forget 30 how about 40?
Here's the Streetwire from the other day.
PELE AND FRIENDS HOPE FOR NEW SPARKLE AT WAWA
by Will Purcell
The area of Northern Ontario near the town of Wawa should continue to attract the attention of speculators, if the recent flurry of diamond counts, private placements and property acquisitions by several junior explorers means anything at all. Some of the more bullish investors believe that at least one of those juniors is poised to announce Canada's next great diamond discovery, while others hold the opinion that the Wawa diamond play is just another passing exploration fad.
It also seems that the same range of opinions exists among the players in the region -- past and present -- as the various properties have carried a wide variety of price tags over the past year or two. Although many holdings have been acquired on the cheap, it was an option deal signed by Kennecott Canada Inc. that gave the play instant credibility. The 1999 deal will allow Kennecott to earn a 60-per-cent stake in the Wawa-area project of Canabrava Diamond Corp. and Paramount Ventures & Finance Inc, though the expenditure of $25-million over seven years -- certainly a sizable sum by any standard.
There is also a major difference in the exploration strategies of the players. Some are rapidly advancing their programs, while others are seemingly content to sit back and explore vicariously through their neighbour's efforts. As well, some of the explorers were drawn to the diamond play not by gems, but by gold. The uncertainty over the merits of the project is likely to continue, at least until one or two of the explorers take a minibulk sample from their more prospective showings. Such a program would go a long way toward ultimately proving or killing the play.
Alan Shefsky's Pele Mountain Resources Inc. is one of the active explorers, and the company made a glittering start to the new year with another find along its diamondiferous Destiny showing, on its Festival property located about 25 kilometres to the north of Wawa. A total of 350 kilograms of weathered rock from an outcrop were processed, and 42 diamonds were recovered, including eight macro-sized stones. The macro count was by far the best result obtained by Pele to date, and one of the macrodiamonds was 1.09 millimetres in length, which places it among the largest diamonds recovered in the region so far.
In October, a similar sample was processed from the Destiny showing. A total of 62 diamonds were recovered from 340 kilograms of weathered outcrop, but only one of the diamonds was macro-sized. The Destiny showing was first proved diamondiferous when a 0.8-millimetre macro was panned from a five-kilogram sample of material, and a second, smaller diamond was recovered from a 53-kilogam sample taken from the Destiny outcrop.
In all, 108 diamonds have been recovered from the Destiny outcrops, but nearly all of them are microdiamonds, with only 10 of the stones apparently large enough to be classed as macros. Diamond counts showing a significant number of microdiamonds but few macros seem typical of most of the Wawa samples taken so far, although like the results obtained by other explorers, the macro content does appear to vary significantly across the Destiny showing.
Pele has also been sampling the Jubilee showing, located about four kilometres to the northwest of Destiny. Last summer, the company found a yellow macrodiamond in a 35-kilogram sample of rock, but a subsequent 110-kilogram batch of material was found to be barren. As a result, it seems likely that it will be Destiny that is destined to occupy much of Pele's time and resources this year.
Ironically, it was the search for gold that led Pele Mountain to its diamond find. Early last year, the company was drilling its Wawa gold project and hit a kimberlitic dike with five of the holes. The material did not contain any diamonds, but it did hold promising indicator minerals, and the find seemed to whet Pele's appetite. Last spring, the company joined the hunt for real, acquiring the right to explore the Festival property for about $6,000 per year, payable to the owner, plus a $300,000 cash or stock payment to the former licensee.
The fairly cheap price of admission seems typical of most of the recent acquisitions in the area. Early last year, Denis Clement and Stephen McIntyre's Dumont Nickel Inc. joined the fray, picking up two properties in the region for a modest outlay of cash and stock. In August, Dumont joined the Wawa diamond club, with the discovery of 12 microdiamonds in a 49-kilogram sample of lamprophyric rock. All of the diamonds were yellow, not an uncommon colour for Wawa stones. Dumont collected a second sample from another portion of its property, but the 57 kilograms of rock was barren.
Tri Origin Exploration Ltd. is another junior explorer that originally sought gold, but has now climbed aboard the Wawa diamond bandwagon. The company has an option to acquire a 51-per-cent stake in ground about two kilometres to the east of Wawa, and it will earn the interest if it spends $1.5-million in exploration over the next five years -- a far steeper price tag than carried by most of the properties in the region. To help pay for the work, Tri Origin has just completed a modest private placement, raising $150,000.
So far, Tri Origin has had mixed results at best. The company has found a number of dikes on the property, but samples proved to be barren. On a brighter note, several of the samples proved to be type II kimberlite, and the next stage of exploration will centre on these rocks. The company was first drawn to the property as it contained seven modest historical gold mines and a number of additional gold prospects, but it is currently the diamond hunt that has caught the attention of the market.
