Band-Ore Resources Ltd BAN
Shares issued 25,218,224 Nov 27 close $0.30
Mon 27 Nov 2000 Street Wire
by Will Purcell
The results of a systematic sampling program are expected to provide
Band-Ore Resources Ltd. with sufficient information to plan the next stage
of exploration on its Wawa diamond project, which is likely to begin next
year. Most of the earlier samples of outcropping lamprophyric rock have
been shown to be at least marginally diamondiferous, and the collection of
a larger minibulk sample from some portion of the property now seems in the
cards. Although Wawa remains Band-Ore's top priority, the same, systematic
approach to exploration is about to begin on the company's Torngat dikes in
Northern Quebec, a region that has produced much more robust diamond counts
to date.
Band-Ore president, Wayne O'Connor, is no stranger to the hunt for
diamonds. In the mid-1990s, he took Southern Africa Minerals Corp. to
Botswana in search of the gems. That program was highly successful at
finding kimberlite pipes, but most turned out to be barren. As a result, it
was perhaps no great surprise when Mr. O'Connor jumped into the search for
Canadian diamonds, where he has so far had much better success at finding
diamonds than kimberlite.
Early this year, Band-Ore and Southern Africa acquired equal 50-per-cent
shares in ground about 10 kilometres to the south of the Twin Mining Corp.
discovery on the eastern coast of Ungava Bay, just west of the Torngat
Mountains. Just a month later, Band-Ore acquired a 100-per-cent stake in
the GQ property near Wawa. Although early results from the Torngat
discovery seemed more promising than diamond counts at Wawa, it was the
latter acquisition that excited the market for a time. Band-Ore shares had
been trading for 27 cents prior to the acquisition of the Torngat property,
but the acquisition had little initial impact on the share price. It was
the Wawa property that seemed to excite the market, and Band-Ore shares hit
a high of $1.99 in early March. Since then, interest has cooled and the
share price recently dropped below the 30-cent mark for a time.
Nevertheless, Band-Ore is rapidly advancing its Wawa exploration program.
The company has taken rock samples averaging about 30 kilograms each from
177 different locations on the outcropping dikes. In all, about 5.3 tonnes
of rock is on its way to the Saskatoon Research Council laboratory in
Saskatoon where it will be processed for diamond recovery. Four of the
samples were sent to the lab earlier, and two proved to be diamondiferous.
One 32-kilogram sample contained nine microdiamonds, and two micros were
found in a 48-kilogram sample. Earlier sampling yielded a total of 746
diamonds, including 15 macro-sized stones, from rock weighing a total of
746 kilograms. One of the macros exceeded one millimetre in length.
The macro counts from the earlier samples, and those collected nearby by
Spider Resources Inc. are certainly modest at best, but Band-Ore is hopeful
that portions of the dikes will have much more robust diamond counts.
Several different phases of the lamprophyric rock have been identified, and
more are likely to be found. It is not uncommon for different phases to
have vastly different diamond content, and a number of kimberlite pipes
have been shown to have diamond contents varying by an order of magnitude.
For example, grades at the Kennady Lake Tuzo pipe vary from less than 0.3
carat per tonne to over 3.0 carats per tonne, and the Jericho pipe displays
a variation only slightly less extreme.
The earlier Wawa program certainly demonstrated a high degree of variation
in the diamond counts. Surface samples weighed an average of about 60
kilograms, but the diamond content varied from a low of two stones to a
high of 98. One of the more promising samples had contained 45 diamonds,
including 10 macros, in 63 kilograms of rock. As a result, it seems
probable that the diamond content of the latest samples will continue to
show a high degree of variability.
The purpose of the recently completed sampling program is clearly to
identify regions of the outcropping dikes likely to have a higher diamond
content. Mr. O'Connor said that finding areas with large or commercial
sized diamonds was the primary goal of the current program. "We are one big
diamond away from making this a real boom area in diamond exploration," he
stated.
Size is a relative term in the hunt for diamonds, and a comparatively
small, yet commercial-sized stone would be a welcome sight for Band-Ore and
its investors. "A 1.8-millimetre diamond would turn this play around
significantly," added Mr. O'Connor. If that is indeed the case, his fairly
modest wish could well come true. Such a stone might weigh about 0.03
carat, perhaps triple the weight of the largest diamond found to date, but
not an unreasonable expectation from sample weighing about seven times more
than all the earlier ones combined. The market would likely react much more
favourably to a still larger diamond. Although the 11-millimetre,
1.76-carat Aber diamond is now the stuff of legends, finding a
three-millimetre stone weighing perhaps 0.12 carat or more in the current
samples would likely be sufficient to renew speculative interest in the
Wawa play.
