Ownership of the consolidated project area will be shared 50-50 and include roughly 3.5 million acres (14,150 sq. km) of ground held by BHP Billiton Diamonds, 3.3 million acres (13,400 sq. km) already jointly held by Diamonds North and BHP, plus the 418,000-acre (1,692-sq.-km) Amaruk project staked last fall by Diamonds North. The staking of Amaruk was based on promising results from reconnaissance kimberlite indicator mineral sampling.
As part of the arrangement, BHP Billiton will act as operator over the merged area and has agreed to incur all exploration costs up to the completion of a feasibility study within a 7-year time frame in return for an extra 10% interest. BHP Billiton will have the right to earn up to an ultimate 65% stake in the project by arranging all financing to production.
In the meantime, Diamonds North will be reimbursed $500,000 for land costs incurred to date, plus an additional $500,000 on an airborne geophysical survey, now under way. In addition, BHP Billiton will take down a $500,000 private placement in shares of
Diamonds North priced at $1.40 apiece. At the junior’s choosing, BHP Billiton will be obligated, in each of the next three years, to invest up to $1 million in Diamonds North at a 20% premium to the market.
The eastern Arctic project area covers several multiple kimberlite indicator mineral anomalies, based on regional sampling. One individual sample taken by Diamonds North contained an impressive 1,350 indicator mineral grains, including peridotitic and eclogitic garnets, chromite, chrome diopsides and ilmenite.
Diamonds North expects the 2004 exploration budget will be around $4 million and used to conduct sampling, airborne geophysics and possible drilling.
Diamond exploration in eastern Nunavut has intensified, fuelled by the highly prospective new kimberlite discoveries of BHP Billiton Diamonds at the southern end of Melville Peninsula, as well as by
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