One for Vaughn.
Shear adds a new play
Shear Minerals Ltd (TSX-V:SRM)
Shares Issued 47,766,407
Last Close 2/15/2005 $0.385
Wednesday February 16 2005 - Street Wire
by Will Purcell
Pamela Strand's Shear Minerals Ltd. has a new grassroots diamond project to play with, as the company prepares for the busiest year yet on the Churchill property. Shear plans a major drill program on the latter play this year and the partners once again have high hopes that some new kimberlite finds will yield promising diamond counts. Meanwhile, Shear will poke around on a new play in the Far North, which suddenly became a hot new diamond district this year.
The new play
The federal government makes its annual award of prospecting permits in early February, and this year was one of the busiest yet. Diamond explorers hopped aboard the High Arctic bandwagon, led by De Beers Canada Corp. and BHP Billiton Ltd. Several juniors were also active participants in the process and Diamonds North Resources Ltd. was one of the leaders in the land grab.
Shear was also an active participant, acquiring about 190,000 hectares of prospecting permits on Melville Island. The new play is in the central part of the island, which lies just north of Victoria Island and northeast of Banks Island, two of the larger islands in the Far North.
The company picked up the Hecla permits from an undisclosed vendor, but the grassroots play did not command a hefty price tag. Shear must issue 25,000 of its 40-cent shares when it receives the permits and an extra 175,000 shares should it eventually discover a Hecla kimberlite and recover 25 microdiamonds from a 25-kilogram batch of the rock.
Shear's Hecla play is roughly 1,400 kilometres north of Yellowknife. That places the project about 500 kilometres north of the Victoria Island diamond district and roughly 1,000 kilometres northwest of the Aviat play on Melville Peninsula.
The High Arctic has hardly been a hotbed for diamond exploration, but that is about to change. De Beers picked up a major land position across the region, including all of Prince of Wales Island and Devon Island. Prince of Wales Island is about 300 kilometres southeast of Shear's Hecla property.
De Beers also grabbed ground on Victoria Island, marking a return to a region the company abandoned in the late 1990s. The company picked up permits near Cambridge Bay, in the southeastern portion of the island, as well as a block of permits on northwestern Victoria Island, about 250 kilometres southwest of Shear's Hecla play. De Beers's original hunt was in the central part of the island.
The High Arctic hope
De Beers was one of the first companies to give the Far North a try. A kimberlite turned up in the 1960s on Somerset Island, about 500 kilometres southeast of Melville Island. It took about 10 years for the discovery to stir up any notice, but De Beers and Cominco Ltd. jumped on the Somerset bandwagon in the early 1970s.
The two companies were busy for a time and Somerset produced a cluster of kimberlite bodies. Some of the finds were diamondiferous, although just barely so. The Batty kimberlite was one of the bodies that De Beers mini-bulk tested. A 160-tonne sample produced a few macrodiamonds at least, and one weighed about 0.10 carat. A larger macrodiamond also popped out of a 14-tonne test of the Nord kimberlite and a few other pipes produced microdiamond parcels.
Without any richer discoveries the old play petered out, but the High Arctic hunt sprang back to life in the early 1990s, after the big find at Lac de Gras. Cyclone Capital Corp. crafted a promotion out of the old Somerset play, which expanded to include Bathurst Island, about 200 kilometres east of Shear's Hecla project. The Cyclone play proved promotable for a time and it produced a few new finds on Somerset, as well as a lamproite pipe on Bathurst.
Cyclone's diamond hunt blew itself out in the mid-1990s, but the Far North continued to spark interest with gem hunters. Much of the interest centred on Baffin Island, but Diamonds North took over the Victoria Island play from De Beers with some success. Victoria Island produced a few kimberlite finds with toutable tallies of diamonds in recent years, attracting the interest of Teck Cominco Ltd.
Diamonds North was also the first company to expand the High Arctic play. In 2003, the company picked up permits on the northeastern tip of Banks Island, in a partnership with Majescor Resources Inc. That project lies just 200 kilometres southwest of Shear's Hecla play. The partners grabbed the play on the basis of some quick indicator mineral work and a closer look apparently added some promise. Diamonds North and Majescor doubled the size of their project this year.
