New kimberlite camp emerges north of Rankin Inlet

A $3-million investment to acquire a 14% minority stake in the Churchill diamond project in Nunavut is already paying dividends for BHP Billiton (BHP-N). The major reports that two separate kimberlites were discovered in the first two holes of a drilling program designed by Shear Minerals (SRM-V) and Northern Empire Minerals (NEM-V) to test at least 15 geophysical targets, north of Rankin Inlet.

The first hole tested the centre of a circular magnetic low anomaly and intercepted kimberlite beginning at a depth of 11 metres. The vertically drilled hole intersected more than 90 metres of kimberlite before shutting down while still in kimberlite at a depth of around 100 metres. Drill core from the new discovery is described as macrocrystic kimberlite and breccia, with visible olivine macrocrysts and picroilmenite

“We hit kimberlite on the first drill hole and within the first 12 hours of drilling, which is very encouraging,” states Shear President Pamela Strand.

Drilling of a second target, a circular magnetic low measuring 150 by 150 metres, has resulted in the discovery of another kimberlite body, 6 km north of the first. The first two kimberlites have been named Kadluk (Thunder) and Kraumalak (Lightning).

Shear is the operator and owner of a 51% interest in the 4,164-sq.-km Churchill project, which covers some promising kimberlite indicator mineral chemistry and hundreds of geophysical anomalies. Under a deal struck with privately held Hunter Exploration Group, Northern Empire is earning a 35% interest in the project by spending $750,000 on exploration. This year’s exploration budget at Churchill is $2.5 million.

BHP Billiton Diamonds recently acquired its 14% stake from Hunter Exploration for $3 million cash. In exchange for Shear and Northern Empire’s waiving their respective rights of first refusal over the sale of Hunter’s minority position, BHP Billiton has agreed to pay all of the costs associated with taking the first 200 tonnes of bulk sample from the project area.

Under a standstill arrangement, BHP Billiton has also agreed not to take certain specified actions to acquire, or otherwise take control of, either Shear or Northern Empire for four years. This restriction will end if a third party makes an offer for either company. Hunter Exploration retains a 2% gross overriding royalty on the project.

“Given our kimberlite discovery, we’re optimistic this year’s exploration will result in the discovery of an entirely new kimberlite cluster at Churchill diamond project,” says Strand, who has every reason to be optimistic following the recent announcement of a new kimberlite discovery on the nearby Meliadine East project, which is shared 50-50 by Cumberland Resources (CBD-T) and Comaplex Minerals (CMF-T).

The Churchill property is underlain by metamorphosed rocks of the Archean Rankin Inlet group and surrounding Archean metaplutonic rocks of the Churchill structural province. The Rankin Inlet group comprises metamorphosed and deformed sequences of mafic and felsic volcanics, interflow sediments, oxide-facies iron formation, and syn-to-post tectonic gabbro and granite intrusions. Undeformed Proterozoic diabase and biotite-lamprophyre dykes intrude the package. The Rankin Inlet group is overlain by Proterozoic metasediments of the Hurwitz group, which outcrops sporadically along the Rankin-Ennadai greenstone belt.

The property is in the barren lands of the Far North in relatively flat terrain dominated by till and oceanic sediments. The area has been the focus of gold exploration since the fall of 1989, when gold mineralization was discovered at Meliadine Lake. There has been little diamond exploration in the Rankin Inlet area.

192 million years

Comaplex intersected seven kimberlite dykes and one ultrapotassic dyke while drilling the Meliadine gold property in 1996. In a recent technical report of the Churchill project, Dean Besserer of APEX Geoscience says the dykes were intersected at depths ranging from 19 to 121 metres and are up to 1.9 metres thick. The dykes are described as barren and have been age-dated at 192 million years. Besserer notes that other companies, such as BHP Billiton and De Beers Canada, previously conducted regional till sampling in and around the Rankin Inlet area.

During 2001 and 2002, Edmonton-based APEX Geoscience completed regional heavy mineral till sampling on the Churchill project on behalf of Hunter Exploration and Shear. In total, 145 microprobe-confirmed kimberlite indicator mineral grains were recovered from 183 till samples, along with the discovery of two separate occurrences of kimberlite float.

Last fall, a high-resolution airborne magnetic survey totalling 16,307 line km revealed 226 anomalies. This spring, ground magnetics and horizontal-loop electromagnetics were conducted over 31 anomalies, further defining 23 drill targets.

An adjoining, 1,550-sq.-km package of ground was recently optioned to International Samuel Exploration (SAZ-V), which can earn up to a 65% interest by spending $1 million on exploration over two years, issuing 200,000 shares, and reimbursing property acquisition costs. Shear and Northern Empire will each retain the right to buy back a 10% interest for $100,000. The property, known as the Churchill West project, covers 20 airborne geophysical anomalies and six anomalous till samples.