Ashton finds new Alberta hope
Ashton Mining of Canada Inc ACA
Shares issued 49,062,149 Jan 31 close $1.40
Fri 31 Jan 2003 Street Wire
by Will Purcell
Ashton Mining of Canada's Buffalo Hills diamond play has a new lease on
life, with news that its drill had encountered kimberlite in a promising
target, named K-296, on its project in Northern Alberta, northeast of Peace
River. The news did not create much of a stir with speculators, who have
seen early promise lead to later disappointment in the past, but hope
springs eternal with the Alberta play, and there are some hopeful signs
that the new find might deliver some promotable results in the near future,
if Ashton can come up with some toutable diamond counts from its latest
discovery. Still, there are many questions that will have to be answered
before investors flock back to Ashton's Alberta promotion.
The size of the K-296 target is a big factor in the latest burst of hope,
but it is not yet known whether the kimberlite body will measure up to its
initial billing. The electromagnetic anomaly measures roughly 400 metres in
diameter; and that could translate into a surface area of roughly 15
hectares. With such a surface area, a kimberlite pipe with steep walls
could contain about 100 million tonnes of kimberlite to a depth of 350
metres, and that would be enough to support a mine, if the body contained
an economic diamond grade and value. That is putting the mine well before
the exploration program of course, but the potential size of the body is of
prime importance at this early stage, due to an Alberta disappointment just
a year ago.
In early 2000, Ashton discovered the K-252 kimberlite, and from the start,
it seemed to have promise. The initial diamond counts supported a closer
look, and a series of progressively larger mini-bulk tests indicated that
that body was by far the best of the Alberta lot. In all, Ashton processed
24.1 tonnes of kimberlite, recovering 13.4 carats of diamonds larger than a
0.85-millimetre screen, for an indicated grade of 0.56 carat per tonne.
That was much better than any of the company's earlier finds in the region,
but Ashton decided against any larger samples, due to the small size of the
body. Although the anomaly measured about 150 metres in diameter, which
inferred a surface area of about two hectares, Ashton's subsequent drilling
indicated that K-252 had an irregular shape, and its surface area appears
to be well short of that earlier calculation. As a result, any further work
at K-252 will likely have to wait until Ashton finds additional quantities
of rock that might justify a mine.
If the actual dimensions of K-296 do roughly approximate the size of its
electromagnetic anomaly, and if Ashton can produce a grade that is
comparable with the result from K-252, the Buffalo Hills promotion would be
off and running. Coming up with a good idea of the actual geometry of the
body will come later, as several holes would have to be drilled to
adequately determine its size and shape. Therefore, the first indication of
the promise of K-296 will likely arrive with the first batch of diamond
counts from the body.
If K-296 proves to be diamondiferous, the initial diamond counts from K-252
and some of Ashton's earlier finds will provide speculators with a good
basis for comparison. During 2000, the company processed about 227
kilograms of kimberlite from K-252, recovering 263 diamonds, including 19
stones that exceeded 0.5 millimetre in one dimension. That was nothing
special, but there were clear signs of hope in the size distribution of the
recovered diamonds. Ten of those macro-sized stones measured at least 0.5
millimetre in two dimensions and at least five of them were more than one
millimetre long, with two of them measuring more than two millimetres in
length.
The unique feature of the K-252 result appears to be those larger stones,
rather than the numbers of diamonds in the samples. For instance, the K-11
kimberlite produced 120 diamonds from 190 kilograms of rock, or about 630
stones per tonne, which was a bit better than half the number that had been
found in K-252. Included in the mix were 14 macro-sized stones, or about 75
per tonne, close to the 85 per tonne that had been obtained from K-252.
That seemed to be the limit of the good news however. Although three of the
diamonds were more than one millimetre in length, the longest was just 1.7
millimetres long. Ashton subsequently processed 21.85 tonnes of rock from
the pipe, recovering just 0.96 carat of diamonds, for a sample grade of
0.044 carat per tonne.
The best of the Ashton pipes prior to K-252 was K-14, which delivered a
mini-bulk grade of 0.17 carat per tonne, based on a 44.87-tonne test using
a 0.8-millimetre screen. That was followed by a 479-tonne sample that
yielded 56.45 carats of diamonds larger than a 1.2-millimetre cutoff, for a
sample grade of 0.12 carat per tonne. The initial diamond counts from K-14
did not seem especially encouraging, with 483 diamonds recovered from 516
kilograms of kimberlite, or about 940 stones per tonne. Just 28 of the
diamonds were macros however, or about 55 such stones per tonne, and that
value was less than the result from K-11 or K-252. Nevertheless, there were
some signs of hope in K-14 at the early stage, and if they appear in K-296,
it would be good news. Two diamonds larger than two millimetres in length
were recovered in the K-14 sample, and the two diamonds weighed a total of
0.10 carat. Finding those stones in such a small sample was clearly a bit
of a fluke, but the result did seem to indicate that K-14 might have an
encouraging size distribution curve. As things turned out, it was not
encouraging enough, but a portion of the pipe might still have a chance, as
it appears to be a fairly large body, with an anomaly measuring 300 metres
long and 200 metres wide, covering about five hectares. That size could be
hiding a higher-grade zone, as the diamond recoveries from the pipe appear
to be quite variable. As a result, a higher-grade zone could be of
interest, should Ashton manage to find a mine elsewhere in the region.
