Hello Fix
Well, its that time of year again. It is perhaps time to revisit this play and rekindle some discussion on this thread. The Winter drilling program is coming up shortly and I note that IAR has received some attention in a recent Canacord Morning Coffee along with some pre-season speculative share appreciation: up from $0.12 to $0.25 over the past week or so.
I talked at length to IAR's President Lawrence Barr for half an hour the other day and to Douglas McLaughlin yesterday. Very straight forward and forthright conversations and I hung up with a reasonably confident sense of what the company is all about and what I could expect from management.
“Larry” had the following company synopsis sent to me, which pretty much summarizes what was accomplished last year and what is anticipated over the coming four months or so. Of all the diamond exploration plays in the NWT and for that matter in the world right now, which have had exploration data published, I truly find this one and to a modestly lessor degree, SUF's Yamba Lake and GMD's Royce claims, the most potentially exciting.
Munn Lake in particular stands out to me as an exceptionally exciting and prospective exploration play for all of the reasons noted below and a few others. In particular:
1. The percentage of G-10's in a given sample size.
2. The well above average Magnesium and to a lessor extent Calcium content of the G-10's.
3. The uniquely large size of the Yuri kimberlite float (boulders) not only suggestive of a nearby pipe source, but possibly suggestive of a larger than average diatreme (pipe) or one that is relatively less eroded than the NWT average and that may have been very explosively emplaced.
4. The lack of similar float or geochemical trains up ice of Munn Lake.
5. The geochemical contrast between the Yuri float and the kimberlite found in the extensive dykes in and around Munn Lake suggestive not only of a different and more highly diamondiferous source, but possibly a later intrusion (less eroded).
6. The above average diamond grade (carats/tonne) of the Yuri float.
7. The above average ratio of macro to micro diamonds in the Yuri float.
8. The number, size and quality of the diamonds in the Yuri float.
Much of the above data is unique. That is none has been found of similar quality anywhere in the NWT and in some cases, the world.
This is exciting stuff and given the reputation of the company running the exploration program (SUF) the market can not help but give a premium to any find based on association with their reputation and industry standing. In other words, I don't think IAR will be treated as just another speculative Canadian junior play upon a discovery and very well prior to it. Lets face it, when the market focuses on who is running the show, credibility will not be a question.
I note that the number of shares Fully Diluted appears to have nearly doubled from this time last year with Warrants outstanding which is unfortunate, but understandable. Regardless, many are tightly held leveraging the price appreciation potential of those that free trade.
I also note that while typical volume is relatively low, there has been sufficient activity to make a modestly sized investment relatively easy to trade. With the attention I expect this play and the NWT diamond sector in general to receive this winter/spring, an investor's ability to take profits should they choose too, should be unhampered.
Let's fanaticize for a second. IAR has 10.62% of lets say a modest to large high grade pipe say 4 to 10 hectares running say 3.5 carats per tonne at say $150/carrat. In very broad and completely speculative numbers this might kick out say $1.7billion to $4billion in situ value divided by say 20,000,000 shares = a possible and HIGHLY speculative insitu share value somewhere between $83 and $200.
The following is the summary IAR sent me minus the index and map.
Have a Merry Christmas and a very rewarding new year.
Regards
***********
MANAGEMENT
LAWRENCE D. BARR
PRESIDENT
Mr. Barr has over 30 years experience in financing, managing and promoting mineral exploration companies. He has served as President of Island-Arc Resources Corporation for the greater part of the past decade. Mr. Barr's strengths are in the areas of finance and project acquisition.
DOUGLAS McLAUGHLIN, B. Sc.
EXPLORATION MANAGER
Mr. McLaughlin has twenty years experience in gold, VMS, nickel and uranium exploration. He graduated from Acadia University, Nova Scotia in 1977. Mr. McLaughlin spent the past two years with Echo Bay Mines as Regional Geologist, Western Canada supervising Lupin and Ulu Mines area exploration along with major project evaluation in western Canada. Prior to joining Echo Bay he spent four years working with the Falconbridge Limited nickel exploration group in Timmins and northwestern Ontario including work at the Raglan nickel deposits in northern Quebec.
GERALD H. RAYNER, B. Sc., P. ENG.
DIRECTOR
Mr. Rayner has over 35 years of global mining exploration experience. He was involved in the discovery of the Ok-Tedi copper/gold deposit in Papua New Guinea for Kennecott Resources. In addition to his position with Island-Arc, he is a principal of G.H. Rayner and Associates, an exploration consulting company. He received his degree from the University of British Columbia.
BARRY J. PRICE, M. Sc., P. GEOL.
DIRECTOR
A self-employed consulting geologist and Fellow of the Geological Association of Canada, Mr. Price has 30 years of experience in mineral exploration in North and Central America. Mr. Price received his graduate degree from the University of British Columbia.
MARVIN A. MITCHELL, P.ENG.
DIRECTOR
Mr. Mitchell received his degree from the Montana College of Mineral Science and technology. He has over 38 years experience in the mineral exploration industry including 8 years as Exploration Manager for the Minerals Division of Ranger Oil Ltd.
CORPORATE INFORMATION
PRESIDENT: Lawrence D. Barr
DIRECTORS: Lawrence D. Barr
David McCue, LLB
Marvin Mitchell, P. Eng.
Barry Price, Sc., P. Geol. Gerald Rayner, B. Sc., P. Eng.
