Kennecott launching major diamond exploration program

By the time Kennecott Canada wraps up its 1993 diamond exploration program in the Northwest Territories, the company will have trimmed its landholdings significantly, says President John Stephenson.

“You’ll see our ground position reduced substantially by the end of the year,” Stephenson says. “We want to prioritize the ground as quickly as possible. The properties that don’t respond, we’ll drop.”

But with roughly five million acres to explore under a number of separate option agreements, Kennecott’s process of elimination demands a major exploration thrust.

The senior’s overall budget for the Territories remains confidential, but it’s public information that at least $1 million has been designated for the 1.4-million-acre Diavik joint venture alone.

Although contractors are reluctant to discuss their prices, the cost of drilling a 1,000-ft. core hole into a kimberlite pipe in the Lac de Gras area, including mobilization, is estimated to be $30,000-60,000. “We are planning a major program,” Stephenson says. “We are going to try and hit on as many targets as possible while there is still winter ice. We’ll leave the other targets for the summer.”

The winter program will also include ground geophysics and, later in the year, heavy mineral sampling down-ice from selected targets. The Diavik joint venture, which surrounds Lac de Gras, consists of several land packages all partially held by Aber Resources (TSE), but shared by a basket of companies, including Commonwealth Resources (VSE), DHK Resources, Pure Gold Resources (TSE) and SouthernEra Resources (TSE).

Kennecott, a subsidiary of RTZ Corp., can earn a 60% interest in Aber’s share of the claim groups by spending $10 million before the end of 1997. Asked about the less-than-stellar drill results received from Aber’s Tenby claims (part of the Diavik joint venture) earlier this year, Stephenson described the project as a “rush program” designed to test a few targets before bad weather set in. Although it yielded only a few microdiamonds, the program was considered a success in terms of validating airborne geophysics as a reliable means of pinpointing kimberlite intrusions in the Territories. Of the eight holes drilled, seven yielded kimberlites pipes. Results from over half the heavy mineral samples collected on the Diavik joint venture last summer are pending. Target selection for a 20,000-ft. March drill program, expected to test at about 30 sites, is under way. Drilling is also scheduled to begin shortly on DHK WO claim block, between MacKay Lake and Lac de Gras, where two geophysical anomalies with strong signatures have been outlined. Results of outstanding heavy mineral samples combined with ground geophysical data are expected to create additional targets.

Kennecott can earn a 65% interest in DHK’s three claim blocks, covering 208,000 acres, by spending $1.5 million and making $500,000 in cash payments over three years.

Northeast of Lac de Gras, Kennecott has also finalized option agreements with Argus Resources (ASE), Bre-X Minerals (ASE), Geomaque Explorations (CDN), Thermal Exploration (ASE) and Totem Health Sciences (VSE).

To the south at Back Lake, Kennecott has agreed to finance exploration on 522,181 acres that fall under a pooling agreement between Kalahari Resources (VSE), Island-Arc Resources (VSE), Gulfside Industries (VSE), Slumber Magic Ventures (VSE), American Exploration (ASE), Kestrel Resources (VSE) and Ballatar Explorations (VSE).

Kalahari also holds 550,000 acres under option to Kennecott at MacKay Lake, due south of Lac de Gras.

— For more diamond exploration coverage, see Page 6.