M.I.T. Ventures Corp. has also been drawn to the area by the allure of cheap ground and the prospect of producing diamond counts for a modest cash outlay. The company has been acquiring ground prospective for diamonds across Northern Ontario, and it recently landed the exclusive right to purchase three Wawa properties for $31,500 in cash, an exploration commitment of $85,600 over two years, and 300,000 shares, worth about $15,000 at recent levels. So far, the company's exploration effort has been even more modest than the cost of acquisition.
Aurogin Resources Ltd. is another recent addition to the landholders in the region. The company paid the princely sum of $1 for an option on the property, provided it flew a survey over the property. Aurogin can acquire a 100-per-cent stake in the ground by issuing 50,000 common shares to the owner. At recent prices, those shares would carry a value of just $8,000.
The Wawa play was certainly slow to develop. The first diamond find reportedly took place in the 1930s, just to the north of Pele's gold project. Prospector Mickey Clement found alluvial diamonds in the Wawa area nearly 10 years ago, and two of those stones weighed just over one carat each -- seemingly proof that there are larger gems to be found. Several other diamonds were found in overburden samples taken during preliminary exploration programs in the search for metals, but it was not until 1995 when the diamond hunt began for real. Prospector Sandor Surmacz and geologist Marcelle Hauseux recovered six diamonds from about 18 kilograms of rock, and one of the stones was a 0.71-millimetre macro.
That caught more than a few eyes, and the discoverers promptly optioned the property to Spider Resources Inc. The Wawa play was off and running, as Spider chipped away at rock outcrops for nearly two years and was successful at proving most of them to be diamondiferous. In total, nearly 800 kilograms of rock taken from the Spider property yielded 232 diamonds, but just 38 macros. The largest diamond measured just under one millimetre in length.
The macrodiamonds were small in size and few in numbers, although the diamond content did seem to vary across the property. The best areas were the original Sandor site itself, and another location about 3,900 metres to the south. The latter site produced the largest diamond and 16 of the macros from about 190 kilograms of rock. That was not enough to enthuse the market however. Spider and its partner, KWG Resources Ltd., fell upon hard times shortly afterward and the project was mothballed. For a time it seemed that interest in Wawa diamonds had passed.
That changed abruptly early last year. Wayne O'Connor's Band-Ore Resources Ltd. acquired the private company that owned the GQ property, located about 15 kilometres to the north of Wawa, for $1.2-million and two million shares. The property did not come cheaply, but by then the original owners had already made a diamond discovery on the property. Several others followed, and Wawa diamonds were back in the news.
So far, Band-Ore has produced 746 diamonds from about 785 kilograms of lamprophyric rock, but just 15 macro-sized stones, including one that managed to just exceed one millimetre in length. Once again, the results showed a significant variance however, and the best sample so far was the first, collected by the original owner. A total of 63.4 kilograms of rock yielded 45 diamonds, of which 10 were macro-sized, including the one-millimetre stone.
That was certainly interesting, but a duplicate check sample taken by Band-Ore provided a different result. Nearly 100 diamonds were recovered from the 54.6-kilogram sample, but all of them were micros. Later last year, Band-Ore also caught the attention of the market with the recovery of more than 500 diamonds from a 97-kilogram sample, but only one of the stones was a macrodiamond.
Spider and KWG are poised to rejoin the hunt, but Band-Ore is now the clear leader of the Wawa play. The company has collected over five tonnes of sample from well over 100 locations on the GQ property, and the diamond counts will be used to select a prospective site for a minibulk sample, expected later this year if it can raise the cash. Band-Ore recently raised $105,000 through a private placement, about one-tenth of the amount it was seeking, and the company is expected to continue its quest for cash.
Meanwhile, Pele and Dumont are likely to play catch-up, with continued sampling expected on their properties as well. Pele has also gone to the market for cash, raising about $30,000 to further its work. With new cash seemingly as rare as macrodiamonds, only Dumont has been successful at raising considerable sums of cash of late, coming up with about $1-million over the past few months.
Most of the Wawa explorers have seen their share prices decline in recent months, as many speculators wait on the sidelines for signs of larger macros and improved counts. If one of the active explorers can deliver such a sign, it would give the play a much-needed boost. Pele Mountain traded as high as 90 cents last February, but closed Friday at 25 cents. Dumont Nickel closed at 10 cents, down from a spring high of 53 cents, and Band-Ore closed at 25 cents, well down from its March high of $1.99. (c) Copyright 2001 Canjex Publishing Ltd. canada-stockwatch.com |
