The Camsell Lake soap opera continues.
Winspear, operator and 67.76%-owner of the project, is seeking to set aside Justice Shaw’s ruling and dismiss the reinstatement of Aber’s interest. Aber had taken Winspear to court to protect its 32.24% stake after Winspear claimed that Aber had failed to provide timely written notice of its intention to participate in 1999’s $12-million exploration program on the promising NW Snap Lake kimberlite dyke project and that therefore its 32.24% interest should be reduced to 16%.
In its notice of appeal, filed May 8, Winspear requests that Aber’s action be dismissed and judgment be rendered in favour of Winspear with costs. Alternatively, Winspear would like the action to be deemed inappropriate for disposition by means of a summary trial and, instead, proceed to the scheduled trial date of June 18, 2001.
Based on a summary hearing held Feb. 28-March 2, Justice Shaw ruled in Aber’s favour on the grounds that there was ample evidence the company intended to contribute its share of costs. Also, using Dec. 17 as the starting date, he concluded that a 30-day notice period had run out before Winspear formally confirmed (to itself, on Jan. 19) its intention to contribute to the program.
“In my view, it would be unconscionable to allow Winspear to benefit from Aber’s alleged failure when Winspear committed the same error that it alleges against Aber,” stated Shaw. He ruled that “it would be unjust to allow Winspear to appropriate Aber’s interest. To do so would deprive Aber of the real objective of the contract, which is the potential for future profits if the diamond property proves successful.”
Aber says it has always viewed Winspear’s actions as “capricious and damaging.” Aber will request an expedited hearing of the appeal and says it will pursue its claim against Winspear and others for both actual and punitive damages. The appeal could be heard any time in the next 3-6 months.
According to a Northern News Services article on April 17, the claim for damages could exceed $50 million. “We can’t ignore something that is of value to our shareholders,” Aber President Robert Gannicott said in the article. Aber had planned to spin off its exploration properties, including its interest in the Camsell Lake joint venture, to a new company. Those plans were cancelled when Winspear sought to reduce its Camsell Lake interest to 16%. Winspear carried out a similar type of arrangement by spinning off its early-stage properties (with the exception of its Camsell Lake interest), creating
In the meantime, it’s business as usual at the Snap Lake project, which is under the control of the Camsell Lake joint venture, 220 km northeast of Yellowknife. Winspear has completed 8,200 metres of an 11,000-metre spring drilling program on the NW Snap Lake kimberlite dyke, with 22 of the 24 holes having intersected kimberlite. The main focus of the drilling is to extend the indicated resource out to the east and to the north. “The dyke continues to show remarkable consistency and increases in thickness to the northeast,” said Winspear President Randy Turner at a recent shareholders meeting.
Based on prefeasibility work, MRDI Canada estimates an indicated and inferred kimberlite resource of 12.6 million tonnes grading 1.75 carats per tonne and exceeding 2 metres in thickness, after allowing for mining dilution. This is equivalent to 22 million recoverable carats at a value of US$118 per carat, or US$206.50 per tonne.
The indicated and inferred resource represents about 60% of the dyke’s much larger global resource, which stands at 21.3 million tonnes grading 1.97 carats per tonne, equivalent to 42 million carats, based on 189 drill intersections completed to the summer of 1999. The thickness of the dyke averages 2.4 metres.
Winspear has now drilled 217 contiguous holes representing about 60,000 metres. The NW dyke extends along strike for 2.5 km and downdip to the east for 2.6 km. Although the company has encountered narrower intervals along the northwest and east margins, Turner says the deposit remains wide open, with the exception of the western side, where the dyke subcrops. “At this point, we have yet to find the limits of downdip extension or the strike,” he adds.
Results from recent drilling included 15.6-metre- and 8.8-metre-thick intercepts outside of the indicated resource boundary but within the eastern limits of the global resource. The 15.6-metre interval is near the Snap fault, a major structural feature which the company believes may have exerted some control on kimberlite emplacement in the area.
Further potential exists in the southeastern arm of Snap Lake. The company says results to date indicate a substantial area, about 2,800 metres long, that contains kimberlite intersections greater than 1 metre in thickness. These multiple northwesterly dipping dykes have been encountered as much as 600 metres in a downdip direction and remain open to the northwest.
Exploration drilling with three rigs will continue on the northern shore for the next month.
Based on the indicated and measured resource, MRDI predicts a 12-year mine life for a 3,000-tonne-per-day underground mining operation at Snap Lake. A small open-pit in the mine’s early days will represent about 2% of the minable resource. Capital costs are projected at $269.4 million; operating costs, at $93.62 million. The project has a 37.6% after-tax discounted internal rate-of-return and a quick payback of 2.1 years.
As part of a $45-million program designed to complete a bankable feasibility study by year-end, Winspear is driving a 1,200-metre decline under Snap Lake to collect a representative 20,000-tonne bulk sample of the NW dyke’s downdip extension. Of that total, 6,000 tonnes will be processed on-site in a 10-tonne-per-hour dense media separation plant later in the fall. The decline has so far been advanced more than 300 metres.
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