Partners eye Jericho

Vancouver — A kimberlite float sample west of the Jericho pipe in Nunavut has proved diamondiferous for partners Tahera (TAH-T) and Kennecott Canada Exploration.

The 7-kg sample was collected from the southern end of a kimberlite indicator mineral train that terminates 900 metres west of the Jericho diamonderferous kimberlite pipe. Diamond counts yielded seven stones, six of which measured greater than 0.5 mm in one dimension.

In early September, the junior optioned its wholly owned Jericho diamond project in Nunavut to Kennecott, a subsidiary of Rio Tinto (RTP-N). Under the deal, Kennecott will have a year in which it can elect to incorporate the Jericho project into its existing joint venture with Tahera (which dates from 1997) on the Rockinghorse and Hood River properties, also in Nunavut. During the 12-month option term, Kennecott must spend at least $1 million drilling at least 20 kimberlite targets on the Jericho claims.

If Kennecott elects to add the Jericho project to the existing joint venture, it will be required to spend $1 million annually on these claims in addition to an existing $1.5-million annual commitment to the joint venture. Kennecott would also make a series of yearly $1-million private placements in Tahera over four years at escalated premiums on the original premium price of 10% above market.

Kennecott will have the exclusive right to market all diamonds produced from the Jericho kimberlites for the first five years of production. In addition, Tahera retains a 2% gross royalty on Kennecott’s share of production from the known kimberlites on the Jericho property.

If Kennecott does not commit to a mine plan on the Jericho kimberlite within 24 months of incorporating the property into the joint venture, Tahera can elect to develop the Jericho project on its own. Kennecott would then lose all rights and interests in the Jericho claims.

The Rockinghorse/Hood River joint-venture agreement, updated in April 2001, lets Kennecott earn an initial 25% interest in the properties by spending a total of $25 million before the end of 2008. A minimum of $2 million must be spent this year, and $1.5 million in each year thereafter. By funding all costs up to, and including, a bankable feasibility study by 2008, Kennecott can earn a 62.5% interest in the joint venture.

The Jericho properties lie along the northwestern and northeastern shores of Contwoyto Lake, 26 km north of the Lupin gold mine and 430 km northeast of Yellowknife. The Ekati diamond mine is 150 km southeast of Jericho. The Jericho properties are subdivided into three main parcels — the Jericho, Contwoyto and Burnside groups — and together these total 2,000 sq. km.

Five kimberlites have been found on the Jericho properties, including the Jericho (JD/OD-1), JD/OD-3, Contwoyto-1 and JD/OD-2 pipes, along with a kimberlite discovered in April of this year. The kimberlites are roughly 172 million years old.

The focus of the proposed Jericho mine project is the Jericho pipe, 400 metres south of Carat Lake. Discovered in 1995, the pipe is a multi-phase complex measuring 280 metres long and up to 120 metres wide. It has been tested to a depth of 350 metres by 86 NQ-size holes (4.5 cm in diameter) and 47 PQ holes (8.3 cm in diameter) for a total of 28,000 metres. The pipe intrudes Archean granodiorite rock and is covered by 10-50 metres of unconsolidated overburden.

A June 2000 feasibility study by SRK Consulting concluded that the pipe could produce 3 million carats over a mine life of eight years. The study is based on a probable minable reserve of 2.5 million tonnes grading 1.19 carats per tonne.

Early this year, Tahera submitted a revised project proposal and a draft environmental impact study for a combined open-pit and underground mine on the land-based Jericho pipe (JD/OD-1), along with a 1,200-tonne-per-day processing plant.

Next year, Kennecott plans to move ahead and test 20 kimberlite targets already identified on the Jericho claims.