Ashton's new sparkle should help financing
Ashton Mining of Canada Inc ACA
Shares issued 35,887,417 Dec 7 close $0.75
Fri 8 Dec 2000 Street Wire
by Will Purcell
Pipe K-252 has given the diamond play in Alberta's Buffalo Hills a new
lease on life, although it is still too early to describe the recent
discovery as the best kimberlite in the region. The area has offered up
signs of encouragement before, but more detailed work always seemed to lead
to ultimate disappointment. Ashton Mining of Canada Inc. now hails the
preliminary results from K-252 as its "best ever Alberta results," but
although the results certainly rank among the best to date, there actually
have been better minibulk samples of a similar size collected from at least
one of the earlier discoveries. Nevertheless, the future of the Buffalo
Hills program, which so far has refused to die despite repeated
disappointment, now likely hinges on continued success at K-252, and the
possibility of finding similar, weakly magnetic anomalies.
The stone counts from the microdiamond analysis certainly indicate that
pipe K-252 has a good chance of producing commercial-sized diamonds, and
these numbers at least do appear to be the best to date from any of the
Buffalo Hills finds. Samples of kimberlite weighing 226.9 kilograms in
total yielded 263 stones, including 19 macrodiamonds. At least five of the
macros exceeded one millimetre in length, and two were longer than two
millimetres. The total carat weight of the diamonds was not made public,
but it was likely around 0.16 carat, based on the data provided.
The results to date indicate that K-252 has about 84 macrodiamonds per
tonne, at least 22 of which would exceed one millimetre, and nine of which
would exceed two millimetres in length. The total diamond grade, based on
the very small sample, should be around 0.7 carat per tonne. It must be
remembered that such calculations are misleading, due to the extremely
small sample size, and due to the fact that much of the diamond weight is
contained in very small stones, not recovered in a commercial mine.
Nevertheless, the result does provide an interesting comparison with
another kimberlite body to the east.
Shore Gold Inc. has now collected about 1.24 tonnes of sample from its Star
kimberlite this year, and the company recovered 272 diamonds, including 59
macros, 11 of which were longer than one millimetre. That works out to
about 48 macro-sized stones per tonne, including nine that were more than
one millimetre long. The total diamond content of the sample was 0.30
carat, or 0.24 carat per tonne. Kimberlite pipes can exhibit vastly
different results in different sections, and the latest results from Star
indicated counts for macros and one-millimetre stones quite similar to
K-252, although the key difference between the two pipes is the absence of
two-millimetre diamonds at Star, at least in the recent drill program.
The K-252 diamond counts also eclipsed all of the earlier Buffalo Hills
results. Pipe K-14, the most promising kimberlite of the lot, contained 202
diamonds in 204 kilograms, including 12 macros. Only one of the diamonds
was longer than one millimetre, however. Sample from an extension of K-14
did contain a high number of micro and macrodiamonds, but most were
fragments of a larger stone, and that sample was not representative as a
result.
Pipe K-11 was also considered promising at one time. It contained 120
diamonds, including 14 macros, in 189.5 kilograms of kimberlite. Three of
the macros exceeded one millimetre in length, but none of them were two
millimetres long. K-91 was another kimberlite with encouraging counts.
Sample weighing 97 kilograms contained 146 diamonds, seven of which were
macros, including one longer than one millimetre.
Ashton also collected a larger sample from K-252, which was sent to its
dense media separation plant in North Vancouver for macrodiamond recovery.
Rock weighing 1.28 tonnes contained macrodiamonds weighing 0.85 carat,
which suggests a grade of 0.66 carat per tonne, for stones sufficiently
large not to pass through a 0.8-millimetre screen. It was this result that
certainly caught the market's eye, as the indicated grade was far superior
to any of the combined minibulk samples completed at the other Buffalo
Hills pipes.
