Diamonds North finds new hope at Snow Goose
Diamonds North Resources Ltd DDN
Shares issued 13,047,885 Aug 26 close $0.72
Wed 27 Aug 2003 Street Wire
by Will Purcell
Mark Kolebaba's Diamonds North Resources continues to come up with a new spin from portions of its Victoria Island diamond play that were once part of the exploration efforts of De Beers. The diamond giant subsequently soured on its search for gems in the region, allowing Diamonds North to acquire the company's ground. Since then, the junior explorer has come up with several new kimberlites and some more promising results from some old ones. The Snow Goose pipe is another of those old finds that could present a far different picture than what was initially the case, due to a possible mix-up in the precise location of the original drill holes. Slight differences between two North American Datum (NAD) systems are thought to be the reason that some of the Victoria Island kimberlites were missed, despite several drill attempts into promising anomalies. As well, the initial diamond counts that were initially attributed to the Gosling body now appear to have come from the fringe of the main Snow Goose pipe. Moving from the NAD27 system to NAD83 results in a shift of about 220 metres to the north and 66 metres to the east, and this is roughly the discrepancy noted between the actual and plotted positions of some of the drill holes. That difference became apparent when Diamonds North went in and surveyed some of the old finds and drill targets last summer. Diamonds North's exploration manager, Graham Gill, said that the discrepancy could arise if the information was acquired relative to one system, but subsequently plotted using the other NAD. Mr. Gill has been with Diamonds North since the company was spun off from Major General Resources early last year, although his early career was directed at metals and gold, not gems. He received a degree in geology from the University of British Columbia in 1983. The difference between the NADs could be a key one for Diamonds North at Snow Goose and Gosling. Last September, the company still thought that some early De Beers drill results pertained to Gosling, which is a separate and elongated anomaly from Snow Goose. De Beers processed 151 kilograms of kimberlite from the one drill hole, coming up with 55 diamonds. Just three of the stones were macrodiamonds, but that was using De Beers more stringent definition of the term, requiring the stones to remain on a 0.5-millimetre mesh. As well, one of those three diamonds was quite large, weighing about 0.23 carat. That one stone might seem to be a clear fluke, but even if it is removed from the totals, the remaining diamond haul weighed in excess of 0.03 carat, which would suggest that the drill hole encountered an array of diamonds with a healthy size distribution. That in turn would make the one large stone somewhat less of a fluke. The one set of numbers provides a real enticement to go back and resample the body, but it now appears that the results came from the fringe of Snow Goose, not Gosling, which adds to the hope for both bodies. "It pays to get out and survey these things," said Mr. Kolebaba. Diamonds North's survey work could pay off on other targets as well. Mr. Kolebaba said that one target had been drilled, and missed, seven times, as the airborne survey data did not correspond with what was happening on the ground. Such errors were fairly common in the late 1990s, when explorers were switching from paper copies to digital data. "When you worked off topographical maps, you knew where you were," Mr. Kolebaba said, adding that transferring from NAD27 to NAD83 provided all kinds of grief for explorers. If the NAD discrepancy was a common problem with some of the early work on Victoria Island, it is no great surprise that some kimberlites would repeatedly be missed, as the miscue would result in a hole being drilled about 230 metres from the planned spot, which would be sufficient to miss most of the kimberlites that have been discovered in Canada's North over the past decade. The company's exploration manager, Mr. Gill, started his mining career with Cominco, but subsequently moved on to Noranda, where his focus gradually shifted to gold, with the creation of Hemlo Gold Mines in the late 1980s. Not long after Hemlo Merged with Battle Mountain Gold in 1996, Mr. Gill moved on to Major General. The company was just getting things rolling on its Victoria Island diamond hunt, but Mr. Gill focused on the company's metal plays. Nevertheless, he found the diamond exploration program interesting, and he began watching the company's director and geologist, Bernard Kahlert, who was then in charge of the diamond end of things. By the time the company spun off its diamond assets to Diamonds North, Mr. Gill had become a diamond convert. Diamonds North has now drilled two holes into Snow Goose, and it has plans for a third. The company is using NTW equipment, which produces core samples 56 millimetres in diameter, compared with the 47.6-millimetre core from NQ equipment. As a result, Diamonds North now has several hundreds of kilograms of kimberlite from Snow Goose, which should be sufficient to
provide some additional insight into the diamond content and size
distribution of the pipe.
