WOW, that even longer than Will's Streetwires ...
GGL Reports on Activities for the Period Ended August 31, 2003
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VANCOUVER, BRITISH COLUMBIA--Raymond A. Hrkac, President of GGL
Diamond Corp. (GGL.TSX) reports on the activities of the Company
for the period ended August 31, 2003.
Since 1981, the Company has been engaged in the acquisition,
exploration and development of mineral properties in North
America. Its initial exploration focus was primarily on gold and
copper-gold prospects. As a result, the Company retains ownership
of a gold property and a copper-gold property in British
Columbia, Canada, and has a gold property under option in Nevada,
USA.
In 1992, the Company began to explore for diamonds on the Slave
Craton in the Northwest Territories of Canada, an effort that has
become the Company's primary exploration focus. Between 1992 and
1995 the Company initiated joint ventures with Teck/Cominco, the
Slave Diamond Syndicate, Echo Bay Mines, and De Beers Canada
Exploration Inc. ("De Beers", formerly Monopros Limited). One of
these, the Doyle Lake Project with De Beers, has discovered a
diamond bearing kimberlite and exploration is in progress. The
Fishback Project claims (formerly held by the Slave Diamond
Syndicate and a subsequent joint venture with De Beers) have
reverted to the Company and exploration continues on some of the
claims.
In March of 2000, the Company began a claim acquisition program,
the CH Project, south and west of Lac de Gras and the Ekati
Diamond Mine. Diamond exploration and claim staking continued
through 2001, 2002 and 2003. Portions of this project area have
advanced to the target drilling stage while heavy mineral
sampling continues to aid in the definition of new targets. The
CH project area contains over 300,000 acres in ten claim groups.
The excellent geochemistry of the diamond indicator minerals in
this area is prime evidence that clusters of diamond bearing
kimberlites are to be found here.
Diamond Exploration, Slave Craton, Northwest Territories, Canada
The Slave Craton, an area approximately 400 km by 600 km, is
composed of thick crustal rocks greater than 2.5 billion years
old. Defined by age and thickness, Cratons are known to contain
economic diamond deposits. Prior to the Canadian diamond
discoveries, the best known diamond deposits were in the Cratons
of South Africa, Russia, India and Brazil. To date two major
diamond deposits in the central portion of the Slave Craton are
in production, the Ekati and Diavik mines.
Doyle Lake LA 1 - 30 Mineral Claims, Southeast Slave Craton
The southeast portion of the Slave Craton contains, to date, two
potential diamond mines. The Snap Lake diamond deposit is
scheduled to go into production in two to three years. The
deposit was found in 1996 by a junior exploration company,
Winspear Resources, which in 2000 was bought by De Beers. The
Gahcho Kue kimberlites, on Mountain Province (MPV) claims
adjacent to GGL's Doyle Lake project area, contain a gross
diamond resource of $2.0 billion. De Beers is earning a 60%
interest in this deposit from Mountain Province Diamonds Inc. A
pre-feasibility study is in progress.
GGL began exploring the Doyle Lake area in 1993 under a joint
venture agreement with Teck/Cominco. At that time kimberlites had
yet to be discovered in the area.
The traditional method for exploring for kimberlites is through
kimberlitic indicator mineral sampling (KIMS). It has been common
knowledge that four minerals, chrome pyrope (a type of garnet),
chrome diopside, picro ilmenite, and chrome spinel are used as
kimberlite tracers (indicator minerals) based on an evaluation of
their chemical composition. Although inclusions of these minerals
within diamonds detract from the beauty of the diamond and
decrease its economic value, they are very useful for exploration
because they reveal the composition of the indicator minerals
associated with diamonds. The sampling consists of digging a hole
with a shovel and taking 10 to 20 litres of glacial till (dirt),
and sending it to a laboratory for the recovery of the indicator
minerals (if any) and the analysis of the indicator grains
recovered. This method will not only confirm that a kimberlite is
present in the area, but makes it possible to evaluate the
potential of the kimberlite to host diamonds. The cost of
sampling varies, but in general is $600 to $1,000 per sample.
