Diamonds North hopes for Carina carats
Diamonds North Resources Ltd DDN
Shares issued 10,001,033 Oct 15 close $0.65
Tue 15 Oct 2002 Street Wire
by Will Purcell
Diamonds North Resources Ltd. now has another diamondiferous kimberlite on Victoria Island, but it is difficult to say just what the initial results will mean for the company's 100-per-cent-owned Blue Ice project on the west-central portion of the large Arctic island. The Carina kimberlite produced a significant number of diamonds, but most of them were tiny, a situation similar to a few of the company's earlier finds on Victoria Island, all of which failed to make the grade. Nevertheless, Diamonds North still has hopes for some of those earlier finds, as it has been taking larger samples to provide a better picture of the diamond content of the kimberlites discovered during the glory days of the Victoria Island play during the late 1990s. That will likely be the case with Carina as well, as a larger test could tell a much different story. The rejuvenation of the Victoria Island promotion comes just a few months after Commander Resources, formerly known as Major General Resources, spun off its diamond assets into the newly created Diamonds North. Commander's
vice-president, Bernard Kahlert, a West Vancouver resident and a
professional engineer who has been poking around mineral plays for more than 35 years, took on the role of vice-president at Diamonds North. He plays second fiddle to another West Vancouverite, Mark Kolebaba, who is the company's president and near-geologist. Diamonds North drilled three holes into Carina, encountering two distinct phases of kimberlite. The upper portion was a soft, clay-altered kimberlite that was not particularly diamond rich. The company processed about 23.7 kilograms of the material, recovering just eight diamonds, including two macro-sized stones, or about 340 stones and 85 macros per tonne of rock. Things were better at depth, in the competent, medium-grained kimberlite. A total of 68.7 kilograms of that material was processed, and 78 diamonds were recovered, including six macros. That worked out to about 1,140 diamonds and nearly 90 macros per tonne. The diamond size distribution seemed more promising in the lower kimberlite as well, as three 2-D macrodiamonds were recovered, along with two stones that were at least one millimetre long. One of the diamonds exceeded one millimetre in two dimensions, but Diamonds North did not say just how large the stone was. The results seem mildly encouraging at best, but it is too soon to jump to any conclusions, based on such tiny samples, as the results from one of Carina's sister kimberlites would suggest. Last month, the Diamonds North promotion received a boost when a tiny sample from one of the kimberlites discovered in 1997 produced a rich haul of larger diamonds, and the result seemed to support the contentions of a number of current explorers on Victoria Island that larger samples would be required, due to the fact that the kimberlites carried eclogitic diamonds. That view was aided by the
encouraging news from the Sand Piper kimberlite, which is on the
southeastern portion of the Blue Ice property, near the southeastern end of the Galaxy structure that contains a number of kimberlites, including Carina, which is just 7.5 kilometres to the northwest of the Sand Piper body. The Galaxy structure is about 20 kilometres in length, and it contains a series of kimberlite dikes, as well as blows or pipes and untested targets. De Beers processed about 162 kilograms of kimberlite from Sand Piper in 1997, and the rock yielded just 28 diamonds, or about 175 stones per tonne. That was nothing special, and the fact that all of the diamonds were micro-sized stones added to the disappointment. The paltry haul of microdiamonds weighed just 0.002 carat, which worked out to a microdiamond grade of just 0.012 carat per tonne. With just a sniff of diamonds in the kimberlite samples, De Beers quit Sand Piper in favour of tracking down additional kimberlites, and the company ultimately quit Victoria Island altogether, when its exploration programs failed to turn up much of anything. Convinced that De Beers had quit too soon, Diamonds North took another crack at Sand Piper, drilling two more holes into the body earlier this year. One of the holes seemed to confirm what De Beers had already learned. Diamonds North processed 31.74 kilograms of rock from that hole, recovering 17 diamonds. That was a bit better then the De Beers result, as it worked out to just over 500 stones per tonne, but once again, all of the diamonds were tiny. None of the stones recovered by Diamonds North were large enough to remain on a 0.425-millimetre screen. The total parcel weighed 0.002 carat, or about 0.06 carat per tonne. Although that was marginally better than the De Beers result, it seemed to confirm that Sand Piper was unlikely to make the grade. There it would have sat, had Diamonds North not drilled another hole, about 75 metres to the north. The company processed just 6.49 kilograms of kimberlite from that hole, and it seemed to hit the jackpot. The small sample produced 118 diamonds, including 43 macro-sized stones and 23 two-dimensional macrodiamonds, a clear indication that the sample had a very healthy diamond size distribution, unlike the other two results. Furthermore, 12 of the diamonds were longer than one millimetre, and seven measured at least one millimetre in two dimensions. As well, the longest diamond was over two millimetres in length, and two others came close. As a result, it was no surprise that the sample weighed 0.11 carat, which implied that the tiny sample had a grade of 16.80 carats per tonne. That result gave the Diamonds North pitch a good boost. The stock began trading early this summer at 50 cents, but it had sagged to little more than 30 cents by mid-September. That quickly changed with the Sand Piper results, which sent the stock to a peak of 71 cents, as speculators were wowed by the tiny sample. The rally offered some an opportunity for a bit of profit. The West Vancouver-based Maynard Brown, a lawyer by trade and a Diamonds North director since mid-August, blew off his entire modest holding of 20,000 shares at an average price of about 63 cents per share. It seemed an astute move, as the stock subsequently cooled off, trading in a range near 50 cents recently. Grade calculations based on tiny samples are meaningless, which is something that the three results would seem to confirm. As a result of all that, there are now more questions than answers at Sand Piper, and it will take much larger samples to generate any real answers. There could be multiple phases of kimberlite at Sand Piper, each with a significantly different diamond grade, but it may well be that the drill encountered a nodule that contained most of the diamonds in the rich hole. Like Carina, there appears to be multiple phases of kimberlite at Sand Piper. The official word is not yet available, but the rich sample at Sand Piper came from what is believed to be hypabyssal kimberlite, while the second Diamonds North sample probably came from diatreme, which apparently was significantly lighter and more altered. Like the Sand Piper outcome,
the poorer Carina diamond counts seemed to come from the altered
kimberlite, although that may well be just a coincidence. Diamonds North still does not have a good handle on the geometry of Carina at this stage, although the geophysical anomaly seems fairly large, measuring 350 metres in length, with an average width of about 125 metres. The company has had difficulty in poking holes into Carina however,
primarily due to the influence of the altered kimberlite. Several
10-to-18-metre intervals of kimberlite were intersected, which were
separated by roughly 10 metres of limestone.
