Diamondex continues its southward move
Diamondex Resources Ltd DSP
Shares issued 27,939,289 Jan 28 close $1.09
Wed 29 Jan 2003 Street Wire
by Will Purcell
Randy Turner's Diamondex Resources Ltd. continues to expand its focus in
the southern portion of the Slave craton, which has been one of the more
active Canadian diamond districts of late. Finding kimberlites in the South
Slave region has proven to be a tough task through the years, but a healthy
proportion of the kimberlite bodies have proven to have a diamond content
of potentially economic proportions. One of those richer finds was the
large Snap Lake dike, found by Mr. Turner's Winspear Diamonds Inc., but
subsequently taken over by De Beers Canada through a hostile takeover bid
in 2000. Since then, Mr. Turner has increasingly pointed Diamondex,
Winspear's sister company, toward the region that brought him that first
success, picking up several large properties in the area surrounding the
region where De Beers now thinks it will have two new mines. Through its
latest acquisition, Diamondex hopes to turn the tables on De Beers a bit,
looking for diamonds on a tract of ground that De Beers and its partners
have recently dropped.
Mr. Turner is not alone in his optimism for the South Slave. Nick
Pokhilenko, a Diamondex consultant, is also a big believer in the area, and
his high hopes for the area to the east of Snap Lake, probably playing a
role in the decision by Diamondex to tackle yet another patch of ground in
the region. The latest round of staking saw the company acquire a large
portion of the AK property, which had initially been staked by John
Dupuis's Inukshuk Capital in the early 1990s and optioned to Mountain
Province Diamonds Inc. in the summer of 1992. A few years later, Mountain
Province turned up a promising kimberlite pipe on the southeastern corner
of the AK property, and it spent much of its efforts over the next few
years drilling the pipe and touting the resulting diamond counts. That was
enough to attract De Beers as a partner early in 1997, and the company
quickly added three new finds in the waters of Kennady Lake. Since then, De
Beers and its partners have been exploring around the AK property, but much
of their efforts have been directed toward the central and eastern portions
of the claims, as well as taking a series of expensive mini-bulk tests from
its four main kimberlite pipes. De Beers and Mountain Province have
maintained their grasp over the area surrounding the MZ dikes in the south
central portion of the claims, and all of the ground farther to the east,
but the claims west of MZ Lake have lapsed, primarily due to the passing of
10 years, after which the ground must be taken to lease, or dropped. As a
result, it is possible that the eastern portion of the AK property was
abandoned a bit too soon.
Based on the initial surface sampling that had been completed by Mountain
Province and its partners, that could well be the case. The AK property
proved to be rich in indicator minerals, and many mineral trains had been
identified in the initial work completed by Mountain Province. By early
1997, the partners had come up with about a dozen promising mineral trains
over the southern half of the property, and some of those trains seemed to
have sources on the portion of the AK property that has now been dropped.
One of those trains is believed to begin on the northeastern corner of the
Bear Head property, which was staked by Diamondex in 2001, on ground
immediately south of the Camsell Lake property that is now owned by De
Beers. The initial work by Mountain Province and its partners suggested
that the train was roughly five kilometres long, running northeastward to
terminate in what is now the extreme southwestern corner of the new
Kingfish property. A second train was believed to begin just northeast of
that line, running perhaps another 10 kilometres to the east-northeast, to
a source that would be in the south central portion of Diamondex's Kingfish
ground. Still another train began just to the east of the head of the
second mineral train, and it ran eastward for roughly five kilometres. By
the summer of 1999 however, De Beers had come up with a new interpretation
of the results. The partners apparently now believe that all three of those
mineral trains are in fact one long train of kimberlite indicators that
have a source near MZ Lake and were scattered by the ice toward the west,
and then southwest, onto the Bear Head property, a distance of roughly 20
kilometres.
A similar fate seemed to befall other mineral trains that had originally
been thought to originate on the eastern portion of the AK property.
Another train was initially identified over the extreme southern portion of
the AK claims, on what is now the southeastern corner of the Diamondex
Kingfish property. The feature was tracked for about 10 kilometres, to a
source region that seemed to be on the southeastern fringe of what is now
Diamondex ground, but subsequent work by De Beers appears to have extended
the source region farther to the east-northeast, onto ground held by De
Beers and GGL Diamond Corp., and possibly back onto a portion of the AK
property that is still held by De Beers and Mountain Province.
Meanwhile, another long train had been identified just a bit farther to the
north, and that feature had been tracked eastward for about 20 kilometres,
to what is now the extreme southwestern portion of the remaining AK
property, just east of the border with the new Kingfish block. As well, two
shorter trains had been found a few kilometres still farther to the north.
The initial thinking was that the more westerly of the two had a source on
what is now the southeastern part of the Kingfish property, with the
eastern train having a head somewhere on the southwestern portion of the
remaining AK claims. By 1999, De Beers and its partners had a different
spin on the result, suggesting that the two trains were in fact just one
longer feature, with a source region that would be on ground still held by
them.