STOCK SYMBOL: IAR (VSE)
SHARES ISSUED: 12,929,971
FULLY DILUTED: 17,314,971
WORKING CAPITAL: $150,000
52 WEEK TRADING RANGE: $0.12 - $0.80
ESCROW: 375,000
OPTIONS OUTSTANDING: 1,040,000 @ $0.25
WARRANTS OUTSTANDING:
200,000 @ $0.25 to Jul/99
320,000 @ $0.25/$0.29 to Dec/99
330,000 @ $0.20 to Jan/99
1,270,000 @ $0.30/$0.35 to Jan/00
1,225,000 @ $0.15/$0.1875 to Nov/00
POTENTIAL CASH from
EXERCISE of OPTIONS
and WARRANTS: $1,020,750 - $1,143,600
FISCAL YEAR-END: April 30
AUDITORS: DeVisser & Company
SOLICITORS: Brown McCue
TRANSFER AGENT: Pacific Corporate Trust Company
December 1998
BACK LAKE DIAMOND PROJECT- Northwest Territories, Canada
ISLAND-ARC RESOURCES CORPORATION 10.62% SOUTHERNERA RESOURCES LTD
70.0% KALAHARI RESOURCES INC. 19.38%
SouthernEra is the majority partner and operator of the project with Kennecott Canada Inc. having the right to a back-in for 30% from SouthernEra's share only. Island-Arc's interest is carried in the project until a production decision is made. Island-Arc increased its original carried interest from 1.78% to 10.62% through a buy-out in December 1997 of the other participants in the Back Lake claim blocks. By the end of 1998, SouthernEra's exploration expenditures on the Back Lake Project will total $4.5 million.
This project covers over 90,000 acres and is located 250 kilometers northeast of Yellowknife and 50 kilometers east of Snap Lake where Winspear Resources and Aber Resources are exploring their Snap Lake Project. Approximately 100 kilometers to the north, the BHP and DiaMet Ekati Diamond Mine has just begun production. At the nearby Diavik Project owned jointly by Aber Resources and Rio Tinto, a feasibility study has been completed and the deposit is now in the mine design and permitting stage of development. Both projects are expected to be among the world's largest diamond producers.
In 1999 SouthernEra will spend $1.0 million dollars on the project. The program will continue to search for the source of the Yuryi diamond bearing kimberlite boulders found along the shore of Munn Lake. Additional follow up work on three indicator mineral trains around Margaret Lake will also be completed.
Yuryi Diamond Occurrence - Munn Lake Area
In the summer of 1997 SouthernEra found a large number of diamond bearing kimberlite boulders called the “Yuryi” occurrence located beside Munn Lake. A 581.3 kilogram bulk sample (1,281 lbs) was taken from the two large kimberlite boulder fields which lie 100 meters apart and contain boulders up to twenty five meters in size. Processing of this sample recovered 226 diamonds and included 62 macro diamonds (i.e. diamonds with the largest dimension greater than 0.5 mm). The biggest diamond found was 0.12 carats with four others greater than 0.01 carats. Exploration to date indicates that the source of these boulders is under the east end of Munn Lake.
Some further key exploration features are:
 the indicator minerals and rock textures in the Yuryi boulders suggest that they are from a nearby and still undiscovered kimberlite pipe,
 the size and number of boulders at Yuryi suggest a significant size potential,
 trace metals found in lake sediment samples indicate kimberlite rock lies beneath the lake
 40% of the garnets in the Yuryi boulders are G-10's in composition indicating they came from well within the stability field of diamonds; 18 - 25% G-10's are present in kimberlites from the Lac de Gras area,
 the shallow depths of Munn Lake (up to 20 meters) will not hinder any mine development.
Two previous drill campaigns in 1997 and 1998 by SouthernEra intersected kimberlite dykes throughout the Munn Lake area but none are large enough, nor appear to be of the same composition, to be the source of the Yuryi kimberlite boulders. It is also apparent from the drill testing of the various magnetic and electromagnetic (EM) anomalies that the source of the Yuryi boulders is not responding well to the traditional geophysical methods.
Winter Drill Program
Beginning in February, 1999 SouthernEra will start a sonic drill program to collect glacial till samples from the bottom of the Munn Lake. The program's objective is to progressively track the kimberlite indicator minerals in the till material under Munn Lake until an up-ice cut-off is established. This is defined by noting the geographical position where no indicator minerals are found indicating the bedrock source for the indicator minerals in the glacial till has been passed. Following this, conventional diamond drilling will test for the kimberlite bedrock source at the last known position of indicator minerals in the till.
Alternatively the kimberlite rock could be intersected during the sonic drilling since this drill will also penetrate three meters into the bedrock. The highest priority targets of the twenty untested geophysical anomalies in Munn Lake will be diamond drilled.
In a presentation to members of the Vancouver investment community on November 9, 1998, a SouthernEra senior geologist said the company will set-up an on-site sample operation to quickly process and pick indicator minerals from till samples collected by the sonic drill.
The results will be known within thirty-six hours and will guide the drilling program. Also Monopros will build an auxiliary ice road this winter from the main Lac de Gras winter road to its Kennedy Lake Project which will go through Munn Lake within one kilometer of the SouthernEra camp. SouthernEra expects a cost savings of twenty per cent from this road which means more money for drill program.
Margaret Lake Indicator Mineral Trains
SouthernEra has also identified three other indicator mineral trains leading to Margaret Lake just east of Munn Lake. No indicator minerals have been found on the east side of Margaret Lake suggesting another kimberlite source is underneath Margaret Lake. A 396 till sample program was completed this past August to better define the up-ice source of these trains. Any targets that are defined will be evaluated with detailed ground geophysics and, if warranted, diamond drilling. |