Large areas of the Far North have geology favourable for diamonds, but De Beers and its rivals grabbed much of their new permits without having much supporting evidence on the ground. The company's Devon acquisition includes a large region lying beneath a thick glacier, and the size of the new permits will undoubtedly shrink rapidly, as explorers quickly rule out large parts of their new projects.
Shear acquired its Hecla property on the basis of air photo data, without taking a look at the merits of the play on the ground. The company identified at least 15 photographic features that resemble kimberlite pipes from the photos and satellite images. The circular features are up to 200 metres in diameter and intrude into sedimentary host rock.
Shear planned to visit the region last summer to check out some of the features. The summer was especially short in the Far North last year and the company missed its narrow window of opportunity by a few weeks. Nevertheless, Shear has high hopes for its new play and plans a ground program this year. That work will include prospecting and surface sampling, and if some of the features prove to be outcropping kimberlites, Shear's Hecla play could get a quick jump.
New Churchill encouragement
Shear also hopes to get a jump on a new drill program near Rankin Inlet. The company began poking around on its Churchill play about five years ago and the last two years brought busy drill programs. The company continues to have great success at finding kimberlites, but turning up toutable tallies of diamonds is proving a challenge.
Shear ran its Churchill operation out of Rankin Inlet in the past, but this year the company will base its operation from a camp near the Josephine River. Shear is meeting with community residents and officials to discuss its camp, and it hopes to start setting things up shortly. Running the program from a camp should significantly reduce the travel time and helicopter costs incurred during the main exploration campaign.
Shear and its partners, BHP Billiton and Stornoway Diamond Corp., continue to narrow down the areas of interest on the big Churchill play. Most of the targets slated for drilling this year lie within two large corridors. Several anomalies are within a zone now dubbed the South corridor, while many more lie along the larger Josephine River corridor. The partners also found signs of one or two other swaths of indicator minerals farther to the north.
Shear and its partners plan the busiest year yet on the play. The company selected about 20 lake-based targets for drilling this spring, once the ice is suitably thick. Shear will be checking out the ice shortly and drilling could get rolling in earnest after that. As well, up to 30 land-based features will get a look during the summer drill program.
Interest in the southern part of Nunavut surged over the past few years, after Shear began finding a wealth of indicator mineral promise and clusters of kimberlites. De Beers and BHP were quick to nab large tracts of land in the area, mainly west and north of the Churchill play.
Interest in the area expanded again this year. Diamonds North conducted regional sampling and saw enough mineral promise to grab prospecting permits near Arviat, about 200 kilometres south-southwest of Rankin Inlet. The company also picked up permits near Dubawnt Lake, about 450 kilometres west of Rankin Inlet.
The mineral finds are spread across much of the mainland part of Nunavut, to the west of Hudson Bay, and that makes finding individual sources for the geochemical encouragement a challenge. Shear and its partners collected several thousand surface samples over the years, but that work has only begun to narrow down the potential source areas to a manageable degree.
Shear had great success with an energetic drill program in 2003, hitting kimberlite pipes in about two out of every three geophysical anomalies that it selected for drilling. Many of the finds proved to be diamondiferous, but the token microdiamond counts in the best of the finds left speculators unimpressed. Investors shrugged off the disappointment, as none of the drill targets had a clear association with Shear's promising mineral chemistry. Indicators within the kimberlites were markedly different from the promotable grains turning up in Shear's surface samples, sustaining Shear's expectations.
The market had higher hopes for last year, as Shear had a better idea of where its mineral indicators were coming from and used the information to help select its drill targets. A miserable summer led to fewer kimberlite hits, and microdiamonds were even harder to find. That sent speculators to the sidelines once again, and Shear's shares slipped below 30 cents for a time. That was far below the $1.70 crest set in mid-2003, when Churchill began yielding kimberlite finds at a toutable rate.
More mineral promise from Churchill and the Hecla play are helping to stir new interest in Shear's gem prospects, and the company's shares are again trending up. Shear lost 1.5 cents on Tuesday, closing at 38.5 cents. |