Much of that early work was apparently confined to the southern half of the
large AK property, but De Beers did conduct some sampling over the northern
portion of the property during the late 1990s, and that resulted in the
identification of what appears to be a long, wide mineral train that
extends from near the border of the Camsell Lake property, across the
Kingfish ground, onto the northwestern portion of what is left of the AK
property. That train is believed to be wider than most of the other
features, and an alternate interpretation might suggest that there are a
number of discrete sources present along its length.
The presence of several indicator mineral trains running across Diamondex's
new Kingfish property seems an encouraging sign, despite the fact that De
Beers and its partners now think that they control the source region of all
of them. One reason for optimism is that, outside of the MZ Lake area,
neither Mountain Province nor De Beers have been able to find the source of
any of those western trains, unlike the eastern portion of the property,
where source kimberlites with a significant diamond content have been found
in trains running westward from Kennady Lake, as well as from the area
farther to the northeast, where the Faraday and Kelvin bodies were
discovered.
A second encouraging sign is the continued optimism of consultant
Pokhilenko, who is a big wheel in Russia's diamond industry and a big
believer in geochemistry and indicator mineral sampling. He is chief
research geologist for Almazy Rossi Sakha, the main Russian diamond
company, and he also is the head of a diamond laboratory in Novosibirsk.
Mr. Pokhilenko has had uncommon success with his pursuit of gems, turning
up a cluster of bodies in the Archangelsk region, as well as three more in
Siberia, and that good fortune resulted in Mr. Pokhilenko receiving awards
from both Mikhail Gorbachev and Boris Yeltsin. For the past decade, the
Siberia-based gem hunter has been spending his time away from work in
Canada's Arctic region, poking around Mr. Turner's ever expanding land
position, and although Mr. Pokhilenko has not been showered with medals
from Canadian leaders, giving the busy Russian a summer job has paid off
for Mr. Turner.
Mr. Pokhilenko first took over Winspear's till sampling program in the
summer of 1994, and he began work on the Camsell Lake property, immediately
to the west of Kingfish. It did not take long for Mr. Pokhilenko and his
crew to come up with their first find. The CL-25 kimberlite was discovered
on the northwestern portion of the property, about 10 kilometres to the
west of Diamondex's new project. The pipe proved to be marginally
diamondiferous, as about 350 kilograms of kimberlite produced 221 diamonds,
including nine macro-sized stones. The following year, a second discovery
was made in the same area. The CL-174 pipe was also diamondiferous, but
once again, the macrodiamond content seemed low. A total of 622 kilograms
of kimberlite produced 284 diamonds, but just 10 of them were macros.
Still, the pipe seemed encouraging, as geochemical work revealed that a
high proportion of the pyrope garnets were classified as G-10s, and that
has likely encouraged Mr. Pokhilenko to continue chasing mineral trains
across the region. The following year, Winspear's interest moved to the
northeastern corner of the property, and Mr. Pokhilenko played an important
role in the discovery of what will likely be Canada's third diamond mine,
at Snap Lake.
If De Beers is right, none of its mineral trains have sources on the
Kingfish property, but a new round of preliminary exploration could well
produce a new interpretation, and the chances seem sufficiently encouraging
that Diamondex plans to spend about $500,000 on spring geophysics and
summer till sampling. That more detailed program of sampling should provide
Mr. Pokhilenko and Diamondex with a more detailed picture of the indicator
mineral trains running across Kingfish, and that could lead to a fall drill
program on the new property, if some potential sources can be located.
Finding kimberlites in the South Slave has been a much tougher task than
around Lac de Gras, but the odds of a kimberlite being economic have been
much better in the south. From more than 200 finds in the Lac de Gras area,
only 5 per cent of them appear rich enough to mine. Farther to the south,
only about 20 kimberlitic bodies have been found, but close to one-third of
them have potentially economic grades. As well, promising geochemical work
has kept the likes of Chris Jennings's Southern Era Resources interested in
the region for more than a decade, and it probably helped entice De Beers
to the South Slave in the mid-1990s as well. Although nothing is known
about the geochemical details of the mineral trains across Kingfish, it
seems likely that the data is promising, based on the results from CL-174,
along with the nearby economic diamond deposits at Snap Lake and Kennady
Lake. That, along with Mr. Pokhilenko's past success and his continued
enthusiasm for the region has made Diamondex the largest landholder in the
region by far, as the company's large properties all but surround the
Camsell Lake and AK properties being explored by De Beers.
With yet another busy season ahead of it, Mr. Turner's Diamondex promotion
has been attracting renewed interest of late. The stock traded as low as 60
cents early last fall, but it hit an intraday peak of $1.18 on Tuesday,
before falling back a bit to close up two cents, at $1.09. |