If K-14 and K-252 are any indication, the latest find might reasonably be
expected to have variations in its grade - assuming it has diamonds at all.
The mini-bulk test of K-252 encountered two distinct types of kimberlite,
and each seemed to have a different grade. Ashton processed 9.4 tonnes of
breccia, which yielded diamonds weighing 8.03 carats, for an indicated
grade of 0.85 carat per tonne. As well, about 13.4 tonnes of volcaniclastic
material produced 4.51 carats, for a sample grade of 0.34 carat per tonne.
Ashton's initial test sampled the volcaniclastic phase, and 1.28 tonnes or
rock contained 0.85 carat, for a sample grade of 0.66 carat per tonne.
As a result, the breccia appears to be the better facies at K-252, although
that fact was well masked by the initial diamond counts. The breccia
contained 133 diamonds in 103 kilograms of material, but just seven of them
were macrodiamonds. Meanwhile, the volcaniclastic phase produced 130 stones
from 124 kilograms of rock, and the haul included one dozen macro-sized
stones. Still, there were a few clues in the numbers that suggested K-252
might have significant grade variations. The breccia had contained both of
the two-millimetre diamonds, and a third diamond in the breccia was more
than a match for the largest diamond contained in the volcaniclastic
sample. Complicating matters further at K-252 is the fact that the
volcaniclastic phase of kimberlite generally seems to lie at the top of the
body, with the breccia usually occurring at a greater depth, and it was
interspersed with zones of mudstone, which had just a token diamond
content.
As a result, there could be some rough hints about K-296 offered in
Ashton's initial drilling reports, although there was little hard news in
the company's first crack at things. At the time, Ashton's drill had
reached only five metres into the kimberlite after passing through 30
metres of overburden and 24 metres of mudstone. Even that was mildly
encouraging however, as K-252 had a significantly grater layer of waste
material lying atop the pipe. On average, the K-252 kimberlite was
intersected at a depth of 77 metres, which was significantly greater than
the average for most of the Alberta pipes. For example, the K-11 kimberlite
lies under less than 20 metres of waste rock, while portions of the K-14
kimberlite are near the surface.
Although the actual diamond content of K-296 will be an important bit of
information, another key piece of the puzzle will be the actual size of the
kimberlite body. Although the anomaly is large in comparison with most
finds in Canada's North, it has company in the Buffalo Hills region. For
instance, the K-5 anomaly measured 600 metres in diameter, and although 300
kilograms of kimberlite produced just 74 micros and a solitary
macrodiamond, Ashton tried a 7.55-tonne test, probably due to the size of
the body. That test was a disappointment, producing a grade of just 0.004
carat per tonne. The K-6 kimberlite, with an anomaly that measures 600
metres long and 450 metres wide, was also mini-bulk tested, with a
disappointing result as well. Still, there does not appear to be any real
correlation between the size of an Alberta pipe and its diamond grade,
which could be good news for K-296.
On the other hand, there could well be hope contained in the geophysical
signature of K-296. The body displayed a good electromagnetic response, but
is only weakly magnetic, and that is quite similar with the geophysical
result from the K-252 kimberlite. Also offering hope is the fact that a
recent mini-bulk test of a portion of the K-6 body produced a diamond grade
that was arguably significantly better than what had been obtained from the
earlier test taken from the more magnetic portion of the body. Just how
significant all that is will not be known until Ashton's first diamond
counts trickle in, but at this stage, the news from K-296 appears
encouraging.
Based on its new geophysical strategy, Ashton has come up with at least
three additional targets that will probably be tested this spring, and the
company could produce some additional kimberlite discoveries in the coming
weeks. Ashton has had uncommon success with its drill programs in Quebec,
where eight of 12 drill holes hit diamondiferous kimberlites, and even in
Alberta, its record is encouraging. The company has drilled just 59 holes
into anomalies in the Buffalo Hills property, and 32 of them have been
kimberlites, with at least 23 of them proving to be diamondiferous. If
Ashton's current drill program can match its earlier efforts, the Alberta
play could receive an additional boost.
Speculators seem content to wait for a clearer sign however. Ashton's stock
traded as low as 81 cents last fall, but it has been trading in a range
near $1.40 of late, after some good news from the Otish Mountains play in
Quebec. The Alberta news produced just a minor ripple by comparison
however. The find added seven pennies to the company's stock on Wednesday,
and Ashton gained another nickel on Friday, closing at $1.40. |