By comparison, the Sand Piper anomaly apparently is about 1,600 metres long, but just 25 metres wide, although the kimberlite is now described as an ellipsoid. The rich hole, at the northern end of the kimberlite, hit just four metres of kimberlite, while the second Diamonds North hole, 75 metres south, hit just over 50 metres of kimberlite. Both holes were drilled at a 60-degree angle from horizontal. Sand Piper is now thought to be a dike with a series of blows along its length, but more drilling will be required to better assess its shape. Meanwhile, Diamonds North has tested a second De Beers find. In 1997, the company discovered the Snow Bunting kimberlite, roughly one kilometre to the southeast of Sand Piper, and it fared no better than its sister to the northwest. De Beers processed 137 kilograms of kimberlite, but the sample produced just 23 microdiamonds, or about 170 stones per tonne. There were no macrodiamonds in the mix, and that was it for De Beers. Although the diamond giant had given up on Victoria Island, there were others who have kept the faith, including Mr. Kolebaba. Although he is one calculus course shy of obtaining his BSc degree, Mr. Kolebaba was employed for several years by BHP Billiton as a senior geologist, pursuing diamonds around the world. He was actively involved with the Ekati project, and his high hopes for Victoria Island are based on the indicator mineral chemistry in the region, which has been compared to that at Ekati. Snow Bunting had produced promising mineral chemistry, and Diamonds North decided to take another test from it as a result. The body was originally believed to be just 25 metres in diameter, but Diamonds North now thinks it measures 10 metres wide and up to 250 metres in length. The diamond counts are not yet available. De Beers also discovered the Snow Goose body, near the northwestern end of the Galaxy structure, just over five kilometres to the northwest of Carina, and about 15 kilometres northwest of Snow Bunting. Snow Goose was initially thought to be a fairly large kimberlite, but a review of the data now suggests that there are two discrete kimberlites, rather than just one. De Beers had drilled two holes into Snow Goose proper, which appears to be a pipe. Not much came of that, but a second hole into what is now known as
the Gosling kimberlite produced some intriguing results. The hole
encountered nearly 100 metres of kimberlite, which produced about 150 kilograms of kimberlite. That rock yielded 55 diamonds, which was better than De Beers had come up with elsewhere along the Galaxy structure, but there were just three macro-sized stones in the lot. One of those macrodiamonds was large however, weighing 0.23 carat, which is believed to be the largest diamond recovered so far from Victoria Island. The entire Gosling parcel weighed just 0.26 carat, which would suggest that the one large diamond was very much a fluke for such a small sample. Nevertheless, flukes appear to be the norm on Victoria Island and with eclogitic deposits in general, which is why Diamonds North will have to process much larger samples to prove or kill many of its existing kimberlites in Blue Ice, and elsewhere on Victoria Island. If progressively larger samples do succeed in improving the indicated diamond content of one or more of the kimberlites along the Galaxy structure, the company's partner on the Washburn property, to the southeast of Blue Ice, might retest some of the existing kimberlites that were discovered there by De Beers in the late 1990s. There have been six kimberlites discovered along a northwest-to-southeast line on the northeastern corner of the property. The best of the lot was Snowy Owl, which produced a healthy number of microdiamonds, but comparatively few macro-sized stones. Smaller samples were taken from the other bodies, and Longspur and Golden Plover were deemed worthy of a review of the earlier results. Patrician Diamonds Inc. briefly had an option deal on Washburn earlier this year, but the partners have since agreed to go their separate ways, leaving Diamonds North and its earlier partner, Ascot Resources, to carry on alone. There have been a few dollops of encouragement from Victoria Island, but coming up with an economic diamond deposit remains a long shot at this stage. Nevertheless, at least a few speculators have been buying into the renewed hope that accompanied the brighter bits of news. The stock gained three cents Thursday, closing at 53 cents, but it jumped 12 cents on Friday, following the Carina news, closing at 65 cents, where it remained on Tuesday following the Thanksgiving weekend.
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