ACA-t...in the news:
Ashton adds to its Otish finds
Mon 1 Apr 2002
Street Wire
by Will Purcell
Additional kimberlite finds in Quebec might come quickly, as Ashton Mining
of Canada drills additional anomalies on its Otish Mountains property. A
drill program turned up two kimberlitic bodies last fall, and a third has
now been found, as drilling resumed earlier this month. The company now
seems to have a good idea of which anomalies make the best drill targets
for finding kimberlites, but as well, there is reason for hope that
Ashton's third discovery, named Renard-3, will prove to be diamondiferous
as well.
If so, that would bode well for the Otish Mountains play, which took off
late last year when Ashton revealed that its first two finds contained a
significant population of diamonds. In the weeks that followed that news,
many explorers flocked to the region, and Ashton's shares more than
doubled, primarily as the result of the mounting hype that enveloped the
play. As a result, it should be a busy year as several explorers take up
the hunt.
It is hard to say just how many more targets Ashton will drill this year.
Company spokesperson, Ariel Bowers, said that Ashton did not discuss the
number of targets until after its drilling was complete. For the most part,
that does seem to be the case, although Ashton often lets slip just enough
information that the market has a rough idea of the size of the company's
planned drill programs. Last summer, Ashton said that it had collected
samples in the vicinity of eight geophysical anomalies, and the resulting
data "upgraded the status of some of these anomalies," adding that some of
those eight targets would be drilled.
That suggested that Ashton would be drilling perhaps four or five targets
last fall, which is what ultimately happened. The first hole that Ashton
drilled was a success, as kimberlitic rock was encountered in
mid-September, at a site that was to be named Renard-1. About a month
later, the company discovered Renard-2, but two additional targets had also
been drilled, without success. As things turned out, both anomalies were
determined to be caused by magnetite-rich zones within the bedrock.
Last summer, Ashton also dropped a number of broad hints about its Kikerk
Lake property in Nunavut. The company allowed that its exploration efforts
had turned up two trains of indicator minerals, and five geophysical
anomalies that were associated with those trains. Ashton planned more
investigation, with only the more promising targets to be drilled. One of
those targets turned out to be the diamondiferous Potentilla kimberlite,
but Ashton also drilled a second target last fall, apparently without
success.
In similar fashion, Ashton has let slip a few details of its current Quebec
program, which at least provide a notion of the scope of the current
drilling. In mid-February, Ashton said that it had approximately 10
geophysical anomalies that were situated in areas that displayed an
anomalous number of indicator minerals. Based on that, Ashton planned to
conduct ground surveys over each of them, in order to prioritize the
targets for drilling. If history is any guide, Ashton could have come up
with at least five targets that it planned to drill. In addition to the
recently discovered Renard-3 body, Ms. Bowers said that there would be
additional targets tested. As a result, it does seem certain that Ashton
will be drilling a total of at least three targets this year, but there is
a reasonable chance that at least a few additional targets will be tested
this spring, before the program comes to an end later this month.
Finding kimberlites is one thing; finding diamonds is another matter
entirely. On average, only about 14 per cent of the kimberlites discovered
around the world turn out to be diamondiferous, although exploration in
Canada has managed to top that rate significantly. Even so, Ashton has been
one of the best at coming up with diamondiferous kimberlites, with
comparatively few barren pipes in the mix.
Through the years, Ashton has discovered 54 kimberlites in North America,
and 39 of those, or 72 per cent, have proven to contain at least a
smattering of diamonds, which is an impressive record, even by Canadian
standards. Ashton's president, Robert Boyd, attributed his company's
success to its ability to assess all of the available data, in order to
determine which of the targets were most likely to contain diamonds.
That assessment relies heavily on the use of indicator mineral sampling and
assessment, which is ineffective in Alberta, due to the thick layer of
overburden that covers most of the kimberlites. Without the valuable array
of data from the indicator minerals, it is no great surprise that many
Alberta kimberlites turn out to be barren. Nevertheless, Ashton has proven
quite successful at coming up with diamondiferous finds in Alberta as well.
Of the 36 kimberlites it has discovered in the Buffalo Hills region, a
total of 24, or two-thirds of them, have proven to contain diamonds.
Ashton's record is quite impressive indeed in regions where till sampling
has proved to be effective at recovering kimberlite indicator minerals. In
Canada's North, Ashton has discovered nine kimberlites, and all but one of
them has been at least marginally diamondiferous. In the Otish Mountains
area, both of the two discoveries bore diamonds, and all four of the
kimberlites discovered in the Attawapiskat region of Northern Ontario
proved to be diamondiferous. Even the company's program in the United
States, near Lake Superior, yielded two diamondiferous finds out of three
kimberlites. In all, Ashton has discovered 18 kimberlites outside of
Alberta, and 15 of those have contained diamonds, a success rate of more
than 80 per cent.
As well, Ashton could be getting better, as the company gains more
experience. All of the 10 kimberlites that were discovered over the past
two years have proven to be diamondiferous, and since the end of 1998, 14
of its last 17 finds have contained diamonds, with the three duds occurring
in Alberta. In all, Ashton has come up with six kimberlites that have a
grade of at least 0.03 carat per tonne, and the chances seem good that it
has at least two other finds that will meet that mark.
