More about diamonds (December 28, 1992)

Canadian mining companies are involved in the search for diamonds both at home and abroad:

N.W.T. and Alberta After five months of negotiations, DHK Resources — owned equally by Dentonia Resources (VSE), Horseshoe Gold Mining (VSE) and Kettle River Resources (VSE) — has signed an option agreement with Kennecott Canada.

Kennecott can earn a 65% interest in DHK’s 208,000 acres in the Lac de Gras region by spending $1.5 million and making cash payments totalling $500,000 over three years, including a $100,000 payment and a $90,000 reimbursement of expenditures upon signing.

If Kennecott elects to put a mine into production, the senior will loan DHK the junior’s share of development costs at an interest rate of prime plus 2% until the mine produces positive cash flow.

Kennecott says that a drill program will get under way in the spring on targets identified by heavy mineral sampling and airborne geophysics. Tyler Resources (TSE) has negotiated a private placement of up to 2.2 million units at 55 cents per unit (60 cents per unit for insiders). Each unit consists of one flow-through share and one warrant to purchase an additional share at 70 cents for three years.

Proceeds will be used to finance exploration on the company’s claims. Murray Pezim’s Double Down Resources (VSE) has applied for prospecting permits in Alberta. The permits cover a total of 1.55 million acres near High Level, Alta., and overlay an area of faulting.

Saskatchewan

Melis Engineering of Saskatoon and Lakefield Research of Lakefield, Ont., are combining their expertise to process bulk samples for diamond recovery. Melis recently built a self-contained portable bulk-sampling plant that Monopros used to process samples from its Fort a la Corne properties in Saskatchewan. Lakefield provides analytical services for smaller samples. By combining their operations, the companies will be able to process bulk samples either in the lab or on site, depending on the customer’s requirements.

The lips of partners Cameco (TSE), Monopros and Uranerz Exploration and Mining remain sealed after the joint venture completed a bulk-sampling program on its Fort a la Corne property in Saskatchewan.

The sampling program was designed to follow up on the results of a previous 200-ton bulk sample, which returned 160 macrodiamonds (1.5-5.5 mm in diameter) from 15 separate pipes.

A spokesman for the joint venture declined to comment on the details of the program saying “we don’t want to raise expectations unnecessarily.” Ontario and Quebec

East West Resource (VSE) has negotiated a $105,000 private placement to finance work on its nine diamond properties in northeastern Ontario. Units consist of one share and one warrant to purchase an additional share at 60 cents within one year, or 70 cents within two years.

The company plans to begin drilling up to 30 targets in January. KWG Resources (ME) has completed a private placement of $360,000 with European investors. The placement consists of 210,000 units at $3 per unit composed of one common share and half a warrant. Each full warrant will allow the holder to purchase one share for $4 within one year of closing. Proceeds will be used to finance exploration on the company’s properties in Ontario and Quebec.

Strike Minerals (CDN) has acquired 13 claims on Ile Bizard near Montreal, Que. A bulk sample taken by De Beers on the properties in the 1960s yielded 10 microdiamonds. To earn a 60% interest in the claims, Yanks Peak Resources (VSE) must spend $500,000 on exploration over the next three years and assume all future payments to the vendors.

Overseas

United Reef Petroleums (TSE) has recovered a total of 32 diamonds from gravels on its Bamingui diamond property in the Central African Republic. The diamonds, believed to be of gem quality, are 1-2.4 carats in weight. Exploration will resume on the 500-sq.-km concession in mid-January. Morgain Minerals (VSE) has been given right of first refusal to option a 100-sq.-km concession covering a nearby alluvial diamond property from United Reef.

Under the terms of the agreement, Morgain can earn a 40% interest in the property by paying an estimated $7,000 for a permit and spending $300,000 over 36 months.

Under an identical agreement, Orcana Resources (VSE) can earn a 40% interest in a separate 100-sq.-km concession, in the Bamingui region from United Reef. Both agreements are subject to approval from the local government.