Winspear to launch $12m program at Snap Lake project

Diamond explorer Winspear Resources (WSP-V) is gearing up for a $12-million drilling program designed to advance the NW Snap Lake project in the Northwest Territories.

The project is focused on the exploration of a kimberlite dyke that has yielded an exceptionally high diamond valuation of US$301 per carat on a limited 226-carat parcel of stones.

The gently dipping NW dyke sub-crops on a peninsula that juts into the northwestern corner of Snap Lake. Last summer, Winspear completed a 65-hole grid drill program over an area measuring 850 metres along strike and between 200 and 400 metres wide. The dyke was found to have an average thickness of 2.5 metres.

A scoping study prepared by MRDI Canada, a division of H.A. Simons, estimated that the portion of the NW dyke underlying the peninsula contains a resource of 1.4 million tonnes. The study considered a 1,000-tonne-per-day open-pit operation on the peninsula, based on a minable resource of 694,000 tonnes.

A second model incorporates open-pit mining with underground mining by projecting a 500-metre downdip extension from the eastern edges of the pit. For this model, MRDI estimates a potential resource of 3.5 million tonnes.

The dyke has been intersected in limited, widely spaced holes beneath Snap Lake, 2,200 metres east and downdip of the subcrop on the peninsula. At the close of the 1998 summer drilling program, three holes encountered the kimberlite dyke on the northern shore of Snap Lake, extending the strike length to a potential 1,350 metres.

Winspear is the operator of the joint venture and holds a 67.76% interest, with the remainder held by Aber Resources (ABZ-T).

Winspear intends to drill a minimum of 15,000 metres in an attempt to identify 3.5-5 million tonnes of kimberlite for a feasibility study, and then to outline an additional

3-5 million tonnes. The company expects to have three rigs turning from early February to early April.

Initially, the drilling will concentrate on the northern shore. This phase will test for additional tonnage, as well as test the potential for obtaining a bulk sample. Simultaneously, drilling will test the downdip eastern extension of the NW dyke from the ice on Snap Lake.

An additional 2,500 metres will test various targets that could represent a vertical feeder system occurring near the northern side of Snap Lake. Winspear has discovered three other kimberlite dykes in the eastern and southeastern part of lake; all of these dip between 11and 23 to the northwest and are similar in appearance to the NW dyke.

Winspear says it is conceivable that the kimberlite dykes in Snap Lake form a cone sheet developed around a vertically oriented feeder system.

A more important component of the 1999 program will be the collection of a 6,000-tonne bulk sample of the NW dyke from three sample sites. Two of these sites will be on the NW peninsula, while a third will be sought on the northern shore.

The bulk sample will go a long way in verifying diamond values and grade. Last year, two 100-tonne samples of the NW dyke, collected from surface pits set 235 metres apart on the NW peninsula, yielded a 226.72-carat parcel of diamonds for a preliminary grade of 1.14 carats per tonne. The parcel included 25 diamonds weighing more than 1 carat, with the three largest stones weighing 10.82, 8.42 and 6.04 carats.

The NW Snap Lake dyke yielded the highest diamond values ever reported from the Northwest Territories. The diamonds were determined to be worth an average of US$301 per carat, which translates into an implied value of US$343 per tonne.

Responding to pressure from newsletter writers speculating on the significance of the larger diamonds, Winspear has released further details of its evaluation of the stones.

Of the 25 larger stones recovered from the 199.7-tonne bulk sample, 22 weighed between 1.01 and 5 carats. Seven of these 22 diamonds were recovered from Pit 1, and the other 15 were recovered from the Pit 2 sample. Of the three largest stones, one was recovered from Pit 1 and two from Pit 2.

The combined weight of the 25 stones is 67.72 carats, representing 29.8% (by weight) of the total parcel.

The three largest stones represent about 10% of the weight and account for 75% of the value. The value of the remaining diamonds is US$83.26 per carat, for an implied value of US$94.90 per tonne. Winspear notes that MRDI, in its scoping study of a combined open-pit and underground mine, forecast total operating costs of US$59 per tonne. Capital costs for such an operation were estimated at $103.8 million.

“This distribution of values is in keeping with results that would be expected from an occurrence with a significant population of large, high-value gem stones,” states Winspear. “The diamond population obtained from the mini-bulk sample for stones greater than 1 carat in size is not large enough to be statistically relevant. However, the average diamond size of recovered diamonds less than 1 carat is consistent with that of a producing kimberlite with a high average stone size and a bottom cutoff similar to that used in the Kennecott plant.”

Winspear commissioned an extensive detailed study of the diamonds from Malcolm McCallum of Colorado, who has been involved in diamond research since 1964. McCallum examined 1,291 diamonds, culled from the 1,387 stones recovered from the 199.7-tonne sample. The remaining 96 stones that were omitted from the study represent the smallest screen-size of diamonds recovered and are considered to be unrepresentative of the size class.

McCallum’s study concluded the following:

• The various physical characteristics exhibited by the three large gem diamonds (10.82, 8.42 and 6.04 carats) recovered from the kimberlite are completely consistent with those observed in smaller stones from all size fractions.
• There is a strong correlation of morphological characteristics between diamonds recovered from each of the two sample sites.
• The number of large stones recovered from this sample is unusual but not unprecedented. Based on the high concentration of large diamond fragments in the +9 and +11 size fractions, as well as evaluation of size-frequency distribution curves, preferential breakage of larger, poorer-quality stones appears likely to have occurred either by late magmatic or induced processes.

In summary, Winspear says: “Diamonds recovered from the mini-bulk samples have size/frequency distribution characteristics consistent with a coarse diamond population. Although the number of large diamonds recovered from the mini-bulk sample are too few to be statistically significant, large gem-quality diamonds do occur in kimberlite from the NW dyke.”

In related news, the company expects to release microdiamond results for a 500-kg sample of the NW dyke, representative of the 199.7-tonne mini-bulk sample, as well as micro results from 1998 drilling. These results will serve to add to the geostatistical database on the dyke’s microdiamond distribution, which is being established for purposes of grade prediction.

During the past year, Winspear acquired, by staking, 320,500 acres of ground. The northern boundary of this area adjoins the southwestern border of the Camsell Lake property. Pursuant to a pre-existing agreement, Winspear has joint-ventured a 20% interest in 90,150 acres of this property to SouthernEra Resources (SUF-T). The property held by the joint venture is now referred to as Cache, while the remaining area, comprising 230,350 acres, is called Hilltop and is wholly held by Winspear.

Winspear has spent close to

$1 million on the combined properties, carrying out helicopter-borne geophysical surveys and collecting 781 till samples. A limited ground magnetic-electromagnetic survey was completed over a small area, and two targets were tested by drilling.

Over the course of last summer, eight indicator mineral trains were identified, and follow-up sampling indicated that numerous small kimberlite fragments are associated with some of them. Preliminary evaluation of indicator mineral c
hemistry suggests that a significant number of pyropes and chromites plot within compositional ranges which are normally considered to be equivalent to the diamond stability field. Winspear has budgeted $1.5 million for an exploration program in the winter and spring, including follow-up geophysics and 2,500 metres of drilling.