All of that would seem to bode well for Ashton's current programs, but the
odds of finding a rich mine are still long. There have been roughly 7,000
kimberlites discovered around the world, but only about 1,000 of them are
diamondiferous. Of those, only about one-third had been mini-bulk tested,
with roughly half of them having an indicated grade of about 0.03 carat per
tonne. About 100 of the 7,000 kimberlites are believed to have contained
potentially economic diamond deposits, and only about three dozen of them
have actually resulted in large, profitable mines. As a result of the long
odds, finding a diamond mine can be a lengthy process, marked by many
disappointments. Ashton appears to have managed to shorten the odds
significantly, by focussing its efforts on the targets likely to be
diamondiferous, but so far, the company has not managed to come up with a
rich find in the same class as the Diavik or Ekati pipes.
So far, the best of the Ashton finds was K-252, which was discovered in
2000 and has been subjected to two small mini-bulk tests since then. Based
on that work, the kimberlite pipe appears to have a grade of about 0.5
carat per tonne, but Ashton has deemed the body to be too small to support
a mine on its own, and as a result, the company has decided not to proceed
with a larger sample for now.
Ashton is also taking small samples from two Nunavut pipes this spring, and
the chances seem excellent that both of them will have grades in excess of
0.03 carat per tonne, although such a grade would certainly be quite
unimpressive. The Nunavut play created quite a stir late last year, as
several encouraging finds were made, but things cooled off after a
1.16-tonne surface sample from Ashton's Artemisia pipe produced a
macrodiamond grade of just 0.17 carat per tonne. Although the tiny test was
certainly not conclusive, the diamond haul was below the expectations of
many speculators, and the modest result resulted in a market sell-off that
peeled more than $1 off Ashton's stock, which had been trading for $3.75 at
the time, before it recovered to hover near the $3 mark.
The subsequent decision to put K-252 on the shelf was met with a more
subdued reaction, although Ashton's shares did lose about 25 cents
following the news. The Alberta and Nunavut projects are still very much
alive, but as a result of the recent disappointments, much of the
speculative interest in Ashton is now centred on the Quebec play.
The market has only recently directed much notice toward the Otish
Mountains, but Ashton's involvement in the region actually began several
years ago. Early in 1996, the company signed a deal with SOQUEM to explore
for diamonds in Quebec, including the Otish area, which is actually in the
central portion of the province, nearly 300 kilometres to the northeast of
Chibougamou. The partners conducted a regional exploration program, and
picked up a sizeable land position in the region in 2000, as did a rival
explorer, Majescor Resources.
Ashton continued to explore its property last year, but its efforts brought
little good news for shareholders. The company's stock traded close to the
$1 mark early last spring, but it fell into a slump, trading for just 49
cents late last summer. The market seemed to have little interest in the
Quebec story, as Majescor's shares continued to trade near the 50-cent mark
through the same stretch, despite increasing dollops of promotion from
Majescor and Ashton, helped along by the notice of a few analysts, notably
newsletter writer, John Kaiser.
All that changed just before Christmas, when the diamond counts from the
two Renard bodies provided confirmation that the early hopes for the Otish
region were warranted. The best of the numbers came from Renard-2, which
yielded 145 diamonds from 163 kilograms of rock. That was about 0.9 diamond
per kilogram, which was about triple the number of stones that had come
from Renard-1.
The Renard-2 samples contained 29 macrodiamonds, including five stones that
were large enough to remain on a 0.5-millimetre screen. Those results were
far superior to the numbers posted at Renard-1, which contained only about
one-seventh as many macrodiamonds. Furthermore, Renard-2 contained at least
three diamonds that were large enough to remain on a one-millimetre mesh,
including one stone that measured 1.63 millimetres in length.
All that provided hope that Renard-2 might have a healthy macrodiamond
grade, and Ashton was expected to go back this year to find out. Ashton's
shares jumped 50 cents on the diamonds, but added another $2.50 on
promotion, as the stock soared to a peak of $4.65 early in February. The
market frenzy has cooled since then, and Ashton's shares dipped to a low of
$1.90 last week for a time, but the discovery of Renard-3 seemed to renew
the market's hope, as Ashton gained 52 cents Thursday, hitting an intraday
high of $2.72.
Ashton has now collected its Renard-2 mini-bulk sample, taking about two
tonnes of kimberlitic material for macrodiamond processing. As with the
recent Artemisia program, the small sample will provide little more than an
inkling about the actual grade of the pipe. A larger sample would provide a
clearer picture of the grade at Renard-2, and Ashton does run the risk of
another disappointment, should its tiny sample merely run into a bit of bad
luck.
That possibility did not seem to faze Ms. Bowers however. She said that
Ashton based its programs on what was the most cost effective way to get
the best results, adding that the company was not likely to deviate from
what seemed to be the most efficient and accurate method, simply to appease
the market's concerns, and the market's expectations might have to be
managed better as a result.
Those expectations are still subject to daily mood swings. Hopes are
certainly higher than they were last September, when an Ashton share could
be had for just 50 cents, but expectations seem much less lofty than they
were just two months ago, when the frenzy was at its peak. Ashton closed up
48 cents Thursday, at $2.68. |