Most of the Buffalo Hills kimberlites were duds at the minibulk stage. Pipe
K-5 yielded a microscopic 0.004-carat-per-tonne grade from 7.55 tonnes of
material, K-11 returned a grade of 0.044 carat per tonne from 21.85 tonnes
of kimberlite, and K-6 was only slightly better, with a grade of 0.063
carat per tonne from 13.95 tonnes of sample. Pipe K-91 was somewhat better,
yielding a macrodiamond grade of 0.127 carat per tonne from a 35.87-tonne
program, and K-14 was the best of the lot, yielding a grade of 0.174 carat
per tonne from 44.87 tonnes of kimberlite. The latter result was considered
encouraging enough to take a much larger sample. That led to another
disappointment, when nearly 500 tonnes of kimberlite was processed,
resulting in a grade of just 0.118 carat per tonne. That result was not
directly comparable to the other minibulk samples, as the recovery screen
opening was increased from 0.8 millimetre to 1.2 millimetres for the larger
minibulk program.
At first glance, the K-252 result seems far superior to any of the earlier
minibulk samples, at least at this early stage. However, grades often
display an extreme variation in individual samples as small as that
collected from K-252, and it is interesting to note that some of the
individual minibulk samples from K-14 did indeed surpass the grade
indicated by the K-252 sample.
In 1997, a series of eight samples was collected using reverse circulation
drilling at K-14, and two of the eight actually yielded a better grade than
the current K-252 result. The best result came from a 1.34-tonne sample,
which contained 1.18 carats of diamonds, or 0.88 carat per tonne. Not far
behind was a sample weighing 1.11 tonnes, which yielded a grade of 0.67
carat per tonne. A third sample of similar size returned a grade of 0.45
carat per tonne, but the diamond content of the remaining five samples was
far lower. In all, that program yielded 2.99 carats of diamonds in 8.17
tonnes of kimberlite, for an average grade of 0.36 carat per tonne. Larger
samples from K-14 produced still lower grades, and all of the individual
results for K-14 were ultimately combined to form the 44.87-tonne sample.
The largest diamond found in the K-252 core was also a bit of an eye
opener, weighing in at 0.36 carat. That one stone accounted for just over
40 per cent of the total weight recovered, which may have inflated the
grade somewhat. The one diamond was not inordinately large however, and the
recovery of the two-millimetre stones during the microdiamond analysis does
seem to suggest that there would be a reasonable expectation that such
larger diamonds would be encountered.
The K-252 kimberlite is located just 1,000 metres to the northwest of K-6,
in the midst of a roughly north to south line of pipes, about 11 kilometres
in length, about 85 kilometres to the northeast of Peace River. Most of the
better finds occurred along this line, including all of the pipes that were
minibulk sampled, with the exception of K-11. The pipe is covered by about
67 metres of overburden, and the target has been described as a complex
geophysical anomaly, although its size is still unknown.
There are two distinct phases present, a volcaniclastic kimberlite and a
kimberlite breccia. Although the microdiamond results are still too sparse
to draw any definite conclusions, the data available indicates that the
breccia has a slightly higher diamond content. Although there were more
macros found in the volcaniclastic material, the three largest diamonds
originated in the breccia. If that trend holds up, it could be good news
for Ashton, as the minibulk sample was taken from volcaniclastic kimberlite
only.
With the encouraging results in hand, Ashton will certainly collect a
larger minibulk sample from K-252 early next year. As well, the company is
likely to seek out additional targets similar in nature to the latest find.
That will likely involve completing ground geophysics to identify suitable
targets that would be drilled during the winter.
Ashton's proposed $2.25-million financing is likely to get a new lease on
life as well. In early November the company said it would raise the cash
through the issue of three million units, at 75 cents each, with each unit
consisting of a common share and one-half warrant, exercisable at 95 cents
over the next 18 months. Ashton's share price drifted lower during
November, and the company suspended the financing, as it awaited the K-252
results. With the good news and a sudden use for the new cash, the deal
could be on the rails again.
Although these early results suggest that K-252 might just be the best
chance for the Alberta diamond play to date, the market's response to the
good news was just lukewarm, as investors perhaps recall their optimism
turning to disappointment. Ashton, which holds a 45-per-cent stake in the
play, had traded as low as 55 cents on Wednesday, but hit an intraday high
of 84 cents after the news, before settling back to close up 12 cents, at
75 cents -- back to the trading range of early fall. Pure Gold Minerals
Inc., which has a 10-per-cent interest, gained 4.5 cents to close at 14
cents. The remaining 45 per cent is held by Alberta Energy Company Ltd. |
