Yorkton says buy
Ashton Mining of Canada Inc ACA
Shares issued 20,836,399 Jan 2 close $5.90
Mon 5 Jan 98 Research
Also Pure Gold Minerals Inc (PUG)
Art Ettlinger says why
Ashton Mining of Canada and Pure Gold Minerals have experienced very early
success in their Alberta diamond exploration program. Ashton, which is 62%
owned by diamond miner Ashton Mining Ltd of Australia, and Pure Gold are
exploring over 28 million acres in the Buffalo Hills area of north central
Alberta. These companies have an option agreement with Alberta Energy
Company Ltd whereby Pure Gold and Ashton have the right to earn interests
of 15% and 42.5%, respectively, in the Buffalo Hills property. Much of this
land is underlain by the Buffalo Head craton, which in the area of their
recent kimberlite discoveries, is deformed by the Peace River arch. This is
a geologic environment highly prospective for diamond exploration.
Using airborne and surface magnetic surveys, Ashton has identified over 70
potential kimberlite targets. Drilling was initiated in January of this
year and their first 16 drill holes identified 16 kimberlites. Diamonds
have been extracted from all but four of these pipes. Mini-bulk sampling of
the K-14 pipe complex resulted in determination of a grade of 36 carats/100
t based on an 8.17 t sample collected from 7 reverse circulation drill
holes. A second 19.25 t sample collected from five surface pits returned an
average grade of 10 carats/100 t. Commercial-sized diamonds up to 0.6
carats were recovered. More recently, core drilling of kimberlite K-91 has
shown this pipe to also be diamond-bearing, with a total of 139
microdiamonds and seven macrodiamonds, up to 1.35 mm in size, reported by
Ashton.
Unknown at this point, is whether any of these pipes contain gem quality
diamonds in commercial quantities. Exploration by Ashton, while further
advanced than any of the other companies exploring for diamonds in Alberta
is still in its early stages of discovery and understanding. Prior to any
commercial determination being made, these pipes must be subjected to
considerably more sampling. Once sampled, a parcel of diamonds of suitable
size for grading must be recovered. For comparison, Aber Resources Ltd
recently released information on the final evaluation of diamonds from its
A-418 pipe on the Diavik project, NWT. An average price of US$56/carat was
reported based on a parcel of 8,275 carats recovered form bulk sampling of
approximately 2,200 t of kimberlite. Previously, the company arrived at an
internal estimate of $60/carat from 4,200 carats of stones. The point being
is that any estimate on the value of diamonds obtained by Ashton from the
approximately 28 tonnes of kimberlite recovered thus far is highly
premature. Since Ashton and Pure Gold are still in the early stages of
exploration at Buffalo Hills, it is unlikely a final determination of pipe
economics will be delivered during the coming year.
The infrastructure and business climate of Alberta is ideally suited to
relatively low cost diamond exploration and development projects. The fact
that the majority of Ashton's kimberlite discoveries occur on land at
depths of less than 50m below surface, and that magnetic surveys have
worked so well in identifying buried pipes, also attests to the favorable
geologic environment for diamond exploration in Alberta. It is our feeling
that the developing diamond exploration scenario in the province will be
long lived and potentially significant. Although it is too early to
speculate whether a commercial diamond mine will be developed there, the
positive features discussed above indicate that compared to the NWT, lower
capital expenditures and operating costs can be expected for a diamond mine
in Alberta.
In addition to Buffalo Hills, Pure Gold holds interest in more than 10
million acres of land in southeastern Alberta. The bulk of this land is
underlain by the prospective Hearne craton and has undergone little
exploration to date.
Ashton and Pure Gold will be exploring in the Buffalo Hills area for a long
time to come. Based on their early success we recommend Ashton Mining of
Canada and Pure Gold Minerals for speculative investors. |
