Street Wire by Will
Diamonds North adds to its Victoria Island diamond haul
Diamonds North Resources Ltd DDN
Shares issued 24,606,527 Apr 30 close $0.95
Mon 3 May 2004 Street Wire
by Will Purcell
Diamonds North Resources and Teck Cominco have received the diamond counts from another key kimberlite on their Victoria Island play. The new numbers from the Sand Piper body brought a mixed result, sparking several new questions without providing many answers, but the company's president since its creation in 2002, Mark Kolebaba, was suitably enthused over the outcome. Speculators seemed content with the result as well, as Diamonds North's shares continued to trade just above the $1 mark. With varying degrees of promise from several Victoria Island kimberlites, the two partners are now making plans to advance the project to the next stage, and Sand Piper could factor into those next steps. In all, Diamonds North and Teck recovered 268 diamonds from 691 kilograms of Sand Piper kimberlite this time out, which worked out to just less than 400 diamonds per tonne. That was a far cry from what a tiny sample had delivered in the late summer of 2002, when Diamonds North processed 6.49 kilograms of rock. That material yielded 118 diamonds, which worked out to a rate of about 18,000 diamonds per tonne. There was little doubt that that gaudy result would not be duplicated in a larger test, but the less favourable diamond size distribution indicated by the latest sample is somewhat disappointing at first glance. Only 31 of the diamonds in the latest sample were large enough to be recovered by a 0.30-millimetre sieve, which worked out to about 13 per cent of the entire parcel, while just over 26 per cent of the diamonds in the tiny 2002 test had exceeded that size.
That pointed toward a diamond distribution that was markedly less
favourable than what was provided by the earlier result, and that trend became more evident with the recoveries in the larger sieve classes. For example, there were only three diamonds large enough to be retained by a 0.85-millimetre screen in the latest test, while the minuscule batch of rock processed in 2002 had delivered five stones of that magnitude. As a result, it might seem easy to write off the Sand Piper feature as uneconomic, but things are rarely simple, and a closer look at the results provides some glimmers of optimism that were largely masked by the latest test. Although there were no signs of the very rich material that had been encountered in the 2002 test, there were indications that there was a significant variation in the diamond content within the core samples drilled from the body. In all, 36 of the 47 diamonds extracted from the core samples had come from less than 17 kilograms of kimberlite, for an indicated rate of nearly 2,200 stones per tonne, while the remaining 45 kilograms of material had delivered just 11 stones, a rate of about 250 diamonds per tonne. That much more modest value was comparable with what the partners had come up with from about 630 kilograms of boulder material, which had delivered 221 diamonds, a rate of about 360 stones per tonne. Including that larger amount of rock adds a considerable amount of pessimism to the cumulative result, but that could be misleading. Mr. Kolebaba said that much of the material had originated from one large boulder. As a result, the bulk of the sample would have come from a localized area of Sand Piper, and that could well have been one of the lower-grade sections of the body. As a result, considering just the drill cores might provide a better idea of the average diamond content within the apparently complex body. There were two batches of kimberlite obtained by drilling in the latest test, weighing a total of about 62 kilograms, and the rock yielded 47 diamonds. That was just 760 stones per tonne, and although the figure was diluted by the inclusion of the lower-grade material that was also encountered in the holes, it was still double the diamond content that the boulders had produced. As well, the size distribution of the drill cores was far superior to the boulders. Over 26 per cent of the diamonds in the latest two holes were large enough to remain on a 0.30-millimetre sieve, comparable with what the tiny sample had delivered in 2002. In all, Diamonds North has processed 145 kilograms of drill core from Sand Piper, including some additional 2002 samples that were separated from the richer result. That rock yielded 195 diamonds, for a rate of about 1,350 stones per tonne, and the diamond size distribution of the cumulative core samples was healthy, with about 24 per cent of the diamonds being larger than a 0.30-millimetre mesh. As a result, there is no doubt that there are higher-grade sections of Sand Piper, but the extents and diamond contents of those zones remain unknown quantities. Larger samples would logically be required to answer those questions, but scooping up boulders off of the surface