Barring an extreme disappointment when the results become available early
next year, the Wawa program seems likely to progress to the next stage of
exploration. The sampling program was relatively inexpensive, likely
costing less than $400,000, despite the large sample size, and taking a
larger minibulk sample from one or two locations would likely carry a
similar price tag, depending on the size of the sample. A rough estimate of
the cost of such a minibulk test would be in the order of $10,000 per
tonne.
Mr. O'Connor confirmed that Band-Ore was certainly contemplating a minibulk
test of a prospective portion of the dikes, and he added that such a sample
would probably be on the order of between 20 tonnes to 50 tonnes. The site
selection will await the diamond counts, and where the sample would be
processed remains open to question as well. The new Lakefield Research
processing plant is closest site, but Band-Ore is also considering the Star
Resources Corp. plant in Arkansas that has been used to process lamproitic
material in that state. The Saskatchewan Research Council plant might be a
third option. That plant was used by Twin Mining to process its minibulk
samples, but problems were encountered in recovering many of the diamonds.
Much of the concentrate was subsequently shipped to Lakefield for final
processing to tune up their new plant.
Although the diamond content of the rock remains largely unknown, Band-Ore
is beginning to identify the potential for a large amount of the host rock.
One of the zones has been traced for a strike length of 1,600 metres, with
widths varying between 1.5 metres and 50 metres. Even at the lower figure,
such a body could contain two million tonnes of rock, if it proves to
extend to a depth of 250 metres. Furthermore, it is likely that the wider
portions would add tonnage in a big way. For example, a second zone on the
property has been traced for 1,000 metres, but a 400-metre portion now
appears to be up to 400 metres wide. If those dimensions were maintained to
a depth of 250 metres, the body could contain up to 100 million tonnes of
rock, although much work is required to actually prove the tonnage.
Of greater importance is the question of whether the rock holds any real
value. As yet, none of the processed samples have originated in that
400-metre portion of the body, which Mr. O'Connor described as a recent
discovery. "We have sampled right across that thing now, and along strike
for about 400 metres," he added. If such areas prove to have the best
macrodiamond content, the project would receive an added boost, as the
costs of mining would likely be considerably less, and lower grades would
sustain a profitable operation.
Winter is now descending on the region, and Band-Ore will require the
diamond counts before finalizing plans for next year. In the meantime, the
company may elect to conduct a modest drill program as it bides its time.
"We might pop a couple holes down and see what we can get out of that," Mr.
O'Connor stated. The company poked a few holes earlier this year, and one
sample contained a very high number of microdiamonds. In all, 522 diamonds
were recovered from 219 kilograms of rock, with most of them originating in
a 30-kilogram sample. Many of those microdiamonds were apparently
fractured, which suggests that they likely originated from a larger
macrodiamond.
Although the Wawa project continues to be the top priority for Band-Ore,
its Torngat play should also benefit from the same systematic approach to
exploration. Twin Mining advanced its portion of the play to the minibulk
sampling stage after a comparatively small sampling program, but Band-Ore
plans to take surface samples at regular intervals along its known dikes in
an attempt to locate the most prospective area to take a larger sample. The
company has already collected two or three initial samples, which are being
processed for diamond recovery.
The Band-Ore property appears to contain a different, more southerly swarm
of dikes than the Twin Mining discoveries. If the dike proves to be
diamondiferous, the company will likely collect smaller samples at
intervals of 50 metres or less along its length. The most prospective dike
found so far on the Band-Ore property averages about two metres wide, and
should have a considerable strike length, at least according to the photo
mosaics, which clearly show the structure.
Money does not appear to be a problem for the company. Band-Ore is
currently planning to raise $1.05-million through a non-brokered private
placement of three million shares, at 35 cents each. The funds will be used
to advance the diamond plays, and Mr. O'Connor believes there is more money
to be had, thanks to recent federal tax incentives, and possible changes to
the Ontario treatment of flow-through shares as well.
The earlier diamond counts from the Wawa play as a whole were modest at
best, and the market seems to have largely written off the play as a
result, although Band-Ore shares did take a modest jump on news last week,
closing at 33 cents. The market has been pleasantly surprised by results in
the past, however. In the spring of 1998, Winspear Resources Ltd. conducted
a 200-tonne minibulk sample of a surface outcrop at Snap Lake. Speculators
initially responded unfavourably to the program, and Winspear hit a low of
just 43 cents. Just weeks later, the company shocked the market with news
of several large, valuable diamonds and an apparently economic grade.
Undoubtedly, Band-Ore shareholders are hoping for a similar result from one
of their diamond plays. |
