reaching production is forecast at $750 million. The total capital expenditure during the 25-year mine life is estimated at $1.2 billion.

A central processing plant, southwest of the Koala pit, will initially handle 9,000 tonnes of ore per day at a projected annual operating cost of $163 million. Doubling of production to 18,000 tonnes per day in the year 2006 will increase the annual operating cost to $200 million.

The partners expect to generate annual revenue of between $400 and $500 million through the duration of the 25-year life. An average of 830 people will be directly employed over the life of the project.

BHP holds a 51% stake in the joint venture, with Dia Met holding 29%. The balance is held by private individuals.

Elsewhere in the Northwest Territories

Delineation drilling of seven angle holes is under way on the A-418 kimberlite pipe at the Diavik project near Lac de Gras.

Held 60% by Kennecott Canada and 40% by Aber Resources (TSE), the project is the focus of a $23.5-million underground program aimed at exploring the A-154 South pipe.

The A-418 lies 700 metres south of A-154 South and is reported to be of similar size. Initially, two vertical holes tested the pipe, with the second hole resulting in the previously reported recovery of 29 diamonds weighing 2.56 carats from 707 kg of kimberlite. The preliminary grade was 3.6 carats per tonne.

Results from caustic fusion analysis on the first hole are finally available. A total of 235 macrodiamonds and 487 micros were recovered from 397.8 kg of sample material (or 18.2 diamonds per 10 kg). Fifty-four of these measure greater than 1 mm in one dimension, including five which are greater than 2 mm and three which are greater than 3 mm. The largest recovered stone weighed 1.08 carats.

The first hole of the delineation program, A418-3, was drilled at an angle of 42! and intersected kimberlite at 92 metres; this continued up to 290 metres, at which point drilling was abandoned as a result of caving. A diamond measuring 3 by 3 mm was observed in the core.

* Three juniors — Mountain Province Mining (VSE), Glenmore Highlands (ASE) and Camphor Ventures (VSE) — have released results from caustic fusion analysis of a vertical delineation hole on their jointly held AK property. Hole AK0023 was drilled on land, 310 metres north of the original discovery hole on the 5034 pipe.

A total of 176 macros and 282 micros were recovered from 185.09 kg of kimberlite (or 24.74 diamonds per 10 kg). Of the macrodiamonds recovered, 44 were greater than 1 mm and eight were greater than 2 mm. Drilling continues to test the land-based area of the pipe.

Situated south of Lac de Gras, the AK property is held 50% by Mountain Province, 40% by Glenmore and 10% by Camphor.

* A disputed block of ground, known as LA-125 and staked by Gerle Gold (VSE) south of Mountain Province’s 5034 kimberlite, was granted the stamp of approval by the Territorial mining recorder.

The LA-125 was originally part of the AK claims that Mountain Province apparently let lapse. The northern boundary of the LA claims is within 1 km of the 5034 kimberlite pipe.

The LA-125 claims are to become part of the Doyle properties which are subject to an agreement between Monopros and Gerle in which the former, an exploration arm of DeBeers, can earn a 60% interest by spending $4.6 million over the next four years.

* Ashton Mining of Canada (TSE) is engaged in a sampling program on the Cross property, 120 km northwest of Yellowknife. And a follow-up airborne geophysical survey will help define drill targets.

Ashton can earn a 51% interest in the property, which is held 70% by Tenajon Resources (VSE) and 30% by Pure Gold Resources (TSE). To earn the interest, Ashton must fund all exploration up to, and including, the collection of a 20-tonne bulk sample. Prior to Ashton’s earn-in, Pure Gold can earn an additional 20% interest from Tenajon by funding $750,000 worth of exploration.

* Ashton is also proceeding with ground follow-up of anomalies generated by an airborne geophysical survey over the Noront No. 1 property, 40 km from the Mountain Province kimberlite discovery. Ashton is earning a half interest in the property.

Elsewhere in the Slave province, Ashton is following up on some indicator mineral anomalies uncovered during previous sampling.

At the Lake Superior joint venture in the Crystal Falls area, which straddles the Michigan-Wisconsin border, a new kimberlite pipe has been discovered. Ashton has a 51% interest in the project, where a 100-kg sample is being tested for microdiamonds.

In the first half of the year, Ashton incurred a net loss of $747,000 or 4 cents per share. Corporate costs of $764,000 were offset by interest income on short-term investments of $595,000. Deferred exploration costs charged to operations amounted to $578,000.

Ontario

* Ashton is also preparing to carry out exploration in the James Bay Lowlands, where the Kyle No. 3 kimberlite will be subjected to mini-bulk sampling.

The work will involve preliminary tests for commercial diamonds. Kimberlite material extracted by drilling will be treated through Ashton’s dense media separation plant. To date, 96 microdiamonds and 5 macros have been recovered from 454 kg of kimberlite sampled.

Ashton can earn a 51% interest in the property from KWG Resources (ME) and Spider Resources (ASE) (which own 70% and 30%, respectively).

Africa

* Operations have recommenced at the Quaggas Kop alluvial diamond mine in South Africa.

Redaurum (TSE) owns the mine, which has historically produced 85% gem-quality diamonds. Its accompanying diamond recovery plant is operating at 40 tonnes per hour, with the largest diamond recovered since operations resumed July 17 being a 1-carat gem.

The new earthmoving fleet now at the site will require no further upgrading to cope with the additional throughput.

Once the plant is expanded, annual sales from production should exceed $2 million per year.

Drilling on the adjoining 10,000-acre Rooiberg farm has begun, with results expected in the fourth quarter.