Sampling programs at Doyle Lake were completed in 1993 and in
1994. Although most all of the samples were barren, one sample
contained four grains of chrome pyropes that confirmed the
potential for kimberlite. Two of the grains had the right
composition to be associated with diamonds. Except for this
sample, the overall results were discouraging and Teck/Cominco
withdrew from the joint venture.
The Company, unable to interest the major diamond explorers in
the area, continued on its own. By the end of 1994, the Company,
following up on the one good sample, had located a series of
samples (an indicator mineral train) that contained hundreds of
kimberlitic and diamond indicators. In 1995, a joint venture was
signed with De Beers that allowed the Company to continue
exploration. In 1996, a source of the indicator mineral train was
found. It proved to be a diamond bearing kimberlite at least 1.3
km in length, up to 5.7 metres thick and dipping at five to
eleven degrees. At that time, a limited drilling program
suggested a resource of 800,000 tonnes, but it was clear that the
potential tonnage was much greater. Further evaluation of the
indicator minerals, undertaken in Australia on behalf of the
Company, and in South Africa by De Beers, confirmed the high
grade diamond potential of the kimberlite.
Of the 30 Doyle Lake mineral claims, the LA 26 - 30 claims were
staked by the Company subject to a Notice of Protest, filed in
1995, by which the Company contested the staking of underlying
claims as being in contravention of the Canada Mining
Regulations. (The 1996 kimberlite discovery was to lay within one
of these claims.) At the same time SouthernEra staked adjoining,
but separate mineral claims, also subject to a similar notice of
protest. Beginning in 1995, litigation continued through to May
2003 at which time the Company and De Beers, and SouthernEra and
Diamonds North were awarded their respective claims.
During the eight year period, in which the ownership of the
claims were in question, no further exploration work was
conducted on the five claims or the diamond bearing kimberlite
found in 1996. De Beers continued exploration on the undisputed
LA 1 - 25 claims, earning a 60% interest in the LA 1 - 30 claims.
The Company has a 40% carried interest.
In May of this year a Tribunal appointed by the Minister of
Indian and Northern Affairs upheld the May 1996 decision of the
Supervising Mining Recorder, awarding the LA 26 - 30 mineral
claims to the Company. At that time, De Beers informed the
Company that they were ready to resume work on the claims.
During August and September, De Beers undertook a program to
obtain kimberlite samples for microdiamond analysis and to begin
to define the strike length of the kimberlite. The sample taken
in 1996 contained 69 microdiamonds in a 125.2 kg sample, but the
kimberlite obtained was diluted with granite as a result of the
type of drilling equipment used. Nevertheless it was a
significant result and confirmed that the kimberlite contains
diamonds. This year's drilling used a core drill that recovered
only kimberlite in a 160 kg sample. Without dilution the
microdiamond counts are expected to be greater. It is standard
practice in diamond exploration to first take samples of
approximately this size to help determine if larger more
expensive sampling is warranted. After the results are received,
which we anticipate will be early next year, but could be sooner,
De Beers will evaluate the practicality of taking a large sample
of approximately two tonnes by trenching from surface. The
trenching will be more efficient and cost effective than
drilling.
This program succeeded in extending the strike length of the
kimberlite from 1.3 km to 2 km, which is of great potential
significance for the Company and its shareholders. The kimberlite
resembles a book lying on a table that has one side lifted by one
or two inches. We now know that the lifted edge of the "book" is
at least 2 km long, and we know that this edge is up to 5 metres
thick. The part that slopes away has been defined by only a few
drill holes, which to date have followed it for 150 metres.
