Dianor enters Wawa camp

The Wawa diamond exploration camp in northern Ontario has a new player and may be entering a new phase of its development with the arrival of junior Dianor Resources (DOR-V).

Dianor has struck a deal to earn an 80% interest in the 944-hectare Leadbetter diamond property, situated some 10 km northeast of the town of Wawa in Chabanel Township, along the north shore of Lake Superior.

Road access to the property is excellent and vegetative cover is minimal.

Dianor signed the agreement with property owner and local prospector Joseph Leadbetter, who will retain the remaining 20% interest once Dianor has earned in.

In its first step, Dianor has already issued 1.5 million shares to a company controlled by Leadbetter and will pay $415,000 in cash within six months. Within four years, Dianor must pay a further $3 million in cash and stock, and have spent $5 million on exploration. Lastly, Dianor must pay another $5 million within eight years to secure its 80%.

Leadbetter has been prospecting for gold and diamonds in the region for a decade, and in 2003 discovered the largest diamond yet found in the Wawa camp, a 1.39-carat, white, angular, gem-quality stone found in a creek that drains the Leadbetter property. It was appraised at roughly US$3,000 by Richard Rosset of Savoy Jewellers of Sault Saint Marie, Ont.

That year, he also found two non-gem-quality, alluvial diamonds in a similar setting, weighing 1.06 and 0.25 carat apiece.

These discoveries spurred Leadbetter in the spring of 2004 to sample readily accessible bedrock on what is now called the Leadbetter property, taking 2-3 tonne samples and running them through a sluice — an inexpensive but very inefficient recovery method better suited to gold prospecting.

His bedrock sampling from several spots within a single zone yielded 332 diamonds of varying sizes ranging from micron-size to 0.11 carat, with a promising size-distribution curve. The largest diamond from that parcel has a dimension of 2.94 x 2.71 x 1.53 mm and is described as a transparent, pink, octahedral fragment.

Leadbetter’s hard-rock discovery drew interest from several diamond companies including Dianor, whose personnel first visited the property in August 2004.

After completing a due diligence review, Dianor negotiated a final option agreement on Dec. 15.

Leadbetter has since handed all his relevant data — including sampling results, reports and drill logs — from the Leadbetter property to Dianor President John Ryder, who has passed them along to geologist Winfried Brack, Dianor’s independent qualified person.

Samples of the potential diamond-bearing rock have also been sent to geologist and Dianor consultant Allan Miller for petrographic description and identification.

Ryder says Miller has commented to him that “these rocks are unlike anything he’s seen or looked at from the Wawa area.”

Since the mid-1990s, small diamonds have been discovered in bedrock some 10-20 km north of the Leadbetter property in volcanic breccias and ultramafic dykes by such juniors as Pele Mountain Resources (GEM-V) at its Festival property, Band-Ore Resources (BAN-T) at its GQ property, and partners Spider Resources (SPQ-V) and KWG Resources (KWG-V) at their Wawa diamond project. Private-sector and government geologists have also been finding weakly diamond-bearing kimberlite in the area since 1997.

Currently, Dianor is waiting for the final results from its own sampling at the Leadbetter property. Before the snow fell, the company collected 5.5 tonnes of bedrock from 12 pits situated at 35-metre intervals across a 400-metre strike of the potential diamond-bearing zone.

Dianor sent 3.3 tonnes to the Saskatchewan Research Council’s laboratory in Saskatoon for caustic fusion analysis and 2.2 tonnes from three pits to SGS Lakefield in Ontario for processing.

Small bedrock samples were also sent to Charles Fipke’s CF Minerals laboratory in Kelowna, B.C., for attrition milling to determine the presence of indicator minerals and diamonds.

On Dec. 10, Dianor closed a non-brokered, $1.2-million private placement of 9.2 million units priced at 13 per unit, which each unit comprised of a share and a warrant allowing the holder to buy another share for 19 within a year. The shares were sold to two investors in Ontario, and are subject to a hold period expiring on April 8, 2005.

As a result of the private placement and the 1.5 million shares issued to Leadbetter, there are now 71.2 million outstanding Dianor shares, and the company has no long-term debt.

Dianor shareholders went on a wild rollercoaster ride in early December. For months, shares had been slowly drifting up from the 10 mark before hitting the 14 mark on Dec. 3 and drawing the attention of “The Chartist” at the well-followed, technical-analysis website www.stockcharts.com. Noting that the stock had broken through multi-year downtrends, the Chartist picked Dianor for the first time as one of his two favourite mining stocks.

After that, Dianor stock exploded and ultimately hit a 52-week high of 4020for a few minutes after news of the Leadbetter deal was announced on Dec. 16. After spending several days as the TSX Venture Exchange’s most-active stock, shares settled down into the 25 area.

Dianor is also actively looking for diamonds near Kirkland Lake in eastern Ontario and in Quebec’s James Bay and Otish Mountains regions.