DIAMOND STORY — BHP updates plan for diamond project

An updated “project description” for the Northwest Territories diamond project managed by BHP Minerals Canada is in the hands of the Environmental Review Panel.

The recently created panel is responsible for ensuring that the project meets the requirements of the Environmental Assessment and Review Process (EARP). The four government-appointed members will use the project description to establish guidelines for an environmental impact statement and subsequent public hearings.

BHP had hoped to complete an internal feasibility study by the end of the year, receive permits by the summer of 1995 and be in production by early 1997.

The company now reports that an increase in the scope of the project, as well as rigorous permitting requirements for additional exploration work, has delayed the data-gathering process. As a result, the feasibility will not be completed by year-end. Moreover, the time required to carry out the EARP will likely postpone construction until sometime in 1996, thereby delaying production until roughly the third quarter of 1997.

Despite these delays, BHP remains bullish on the project. “We believe we have an economic project based on the information gathered to date,” states Daniel Johnson, project manager of engineering and construction.

The project description envisions a 9,000-tonne-per-day operation, with five kimberlite pipes developed in phases and subjected to both open-pit and underground mining methods. Plans call for the daily operating rate to increase to 18,000 tonnes in the tenth year of operation.

BHP has released few details of its ongoing sampling and evaluation program. An evaluation of diamonds recovered from the Fox pipe is still pending, although BHP did report that initial appraisals indicate an average value in the range of US$120 per carat. The 6,915 tonnes of kimberlite extracted from the Fox pipe yielded 11,960 diamonds weighing 1,766 carats, for an overall grade of 0.26 carats per tonne.

BHP believes the bulk sample tested only one of several layers within the Fox pipe, and additional underground development is under way with two raises testing the area immediately above the existing workings. This winter, additional drilling will be carried out on surface in an effort to test other layers within the pipe.

Underground bulk-sample mining is continuing on the Panda pipe. A total of 2,835 tonnes of kimberlite have been processed, yielding 13,242 diamonds weighing 2,557 carats. Overall grade is 0.9 carats per tonne. The diamonds appear to be of similar quality to those extracted by surface drilling last winter. That program extracted 230 tonnes yielding 270 carats for an average grade of 1.18 carats per tonne, with the diamonds returning an average value of US$127 per carat.

Commercial evaluations of diamonds recovered from the Fox and Panda pipes should be completed before year-end.

Meanwhile, the joint venture is awaiting permits to carry out bulk sampling on the Misery pipe, and additional sampling by reverse-circulation drilling is planned for the Leslie pipe.

Exploration drilling during 1994 totaled 4,700 metres and identified 13 new diamond-bearing kimberlite pipes, bringing to 39 the number of pipes confirmed on the property. Samples from the new pipes are being analyzed, and plans for this winter call for the drilling of 100- to 200-tonne samples from four or five pipes.

Dia Met Minerals (TSE) and BHP hold a 29% and a 51% interest, respectively, in the property, with private individuals holding the remaining 20%. Elsewhere in the

Northwest Territories

* Mill City Gold Mining (VSE) expects to receive results from diamond analysis on core from its Yamba Lake joint venture by late January or early February.

De Beers is conducting the lab tests in South Africa and can earn a 60% interest from joint owners Mill City and Tanqueray Resources (ASE). * Project operator Winspear Resources (VSE) has received partial results from the CL-25 pipe on the Camsell Lake property. A drill core sample, weighing 116 kg, from hole CL-25-1 contained six macrodiamonds and 112 micros. Additional results from CL-25-1 and CL-25-2 are expected before the new year. An additional 10 targets, outlined by geophysics and heavy mineral sampling, will be tested early in 1995.

The property is owned 30% by Winspear, 40% by Aber Resources (TSE), 20% by Amarado Resources (VSE) and 10% by Consolidated Newgate Resources (VSE). Ontario

* Beginning in February, Pure Gold Resources (TSE) and Jonpol Explorations (VSE) plan to explore their 43 claims in the Ekwan River area in the James Bay Lowlands.

The claims cover 19 magnetic targets that are thought to be potential kimberlite intrusives. These targets are close to the Kyle Lake kimberlite discovered by KWG Resources (ME) and Spider Resources (ASE). Pure Gold can earn a half interest in the property by paying Jonpol $150,000 and 250,000 Pure Gold shares.

* Consolidated Cline Development (VSE) has recovered 433 kimberlite indicator minerals from 118 overburden samples on its various holdings in the Wawa area. At present, Cline holds more than 500 claims and 40 exploratory licence agreements, totaling about 12,000 hectares in the Wawa area. The company plans to follow up the sampling programs by drilling specific geophysical targets in areas with high concentrations of indicator minerals. United States

A court case against General Electric over alleged price fixing of industrial diamonds has been thrown out of court. A U.S. district judge ruled that the Justice Department’s case was not strong enough to warrant trial by jury. Overseas

* Sentinel Resources (VSE) produced diamonds from its various alluvial interests in South Africa in November. A total of 22 diamonds weighing 47.78 carats were produced at the Vaal River project, at an estimated value of $94,000 and an operating cost of $30,420.

At the Holpan project, production totaled 53.23 carats in the same month, for an estimated revenue of $45,240 and a cost of $27,300.

Sentinel can acquire a 100% and a 50% interest in the Holpan and Vaal River projects, respectively.

* United Reef (TSE) has sold 416.76 carats of diamonds accumulated from its ongoing sampling program on the Bamingui property in the Central African Republic.

The parcel was purchased at a price of US$180 per carat, for total proceeds of $75,020. There were 11 other offers for the asset.

* The dispute between Pure Gold Resources and Southern Pacific Development (VSE) has been resolved, clearing the way for the former to acquire 25% of the latter’s 80% interest in the Colonel Murta project in Brazil. The two companies have installed a plant to process gravels from the Jequintinhonha River. An 8-cubic-metre test sample yielded three diamonds for a grade of 0.1925 carats per cubic metre.

The partners plan to upgrade the recovery plant and are contemplating a joint venture on an additional 10-km stretch of the river.