These promising results look remarkably similar to the early
exploration results of Snap Lake. The early drilling at Snap Lake
was also along the near-surface edge of a kimberlite that
appeared to be a few centimetres to a few metres thick with a
strike length of less than 1 km. Only after some 50,000 metres of
drilling was the Snap Lake Kimberlite found to contain a total
resource of 60 million tonnes. To date 23 million tonnes have
been outlined for mining. It is not unreasonable to consider a
possible 5 to 10 million tonnes at the Doyle kimberlite or with
sufficient drilling much more (only 668 metres were drilled this
year). The key factor is diamond content and that remains to be
determined.
This year's drilling by De Beers also produced the first
confirmation of a second suspected kimberlite lying below the
Doyle kimberlite. The possibility of two kimberlites adds to the
potential of this property.
De Beers continues to explore the GGL claims between the Doyle
kimberlite and the kimberlites on the Mountain Province claims.
All of the main diamond bearing kimberlites lie along a northeast
corridor that we have termed "Kimberlite Alley". Between the
Doyle kimberlite and our north claim boundary at Gahcho Kue, ten
kilometres of this corridor remains to be adequately explored.
Outside of this corridor there are two pipe-like drill targets
that are being considered for drilling this winter.
De Beers has spent over $6 million on the Doyle property. This
world-class diamond company has been an excellent joint venture
partner and we look forward to the continued exploration of this
promising property.
CH Project Area, Central Slave Craton
The central area of the Slave Craton is home to two diamond
mines, Ekati and Diavik. These two mines, the first in Canada,
together produce 10% of the world's diamond production. The
central part of the Slave Craton was recently described by
research scientists at the 8th International Kimberlite
Conference, held this year in Victoria BC, as one of the most
prospective diamond potential areas of the Slave Craton. It is
here that the Company's CH mineral claims are located.
Although GGL began staking these claims in 2000, the Company
began to gather the information that allowed this to happen in
1992, the year the Company started diamond exploration. That
year, the Company began to build what is today an enviable and
rich source of data and information. Since that year, the Company
has routinely logged and analyzed vast quantities of diamond
exploration data that is available from public, private, and
government sources, and manages this information to produce maps,
tables and reports on demand. From this unique and proprietary
data set, we have selected areas known to have diamond chemistry
indicator minerals. Because exploration is a dynamic and
competitive industry, it took time, patience and secrecy to take
our own samples to confirm the data set information and to stake
highly desirable claims. This was accomplished at a slower pace
than may have been desired because of the difficulties all
resource companies were experiencing in raising money during what
was undoubtedly the worst downturn for the resource industry in
50 years.
Diamonds are expensive because they are rare and extremely
difficult to find. To give the Company and its shareholders the
best chance for success we acquired as much ground with diamond
potential as we could afford (currently over 325,000 acres). This
required a great deal of time and money to maintain claims, as
set by government regulations, until we could focus on those
claims that have the greatest potential.
The simple version of diamond exploration is first, to find the
right indicator minerals, follow them until they end, ideally at
a geophysical anomaly (target), drill it, find the kimberlite
containing diamonds and live happily ever after. Early in our
exploration, on three of our properties, we found indicator
minerals, reflecting classic geophysical anomalies. With the
blessing and expertise of our independent experts, we drilled six
targets, but we found no kimberlites. We now had something in
common with the other diamond exploration companies who drilled
many targets without finding kimberlites. Drilling many targets
is a valid approach to finding diamonds, for those large
companies that can afford it. A junior company with limited funds
(like GGL) must take more time to evaluate and prioritize each
target before drilling.
The CH Project Area contains ten separate diamond exploration
properties. Of these the Zip-de, Starfish, Seahorse, Courageous
and Mackay are the most advanced. Extensive exploration in the
form of indicator mineral sampling and geophysical surveys has
been completed on these claims. Our geologists are now evaluating
results in order to select drill targets. Prioritizing of drill
targets is expected to be completed early next year after we
receive the results of this year's exploration. Three potential
high priority drill targets have been identified from the
preliminary results of the Fugro airborne geophysical survey, on
the Zip-de mineral claims. Two of these have good indicator
mineral support. The third required additional sampling (results
are pending) to confirm the indicator mineral relationship.