The kimberlite at Snow Goose has already produced a few curious results. The specific gravity of the rock is about 2.9, which is comparable with the 3.0 value for hypabyssal material, however the Snow Goose kimberlite has been described as magmaclastic, not hypabyssal material. In fact, Diamonds North apparently has been finding wood bits in their rock samples, and that seems suggestive of the pyroclastic facies. That possibility has Mr. Kolebaba and Mr. Gill suitably enthused, as pyroclastic kimberlites have produced some of the best diamond grades in Canada's North. One of the questions about Snow Goose is its size. The kimberlite was initially described as about 50 metres in diameter at surface, based on its magnetic low anomaly that covered about 0.2 hectare, but it now seems significantly larger. The latest drilling now indicates the pipe covers an area of about one hectare at a depth of 80 metres, which corresponds to a diameter of about 110 metres. That would make Snow Goose even larger at surface, assuming the pipe had steep, but not vertical walls. Even with a vertical slope of about 85 degrees, the surface diameter of Snow Goose would grow to about 125 metres, or about 1.2 hectares. As well, it is not uncommon for additional drilling to expand the amount of kimberlite within a pipe significantly, but additional delineation work on Snow Goose will likely depend on the results of caustic fusion of the existing kimberlite samples. The discrepancy in the location of the drill hole apparently leaves Gosling as an untested target, but Diamonds North hopes to change that shortly. After the drill program at Snow Goose is completed, the company may well test the Gosling feature with at least one hole. At this stage, it is the Snow Goose program that seems the most likely to attract speculative attention, given the earlier diamond counts. Diamonds North has not been given the complete sieve size data from De Beers, although Mr. Kolebaba said that Diamonds North was now attempting to obtain the early data. Those early numbers would provide a good basis for comparison with the results from the current program, but if the Diamonds North samples provide evidence of a healthy diamond size distribution, it would logically reduce the importance of the De Beers results to most speculators. Nevertheless, that initial result played a key role in making Snow Goose a top priority for Diamonds North on the Blue Ice property this year, along with Sand Piper, which is near the opposite end of the Galaxy structure, about 15 kilometres southeast of Snow Goose. It was a 6.49-kilogram batch of kimberlite from Sand Piper that suddenly renewed the market's interest in what had been a dying diamond play until last fall. Although Diamonds North has not been able to duplicate that one rich sample, the company did produce an array of toutable results from a few other finds on the Galaxy structure. As a result, Diamonds North and its Blue Ice partner, Teck Cominco, have been poking holes in several other kimberlites along the Galaxy structure this year. Nearly 500 kilograms of kimberlite has been collected form Vega and its northwestern extension, as well as Sand Piper East and a new find, SLT-4. The partners also plan to acquire and test up to 200 kilograms of rock from the Snow Bunting kimberlite, as well as material from Carina and another new find, Fornax. As well, the partners could also come up with a still larger sample from the Sculptor and Pegasus bodies, in the central portion of the Galaxy structure, through a trenching program that is still in the planning stages. Sculptor produced what was arguably the best sample last year. Sculptor delivered 254 diamonds from about 209 kilograms of kimberlite, with a proportion of larger stones that stacked up well with the diamond size distributions of some economic discoveries. The haul included four stones large enough to remain on a 0.85-millimetre sieve, one of which exceeded two millimetres in two dimensions. Diamonds North recovered 52 diamonds from about 337 kilograms of kimberlite from Pegasus, and 86 stones from 92 kilograms of Carina kimberlite. The stone size distributions within those samples also offered glimmers of hope, and although the results did not match the proportions at Sculptor, a larger look seems warranted. The initial sample from Vega was also encouraging, as 20 diamonds were recovered from 22 kilograms, with some glimmers of a promising size distribution. The tiny sample makes the result nearly meaningless, but the larger sample that has now been collected should provide more insight. Speculators may not have that long to wait for the initial diamond counts from Victoria Island, but it may not be until late in the year, or even early next year, before all the samples are processed. As a result, there should be a steady stream of diamond counts through the fall to maintain speculative interest in the hunt. Diamonds North dropped three cents on Tuesday, closing at 72 cents.
(c) Copyright 2003 Canjex Publishing Ltd. stockwatch.com
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