DIAMONDS — Citation acquires Quadrant’s diamond projects

Following several months of delays, Vancouver-based junior Citation Resources (CUE-V) has finally completed a deal to acquire diamond projects in western Greenland and Australia from Australian-based Quadrant Resources.

Citation has issued Quadrant 14.5 million shares, and a further 2.5 million shares may be issued over the next two years at a rate of one share for each 45 cents spent on the properties by Citation or its joint-venture partners between Sept. 1, 1998, and Sept. 30, 2000.

With the deal completed, Citation now has 22.9 million shares outstanding (28.4 million fully diluted) and $235,000 in cash. The shares issued for the properties are subject to a 12-month hold period followed by a voluntary pool with variable terms.

As well, there has been a change of guard in the Citation boardroom: Robert Chase has become president; John Ferguson has signed on as vice-president of exploration; and William Rand and Jonathan Rubenstein were appointed directors. Brian Edgar remains the sole incumbent director.

Under joint-venture arrangements at the various properties, about $3 million is being spent this year, of which Citation is required to contribute about $700,000. Some $5.5 million was previously spent exploring the properties.

In Greenland, an exploration program at Citation’s 12,336-sq.-km property is being operated by Dia Met Minerals (DMM-T) under a farm-in agreement between the two companies and Dia Met affiliate Cantex Mine Development (CD-A) (formerly Canadian Mountain Minerals).

Dia Met and Cantex must spend an aggregate of $3.8 million on the property by the end of this year in order to earn interests of 31% and 20%, respectively. Citation will retain a 49% interest and be responsible for its share of expenditures beyond the initial $3.8 million. Dia Met has already advised Citation that the required expenditures are likely to be made by year-end.

Dia Met has reported that heavy-mineral processing of till samples collected on the property in 1997 both up-ice and down-ice from 109 airborne geophysical targets yielded 15 samples with “outstanding quality” diamond-indicator minerals and an additional 34 samples with “intermediate quality” diamond-indicator minerals. The best indicator minerals included G10 garnets, group I eclogitic garnets as well as D.I. chromites, chrome diopsides, olivines and orthopyroxenes of diamond inclusion compositions described as being “at least as favorable as at Lac de Gras, N.W.T.”

More than 1,000 follow-up bulk till samples have been collected in areas of geophysical anomalies identified on the final data and situated up-ice from the most favorable diamond-indicator minerals. An additional 630 bulk till samples were collected during the 1998 field season.

This summer’s prospecting has identified 22 dykes, at least 26 sills and one small (10-by-7-metre) pipe. Magnetic boulders, thought to be kimberlite, were also found around a circular, 200-metre-diametre lake that has a coincident, circular airborne-magnetic anomaly. Rock samples have been collected from all of these previously unknown occurrences, and parts of these have been sent for thin-section and whole-rock analyses to determine whether the rocks are kimberlites or alnoites. They will also be tested for diamond-indicator mineral contents, and kimberlites will be tested for microdiamonds. Three 200-kg rock samples will be analyzed for diamonds pending favorable indicator-mineral findings.

Upon returning from a visit to Dia Met’s operations, Ferguson commented that the mineral chemistry of the kimberlite-indicator minerals confirms the presence of kimberlites derived from within the diamond stability field. The presence of kimberlite is also confirmed by accounts of microdiamonds, and lesser macrodiamonds, in the surrounding Archean terrains of west Greenland.

Also of interest are newly identified intrusive bodies that may be kimberlitic in composition. One such body, measuring 7.5 metres wide in outcrop, is coincident with an aeromagnetic anomaly measuring 10-100 metres wide and extending for up to 5 km.

At Citation’s second, 1,397-sq.-km project area in Greenland, one 586-sq.-km portion is being explored for diamonds in a program operated by De Beers Consolidated Mines (DBRS-Q) subsidiary Monopros, which has earned a 51% interest by spending an unspecified sum on exploration.

The remaining 811-sq.-km portion was recently relinquished by Monopros but retained by Dia Met. Total exploration spending on the property to mid-1998 approximated $3.6 million. Dia Met holds the remaining 49% of the Monopros-operated property and 100% of the relinquished land, but Citation has the right to receive from Dia Met 20% of the proceeds from the sale of production from the entire property, provided that Citation funds 20% of future costs. As a consequence, Citation recently advanced $167,620 to Dia Met as its 20% share of the 1998 Monopros exploration program.

During the 1998 field season, Monopros carried out an 18-hole drill program over several target areas. Two of the holes were abandoned for technical reasons; two indicated that the anomaly was a non-kimberlite; but the other 14 holes all intercepted kimberlite sheets, dykes or sills of narrow width. Analysis of the core is under way at De Beers’ laboratories.

Citation’s other Greenland properties include two wholly owned areas encompassing 2,075 and 105 sq. km. The larger property is considered prospective for diamonds; the smaller, for nickel-copper-cobalt mineralization.

Photo-interpretation was carried out over the diamond property prior to selective till and stream-sediment sampling, and Citation is awaiting results prior to undertaking an airborne geophysical survey.

The property selected for base metal exploration has been mapped and chip-sampled. Minor anomalous nickel-copper-cobalt values were obtained.

In Australia, two of Citation’s three major diamond prospects are being explored in joint ventures operated by Australia-based Diamond Rose and De Beers subsidiary Stockdale Prospecting. Dia Met and two other major companies have offered to farm-in to the third prospect.

Further results from the Australian exploration program are expected to be released in late October.