DIAMOND PAGE — Kennecott seeks diamonds near Wawa

Encouraged by northern Ontario’s newfound diamond potential, Kennecott Canada Exploration has signed a deal to earn majority interests in properties comprising more than 200,000 ha near the town of Wawa.

The company, a unit of mining giant Rio Tinto (RTP-N), can earn 60% interests in the Whitefish Lake, KAP and Rocky Island Lake properties from Canabrava Diamond (CNB-V) and Paramount Ventures & Finance (PVF-V). To do so, Kennecott must spend $25 million on exploration over seven years, or advance one of the projects to the point where a production decision can be made.

At Whitefish Lake, which is fully owned by Canabrava (the other two projects are shared equally by the juniors), two kimberlite dykes are know to occur, as are abundant kimberlite float/boulders and indicator minerals. One of the dykes was tested by limited drilling but failed to return any diamonds. The other was found in outcrop and has yet to be drilled.

Numerous indicator minerals in alluvium and glacial till have been discovered on each of the remaining properties. Also, the study of historical data led to the discovery of one kimberlite body at Rocky Island Lake, and many nearby ultramafic bodies remain untested.

Having evaluated the available geophysical data, Kennecott recently began a first phase of exploration. As part of its agreement with Canabrava and Paramount, the company must spend $1.5 million on exploration within 18 months.

In related news, Canabrava has optioned to SouthernEra Resources (SUF-T) a half-interest in its namesake diamond project in southeastern Brazil. The property covers 400,000 ha of exploration concessions that are considered prospective for both primary and alluvial diamond deposits.

To earn its interest, SouthernEra must spend US$20 million over seven years, of which US$1.5 million must be spent in the first two years. Exploration crews are currently focused on several known pipes, as well as on rivers known to host large and fancy-coloured stones.