Ashton sees glimmer of hope in Alberta
Ashton Mining of Canada Inc ACA
Shares issued 35,887,417 Apr 17 close $0.96
Tue 17 Apr 2001 Street Wire
See New Blue Ribbon Resources Ltd (NBL) Street Wire
by Will Purcell
Hope springs eternal in the Alberta diamond play, but hopeful results have
been few and far between for most of the explorers who acquired stakes
across the northern half of the province. There have been a few finds
through the years that were good enough to excite the market for a time,
but subsequent samples failed to live up to the hopes of speculators and
explorers alike. Nevertheless, the Alberta diamond play keeps coming up
with just enough good news to keep the players interested. That scenario
seems set to play out yet again this year, as a potentially promising find
is again getting a second look.
Ashton Mining of Canada Ltd. scored all of the encouraging finds on a small
portion of its property, located on the Buffalo Head region, but the
company's exploration programs elsewhere in Alberta have not produced much
of anything, and other companies in the area have met with disappointment
as well. Since the Alberta play got going in a big way in 1997, the most
promising results in Alberta all originated within an area about 30
kilometres square. Encouraging diamond counts from four or five pipes led
to larger, mini-bulk samples in the late 1990s, but none of those earlier
finds ultimately panned out, as all of the mini-bulk grades were less than
0.20 carat per tonne.
Ashton has once again managed to come up with a bit of good news -- good
enough to keep the play alive for another year. Last year, the company
discovered another kimberlite -- K-252 -- with enough promise that a closer
look would be required. Four samples of kimberlite, weighing about 227
kilograms had contained 263 diamonds, including 19 macro-sized stones. That
result in itself was not especially noteworthy, but some of the macros were
sufficiently large enough to catch the eye of the company and its
ever-hopeful investors. Five of the stones were longer than one millimetre,
and four of them exceeded one millimetre in two dimensions. Two of the
stones were longer than two millimetres, including one that exceeded two
millimetres in two dimensions.
That was good enough to prompt Ashton to take a larger sample, and that
work also brought an encouraging result. Diamonds weighing a total of 0.85
carat were recovered from about 1,280 kilograms of volcaniclastic
kimberlite, including one stone that weighed 0.36 carat. Based on that
result, Ashton went back and collected a theoretical mass of about 20
tonnes of kimberlite from three drill holes, using a reverse circulation
drill.
If the kimberlite continues to live up to the earlier results, it would be
good news for the Alberta play. The kimberlite is estimated to have a
surface area of about two hectares, and it could contain over 10 million
tonnes of kimberlite to a depth of about 300 metres.
Even if the body does contain a robust grade and diamond value, that amount
alone would not likely be enough to make a mine in the region, and the
search for new kimberlites would continue with enthusiasm renewed. Even if
the latest minibulk sample from K-252 falls short of the hopes of most
speculators as the earlier discoveries did, Ashton now has another
kimberlite card up its sleeve. The company drilled two targets on its
Buffalo Hills property this winter and that work resulted in a new find,
about 15 kilometres to the southeast of K-252. Two holes were completed
into the new find, dubbed K-281, but diamond counts are not yet available.
The new kimberlite is believed to be about 200 metres in diameter, which
would make it somewhat larger than K-252.
Although Ashton and its joint venture partners have not yet found any
economic kimberlites on their Buffalo Hills property, they have at least
come close on occasion. Not so for other explorers in the area. One
property that has seen a fair bit of work in recent years is the Legend
block of Montello Resources Ltd. and Redwood Resources Inc., located to the
northwest of Fort McMurray, or roughly 100 kilometres northeast of most of
Ashton's finds.
Montello was quick to jump onto the Alberta bandwagon, acquiring a large
landholding adjacent to the Ashton play, and signing an option agreement
with Redwood. That deal allowed Redwood to earn a stake in the properties,
and the cash provided by Redwood got things under way. The partners began
initially exploring their Jazz property, located to the southeast of
Ashton's Buffalo Hills project and to the southwest of the Legend property,
but lack of success turned their attention to the Legend area.
The partners flew a magnetic survey over the Legend property in the summer
of 1998 and managed to come up with a number of targets that required a
closer look. Kennecott Canada Exploration Inc. also thought those targets
were interesting, and they signed on as well. Montello now had a new source
for cash to explore its property. Kennecott was to earn a 60-per-cent share
in the diamond project, in exchange for spending $30-million on exploration
over a seven-year period and participating in a number of private
placements of Montello and Redwood shares.
With Kennecott's cash flowing freely, a drill program was quickly mounted
on the Legend property and the partners quickly scored a success, hitting
kimberlite in the first target drilled -- dubbed Phoenix. The drills moved
to other targets, as Kennecott believed it had found a kimberlite cluster
on the Legend property.