To illustrate some of the complexities of the exploration
process, the Company had expected to complete an 8,000 line
kilometre airborne survey over the Starfish and Zip-de claims in
August. However, completion of the survey was delayed because of
severe magnetic storms caused by solar flares. We now expect to
receive final processed data, maps and reports in November.
Because of this unexpected circumstance, the Company had to
abandon its plans to start a drill program this year.
By using the preliminary data provided by Fugro during the
survey, our geologists were able to select and make site visits
of potential target areas. They located 28 targets on Starfish
and 45 on the Zip-de claims. Many of these will not become
priority targets and upon receipt of the final data, and with
additional processing, new targets may be selected. The final
processing of the data is important as many of the best diamond
deposits have shown only weak responses to geophysics (some have
no response) and these weak responses are often not apparent in
the preliminary data.
Many of the kimberlitic indicator minerals within the trains on
the Starfish and Zip-de claims are also diamond indicators. Their
sources are worth finding and that is what we plan to do.
The Seahorse claims contain a 2 km wide, low-count indicator
mineral train. Several drill targets have been chosen at the head
of this train. On the Courageous claims, three targets lie at the
head of the mineral train. All of these targets will be evaluated
and rated against those of the Starfish and Zip-de targets.
Early this winter and prior to the final selection of drill
targets, the chosen potential drill targets will be covered by
ground geophysical surveys.
The other separate diamond exploration properties are Winter Lake
North, Winter Lake South, Zip-du, Zip-da and the "G" claims. Of
these, the Winter Lake North has the best indicator mineral
counts and diamond chemistry. Our geologists collected new
indicator mineral samples this year to help define the trend of
indicator mineral trains. The Company anticipates completing
geophysics on this property in the coming year and selecting
targets for drilling in the late summer of 2004 or early winter
2005.
Samples were taken on the Zip-du and Zip-da this summer and these
claims are in the early stages of diamond exploration. Results of
indicator mineral sampling on the Winter Lake South and G claims
are the least promising of the properties. Some anomalous samples
occur, but trends are poorly defined.
The gathering of evidence to help select the best targets for
drilling is time consuming and expensive. The more evidence we
get the better our chances of success. How patient can we be, how
patient should we be, or how patient are our shareholders? Like
an archer with ten arrows, a hundred targets and only one prize,
we have to aim carefully and hope for a little bit of luck.
Last but not least, the Fishback Project is being re-examined and
may be drilled as part of our 2004 drill program. At this
property, lake sediment samples taken from a large deep hole in a
lake returned positive kimberlite geochemistry. As the hole is 60
to 100 hectares in size the possibility that it could be a
kimberlite cannot be ignored.
Exploration and General and Administrative Expenditures
As at August 31, 2003, the Company had incurred exploration costs
on mineral properties of $1,118,952 (charter aircraft $153,378;
drilling, trenching and sampling $249,583; licences and recording
fees $16,362; salaries and wages $88,745; technical and
professional services $158,279; transportation $93,332 and
project supplies of $107,250). Exploration costs for the period
ended August 31, 2003 are higher than 2002 by $556,593, an
increase of 99%.
On a per project basis, the Company spent the $1,118,952
exploration costs as follows: $57,771 on the Diamond Venture,
$1,043,517 on the CH project, $7,771 on the Doyle Lake project,
$2,004 on the Clinton, $2,520 on the McConnell Creek and $5,369
on the Happy Creek Gold/Silver Property.
The Company reported a net loss of $318,835 for the period ended
August 31, 2003 compared to a net loss of $319,311 for the period
ended August 31, 2002 (a decrease of 1% from 2002 to 2003).