seems unlikely to provide an adequate answer, and surface trenching may also fail to hit the richer sections in a representative way. Mr. Kolebaba said that drilling at a favourable angle was being considered as an option to test Sand Piper and other similar features. The Victoria Island partners are now working on their plans for this year, and the project is expected to carry a hefty budget that is estimated at $3-million, all of it provided by Teck. There will likely be a string of new diamond counts coming from the region late this year, but microdiamond recoveries are no longer the main thrust of exploration on what is becoming an advanced project. "This year's program is about size," Mr. Kolebaba said, adding that the bottom line was value, which would be a combination of grade and size. As a result, Teck and Diamonds North will be developing an array of new drill targets that have a possibility of delivering toutable diamond counts from kimberlites that could have significant dimensions. The partners will be flying a significant geophysical survey over the property this year, and the results should be available in sufficient time to select drill targets this year. As well, the two companies will be considering the collection of small mini-bulk samples from a number of its existing kimberlites that have produced promising diamond counts from bodies that have size potential. Mr. Kolebaba said that one such candidate was Snow Bunting, which he described as having a promising size potential, both from a tonnage and diamond distribution perspective. Originally described as a magnetic low that was about 25 metres in diameter, the body has grown with additional work, and is now believed to be at least 200 metres long and about eight metres wide. The dimensions at depth remain unknown and additional drilling will be required to map out the geometry of Snow Bunting, but if those dimensions prove to be representative, the body could contain over a million tonnes of kimberlite to a depth of 250 metres. So far, the partners have processed about 234 kilograms of Sand Piper kimberlite, coming up with 103 diamonds. That worked out to a rate of just 440 stones per tonne, but about 20 per cent of the diamonds were recovered by a 0.30-millimetre screen, supporting Mr. Kolebaba's notion of a coarse diamond size distribution. As well, there were signs that the diamond content was variable within the body. Sand Piper would also seem to factor into the Snow Bunting equation. Mr. Kolebaba said that the two bodies were close neighbours, and they might well be connected at depth. The former senior geologist for BHP Billiton said that the diamond counts were roughly comparable between the two bodies as well, and that might be another reason to include Sand Piper in any plans for Snow Bunting. Mr. Kolebaba also cited King Eider as a likely candidate for a mini-bulk test of up to 10 tonnes. Nearly 390 kilograms of kimberlite from the pipe has yielded just 64 diamonds, but the body also has a reasonably healthy size distribution, and the body appears to be a pipe that is more than 100 metres in diameter. The best of the Victoria Island lot is still the Sculptor kimberlite, which Mr. Kolebaba described as having diamond counts that were the spitting image of the AV-1 body that was found last year by Stornoway Diamond. So far, Diamonds North has recovered 978 diamonds from 773 kilograms of kimberlite, or about 1,350 stones per tonne. About 23 per cent of them were recovered by a 0.30-millimetre screen, and 3.0 per cent of the stones had been retained by a 0.85-millimetre mesh. Meanwhile, Stornoway had recovered AV-1 diamonds at a rate of 1,380 stones per tonne, and about 26 per cent of the AV-1 crop was large enough to remain on a 0.30-millimetre sieve. The proportion of diamonds retained by a 0.85-millimetre mesh was 3.0 per cent, a match for the numbers at Sculptor. Those numbers confirm Mr. Kolebaba's comparison of the two bodies, and Stornoway's recent mini-bulk test adds a considerable amount of fuel for his promotional fires at Sculptor. Stornoway processed 7.4 tonnes of AV-1 rock, coming up with a diamond content of 0.88 carat per tonne, and there are signs that the result could be conservative. The promotable results have maintained the market's interest since that first six-kilogram batch of Sand Piper kimberlite revived the dormant Victoria Island play more than 18 months ago, and the play could remain a favourite of investors if Diamonds North and Teck can deliver a comparable grade from at least one of its existing finds, as well as demonstrating that there is enough kimberlite to make a mine an economic possibility, either within the existing bodies, or in a new target. Diamonds North shed one cent on Friday closing at 95 cents.
(c) Copyright 2004 Canjex Publishing Ltd. stockwatch.com
Click here for company snapshot:
new.stockwatch.com
Click here for recent SEDAR documents:
new.stockwatch.com |
