Discovery of Lac de Gras in N.W.T. a tale of dedication and

While some gold and base metal discoveries result from luck and serendipity, the recent diamond discovery by Dia Met Minerals (VSE) in the Lac de Gras region of the Northwest Territories is one that is largely attributable to hard work, single-minded dedication and the remarkable persistence of geologist Charles Fipke.

Although a number of majors have explored for diamonds in Canada’s North decades earlier, the roots of the Lac de Gras discovery can be traced back to the very early 1980s when Fipke, now Dia Met chairman, and Hugo Dummett, currently managing North American exploration for BHP Minerals Canada, first worked together on a diamond exploration program.

At that time, Dummett was chief minerals explorationist with Superior Oil, based in Tucson, Ariz. Fipke had his own company, CF Minerals, that did contract exploration with a Superior-managed joint venture

(Superior-Falconbridge) for diamonds north from Colorado into Western Canada. This venture included Stewart Blusson, who like Fipke, is a minority shareholder in the current BHP-Dia Met joint venture. After getting a tip that other diamond exploration teams were active south of Norman Wells, N.W.T., Dummett initiated a program with Fipke and Blusson to explore the area where Diapros was working.

The essential exploration criteria for recognizing kimberlitic minerals from a diamond-bearing kimberlite had already been established by John Gurney, a professor at the University of Cape Town in South Africa. The Northwest Territories program was premised on these criteria, which are based on microprobe composition of minerals derived from kimberlite.

In 1983, Superior decided to discontinue all mineral exploration in Canada, and diamond exploration came to a halt. But after a hiatus, Fipke decided to revive the effort on his own. By 1984, he had formed a public company, Dia Met, which continued the bulk of the exploration in the North to 1989 when the first claims were staked in the Lac de Gras region.

Starting at the MacKenzie River, Fipke sampled eskers or glacial trail searching for a mineral train he could follow to its source. During the initial reconnaissance program, he sampled eskers in a wide swoop from the MacKenzie River as far east as Baker Lake on the Hudson Bay coast. From this work, he picked up a kimberlitic mineral train which he then tracked intermittently for about 700 km, which required plenty of “bloodhound” work as there were huge gaps in the trail.

This meant that for years, Fipke and a few loyal supporters spent summers in the mosquito-infested bush and tundra, living in tents, in a land so desolate and remote few people live there.

But Fipke knew he was on the right track when he saw that the grains of chrome diopside, G-10 garnets and other indicator minerals were getter bigger and more plentiful. Some of these indicator minerals break down easily, so the larger the grains, the closer they are to the kimberlite source. But following the train meant taking thousands of indicator mineral samples, which can each cost $200-1,000 to process. The richer and closer to source the samples are, the more they cost to process as more detailed analytical work is required.

The first claims were staked in the Lac de Gras region in 1989. When Dummett joined BHP in September of that year, Fipke brought the Dia Met project to the company, which expressed an interest, but didn’t sign a deal on the spot. Prior to this, Fipke had approached a number of other companies (the list is rumored to include Placer Dome and the Pezim group) without success. Dia Met, like numerous other juniors, wasn’t finding it easy to raise money, although it was kept alive through the financing efforts of Wayne Fipke and others, as well as by the support of a small core of stalwart believers. But Lady Luck came into the picture in April, 1990, when during a chance fly-over Point Lake, frozen at the time, Fipke spotted what appeared to be the rim of a crater. He ordered the chopper to land, and another stroke of luck came about when a large crystal of chrome diposide was found, despite the ice and snow.

Fipke suspected the lake covered a kimberlite pipe. He didn’t know if it was diamondiferous at that time, although he surmised it would be, because the right indicator minerals were present in the mineral train he had been following in the area.

In any event, this development was enough to turn the tide in negotiations with BHP, which signed a joint venture agreement at the end of August, 1990, a year after negotiations began.

BHP wasn’t particularly interested in diamonds at the time, sources say, but Dummett, a native South African, clearly was. “It took a couple of diamond fanatics to get this thing going,” a longtime associate of Fipke said, adding that the deal between Dia Met and BHP really reflects Fipke’s loyalty “to people more than companies.”

Dia Met had already spent about $800,000 at this stage, work the company estimates would cost millions to duplicate today. Float planes were used rather than more costly helicopters, tents instead of trailers, and the early samples were less rich (in indicator minerals) and therefore less costly to collect and analyze. Security wasn’t a problem back then either. Even though thousands of diamond indicator mineral samples were taken from grid sites on the initial claims, many others were taken from strategic sites in the region to ensure that most of the potential diamondiferous pipe targets were covered. The claims were extended to just under one million acres, which Dia Met says covers a “substantial number of diamondiferous kimberlite pipe targets in the Lac de Gras region.” (The initial kimberlite pipe target is estimated at more than 50 acres at surface.)

Diamond exploration is largely based on geochemical sampling, but initial ground and airborne geophysical surveys to identify possible kimberlite locations on the claims are also done, with follow-up geophysical surveys to define pipe targets. The geochemical sample results based on diamond indicator minerals are then correlated to geophysical pipe targets on the claims, and pipe targets prioritized.

The detailed exploration of the claims carried out in the summer months of 1990 and 1991 (usually July through early October), culminated with the drilling of the first corehole at Point Lake where the first kimberlite pipe was discovered.

Last November, the two companies issued a statement that a 59-kg sample from the drill hole contained 81 small diamonds, all less than two millimetres in diameter; some of the diamonds were of gem quality.

For the first two summers of the joint venture, exploration was conducted without any competitor activity. But subsequent to the announcement, companies rushed in to stake large blocks of claims adjacent to those held by the BHP-Dia Met joint venture. The staking rush, which is still continuing, ranks as among the largest and most feverish in Canadian mining history. So far, though, none of these companies have yet made a new diamond discovery. On the basis of core results, a 160-tonne bulk sample was taken in early 1992 by drilling into the Point Lake kimberlite. The sample was then shipped to Dia Met’s diamond recovery plant in Colorado for processing by BHP. If any doubt remained that the diamond discovery “was for real,” all traces were removed when BHP confirmed Dia Met’s earlier announcement that diamonds weighing collectively at least 90 carats were recovered from the bulk sample. One-quarter of the diamonds were reported to be of gem quality, and a few stones in the 1-3-carat range were obtained. The sample was viewed as too small to be representative of the pipe, but adequate to guide future exploration planning.

The BHP-Dia Met joint venture now covers almost one million acres in two blocks — the main block and a smaller block to the southeast — 364 claims in all. BHP is believed to be testing a number of other priority pipe targets on the property this summer, including targets “bigger than the existing pipe.”

As part of the agreement, BHP Minerals is obliged to spend
$2 per acre for each year that it occupies the claims. Should it decide that one of the sites will become a mine, BHP would prepare the feasibility study, and at delivery, earn a 51% interest in the project. It would also have to finance mine costs up to US$500 million for the entire joint venture.