It was right, for what it was worth. One kimberlite after another was found
during the last months of 1998, but diamonds proved to be far more elusive
than kimberlite. The partners seemed on the right track at least, when
caustic fusion of about 380 kilograms of Phoenix kimberlite had produced
five microdiamonds, but that meagre result was to prove to be the best of
the lot.
The first disappointment came when small check samples from six additional
kimberlites proved to be barren. These samples represented only about 10
per cent of the kimberlite recovered from each pipe, but the larger samples
were little better. No macrodiamonds were recovered from any of the pipes,
and even microdiamonds were few and far between. The Legend kimberlite
contained two microdiamonds, but most of the other bodies were again
barren.
Spending on the Legend block tailed off rapidly after that, and early last
year, Kennecott told its two partners that it had had enough. No matter, as
Montello had found a new partner willing to spend its cash on the Legend
play. The company signed New Blue Ribbon Resources Ltd. to an option deal
whereby New Blue could earn a 60-per-cent share in the Alberta play by
spending $1-million on exploration and issuing 300,000 shares to Montello
and Redwood.
New Blue reviewed all of the earlier results and managed to come up with
two new targets in the vicinity of the pipe cluster. Drilling began last
fall, and kimberlite breccia was encountered in the Kendu anomaly -- along
with an array of diamond indicator minerals. A total of 38 samples were
sent to two different processing laboratories, with each batch of samples
weighing about 85 kilograms. Once again, even microdiamonds proved to be a
rare commodity on the Legend property. A month ago, New Blue received the
disappointing news that both samples were barren.
Despite the disheartening result, New Blue seems keen to keep plugging way
for a bit longer at least. New Blue president, Larry Kryska, wrote off the
result as a kimberlite that had failed to tap a diamondiferous sector of
the mantle, and the company now says it will turn its attention to some
other "interesting and similar targets that remain untested in the Legend
district."
Meanwhile, the area surrounding the Legend property has proven
disappointing for Ashton as well. The company's large Buffalo Hills
property was surrounded by an even larger holding, the Cayo Lands, but the
company has let much of that position go in recent times. The Cayo property
covered about 8.6 million hectares of land, but it has now shrunk to just
over 700,000 hectares, as only the permits believed to hold the highest
exploration potential were retained.
Ashton's drilling was limited to the Buffalo Hills area in the early going,
but the company poked a few holes into Cayo targets last year -- without
success. Despite the repeated failures, Ashton plans to keep plugging away
on the remaining Cayo ground this year, but drilling does not seem to be in
the cards. Rather, the company will investigate what it terms Cayo's
"highest priority targets" using heavy mineral sampling and geophysical
surveys.
New Claymore Resources Ltd. was another junior quick to jump into the fray,
and the company acquired a number of properties surrounding the Ashton
ground and in the area around the Legend property. At one time, New
Claymore held about three million hectares of property in the region, and
the company had signed option deals with nearly two dozen junior explorers
-- all but two of which have apparently now expired. The company's land
position has now shrunk to about 1.2 million hectares.
New Claymore's Panny River prospect is located to the west of the Legend
block, and it saw an exploration program early in 1999. A number of targets
were identified, and three holes were drilled into widely spaced targets,
but nothing of economic interest was found.
The In the spring of 1999, New Claymore teamed up with Montello to acquire
ground just to the east of the Legend block, but since then, the Birch
Mountain property has seen little in the way of work. Nevertheless, New
Claymore does not yet seem ready to throw in the towel just yet. A few
months ago, the company acquired about 240,000 hectares of ground
surrounding the Legend property, although as yet, New Claymore has not
revealed its exploration plans for the property.
Curiously, New Claymore has also acquired the original property responsible
for setting off the original Alberta diamond rush, back in 1993. De Beers
had been exploring to the south of Peace River, and the company discovered
the Mountain Lake kimberlite that year. Not much ever came of that find
however, and De Beers ultimately moved on to search elsewhere in Canada.
New Claymore had acquired ground to the east of Mountain Lake and picked up
the main property itself once it came free. The company has recently
reviewed its magnetic survey data and identified a string of subtle targets
-- targets the company hopes will be a chain of four discrete kimberlites.
New Claymore plans a gravity survey over the targets before deciding if the
targets are worthy of being drilled.
The market now seems to have lost interest in many of the lesser
exploration programs in the Alberta diamond play. Ashton continues to
command the attention of speculators, due to its modest successes. The
company's shares traded as low as 55 cents last fall, but subsequently
rallied to above the $1 mark for a time last month. Ashton gained seven
cents Monday, closing at 90 cents.
Investors have been far less kind to the other players, however. Montello
shares have been trading below the 10-cent mark of late, closing down one
cent Monday, to seven cents. New Claymore has been trading near 20 cents
over the past several months, and closed down nine cents on Thursday, at 21
cents. |