General administration expenses for the period ended August 31,
2003 were $268,815 compared to $226,912 for the period ended
August 31, 2002 (an increase of 18% from 2002 to 2003). The
increase in general administration expenses was primarily due to
an increase in legal and audit (2003 - $28,718; 2002 - $18,711),
corporate relations (2003 - $59,911; 2002 - $18,812), travel
(2003 - $35,025; 2002 - $17,204), licences, taxes, insurance and
fees (2003 - $27,256; 2002 - $16,558) and shareholders' meetings
and reports (2003 - $19,868; 2002 - $14,109).
Revenue for the period ended August 31, 2003 was $10,123
consisting of interest income compared with $1,661 for the period
ended August 31, 2002.
Acquisition and Disposition of Resource Properties and Write offs
29 claims were staked during the period ended August 31, 2003.
The write off of exploration and mineral property costs for the
period ended August 31, 2003 was composed of $57,771 Diamond
Venture general exploration.
Related Party Transactions
During the six months ended August 31, 2003 the Company was
billed $36,000 ($24,000 of which is included in accounts payable)
by one director (August 31, 2002 - $41,600) for consulting fees
and technical and professional services. The fees for the period
ended August 31, 2003 are recorded as Consulting fees. As at
August 31, 2003, the Company has accrued $24,000 owing to the
director who is also the President for consulting fees and
technical and professional services. See "Commitments" section.
Commitments
The Company has entered into an operating lease agreement with
respect to its office premises. Minimum payments of $30,290 in
2003, $30,290 in 2004 and $5,303 in 2005 are required under the
agreement.
Pursuant to an agreement dated March 1, 2001, the Company has
agreed to pay its President and Chief Executive Officer up to
$10,000 per month. Payment of the full amount of $10,000 per
month is subject to a number of conditions precedent, none of
which have been satisfied as of August 31, 2003. If the
conditions precedent had been satisfied at August 31, 2003, the
amount owing under the agreement would be approximately $164,000
in addition to the $24,000 accrued at August 31, 2003.
Financial Condition and Liquidity
The Company had working capital at August 31, 2003 of $861,666
compared with a working deficit of $15,365 as at November 30,
2002. The Company has no material income from operations and any
improvement in working capital results primarily from the
issuance of share capital. As at August 31, 2003 the Company had
$61,488 of long-term debt (mortgage loan) outstanding.
For the period ended August 31, 2003, the Company experienced a
negative cash flow of $259,579 (before allowing for changes in
non-cash operating working capital balances) from operating
activities. Changes in operating activities resulted primarily
from an increase in administration costs such as legal and audit,
corporate relations, travel, licences, taxes, insurance and fees
and shareholders' meetings and reports. (See Exploration and
General and Administrative Expenditures for further information.)
During the period ended August 31, 2003, the Company completed a
private placement of 5,000,000 common shares at $0.20 per share
for gross proceeds of $1,000,000 and paid $80,000 cash as a
finders fee, completed a second private placement of 2,722,222
common shares at $0.45 per share for gross proceeds of
$1,224,999.90 and paid $82,800 cash as a finders fee, issued
550,333 common shares pursuant to the exercise of warrants for
gross proceeds of $132,099.90 and issued 685,000 common shares
pursuant to the exercise of stock options for gross proceeds of
$199,666.65.
The Company's cash position as at August 31, 2003 was $1,160,673.
The increase in cash position compared to November 30, 2002 was
due principally to the completion of two private placements.
Subsequent Events
Subsequent to August 31, 2003 the Company issued 1,066,999 common
shares pursuant to warrants exercised for gross proceeds of
$310,099.70 and completed a private placement of 1,967,623 common
shares at $0.45 per share for gross proceeds of $885,430. The
Company paid a cash finders' fee of $70,832.
GGL DIAMOND CORP.
Raymond A. Hrkac, President
FOR FURTHER INFORMATION PLEASE CONTACT:
GGL Diamond Corp.
Marsha D'Angelo or Susan de Stein
(604) 684-3376
Website: www.ggldiamond.com
The TSX Venture Exchange Inc. has not reviewed and does not
accept responsibility for the adequacy or accuracy of this
release.
Copyright 2002 The Globe and Mail |
