EXPLORATION ’94 — Northern diamond play loses some momentum

The Northwest Territories diamond play has had its high and low points during the past two years.

One of the lowest was the evaporation, some months ago, of hundreds of millions of dollars in shareholder wealth with the release of disappointing results from the DO-27 pipe on the WO claim block in the Lac de Gras region. Kennecott, which holds rights to a 40% interest in the property, had pulled out all the stops in an attempt to

outline an economic diamondiferous kimberlite pipe at DO-27. After drilling on the pipe returned 96 macrodiamonds and 299 micros from a total of 265.2 kg of kimberlite core, Kennecott elected to proceed directly to an underground bulk sample, skipping the extraction of a smaller bulk sample by drilling.

Results of the bulk sample program included an average of 0.359 carats per tonne within 3,003 tonnes from the lower pyroclastic phase of the kimberlite pipe. The relatively low carat content was compounded by the estimate that less than 30% of those diamonds measuring larger than 2 mm would likely be classed as gem quality.

Repercussions of the results were felt throughout the diamond play, with investors realizing that preliminary macro and micro diamond counts may not be indicative of what will be found with a bulk sample. Diamond issues were hammered across the board, but none were hit harder than the DHK group of companies, each of which has an 11.7% interest in the WO claim block. The DHK group involves Dentonia Resources (VSE), Kettle River Resources (VSE) and Horseshoe Gold Mining (ASE), which, combined, have lost more than $180 million in market capitalization since reaching peak levels earlier this year. Aber Resources (TSE) holds a 15% interest in the project, and SouthernEra Resources (TSE) has the remaining 10%.

Kennecott is expected soon to release the results of a postmortem-like assessment on the DO-27 pipe, although the project, is not, by any means, dead. Further results from the DO-18 and DD-17 diamondiferous pipes are still pending, and Kennecott may proceed with a large-diameter, mini-bulk sample on DO-18 early next spring.

Kennecott is having much better luck at its Diavik claims in Lac de Gras, with joint-venture partner Aber. Kennecott is earning a 60% interest by spending $10 million, most of which has been spent. Drilling on the A154 pipe returned a visible diamond at a vertical depth of 55 metres. The diamond, which is believed to have been sheared in half, is described as a clear, colorless octahedron measuring an estimated half-carat.

Results to date from one hole (A153-2) on the A154 pipe returned 894 microdiamonds and 402 macros, the largest of which weighed 1.75 carats, from 750 kg of core.

Analysis of hole A154-3, situated 250 metres northeast of discovery hole A154-2, returned 376 micros and 170 macros from 373.2 kg of core. A total of seven holes have been drilled from a barge and two from small islands, with six of the holes returning kimberlite intersections from what are believed to be two separate pipes. Results from the remaining four drill holes are pending.

The joint venture expects to resume definition drilling from the ice in the new year on the A154 pipes, and also on the A21 pipe where 154.6 kg of core returned 116 micros and 38 macros.

Work is continuing at the now-famous NWT Diamonds project, in which BHP Minerals is earning a 51% interest. The other stakeholders are Dia Met Minerals (TSE), with a 29% interest, and Charles Fipke and Stewart Blusson, each with 10%.

BHP expects to release an updated “plan of operations” for the project in the near future, as part of the permitting process. The most recent operating plan envisioned a 30-year mine life fed by five kimberlite pipes, initially using open-pit techniques, and then using underground methods on two of the pipes.

Values range up to US$150 per tonne of kimberlite,

although final results from bulk sampling have yet to be released. BHP is working on an internal feasibility study and, providing results are positive, will be up and running in 1997.

Also awaited are diamond counts from kimberlite intersections on other projects in the Territories, including the Camsell Lake and Yamba Lake joint ventures.

Camsell Lake is owned by Aber (40%) and three VSE-listed juniors, including Winspear Resources (30%), Amarado Resources (20%) and Consolidated Newgate Resources (10%), whereas Yamba Lake is jointly owned by Mill City Gold (VSE) and Tanqueray Resources (ASE), with De Beers earning a 60% interest.