Ashton soldiers on in Alberta
Ashton Mining of Canada Inc ACA
Shares issued 29,230,665 Apr 28 close $1.14
Thu 29 Apr 99 Street Wire
HOPE SPRINGS ETERNAL FOR THE ALBERTA DIAMOND PLAY
by Will Purcell
Ashton Mining of Canada Ltd. has resumed its quest to find an economic
diamond deposit in northern Alberta. The company that was formed in October
1993 to aggressively explore for diamonds in North America has, over the
past five and one half years, taken that quest to many seemingly improbable
places.
Ashton has had a presence in the Northwest Territories for several years
but appears to remain on the fringes of the main areas of success in that
region. As a consequence, Ashton has often looked elsewhere for promising
diamond plays.
One of its first joint ventures was the Lake Superior project, an
exploration program in prospective areas of Illinois, Wisconsin, and the
upper peninsula of Michigan. Another joint venture, the Northwind project,
took Ashton to the Fort a la Corne region of Saskatchewan.
The company did record some initial success in the James Bay lowlands
region of Ontario and Quebec several years ago. A joint venture with KWG
Resources Inc. and Spider Resources Inc. discovered several kimberlite
bodies, and subsequent analysis showed some of these to be diamondiferous.
The Kyle-3 kimberlite in particular offered promising caustic fusion
results, however the body was subsequently identified as a narrow dykelike
intrusive. In 1996, Ashton appeared to tire of the region, and sold its
interest to Spider Resources.
Ashton then made a brief foray into Arkansas by acquiring a right to bid
for a 51 per cent interest in the "Crater of Diamonds" project. This
lamphroite produced the largest diamond recovered in the United States, the
40 carat "Uncle Sam" diamond. The body was bulk sampled under the direction
of the Arkansas government, with Ashton providing technical expertise. The
bulk sample returned 46 carats from just over 9,000 tonnes of ore, for a
grade of only 0.005 carats per tonne.
In late 1996, Ashton committed itself to the Buffalo Hills region of
Alberta in earnest. The company currently has a 45 per cent interest in the
project, with Alberta Energy Co. Ltd. and Pure Gold Minerals Inc. holding
45 and 10 per cent interests respectively. The joint venture has uncovered
a total of 32 kimberlite bodies in the region to date, most of which are
diamondiferous.
Ashton released caustic fusion results yesterday on its four most recent
discoveries, resulting from a 1999 reconnaissance program budgeted for
$7.4-million. Bodies BH-155 and BH-230 returned few diamonds, and LL-7 was
barren. The most promising results were from the BH-225 body, where five
macrodiamonds and 67 micros were recovered from a sample of 96.4 kilograms.
Two of the macro diamonds had a length exceeding one millimetre. Based on
this result, BH-225 appears to merit a closer look. The joint venture has
achieved similar results in the past, but so far all of those closer looks
have yielded disappointing results.
The K-91 kimberlite was discovered in the fall of 1997 and caustic fusion
results indicated the body was diamondiferous. A sample of 117 kilograms
contained 192 diamonds, of which 12 were macros. The first dense media
separation results released were mildly encouraging as well. A sample of
850 kilograms contained 0.3 carats, including diamonds of 0.14 and 0.13
carats weight. The bulk of the diamonds were recovered from one drill hole,
which had an implied grade in excess of one carat per tonne.
Based on these results, Ashton carried out a minibulk sample on the body
with reverse circulation and coring drills. The results were very
disappointing. From a total of 15.9 tonnes, only 2.41 carats of diamonds
were recovered. The largest stones in this sample weighed 0.45 and 0.41
carats. The average grade was only 0.15 carats per tonne, and results from
one hole drilled in the suspected higher grade region of the body returned
a very poor result, suggesting the earlier results were just luck.
Accordingly, Ashton chose to direct their exploration efforts elsewhere in
the region.
Also in 1997, the joint venture uncovered a complex kimberlite called K-14.
The initial caustic fusion of 204.1 kilograms of sample yielded 202
diamonds, of which 12 were macrodiamonds. One of these exceeded one
millimetre in length. Subsequent drilling proved the K-14 to be a complex
anomaly with three discrete kimberlites present. Caustic fusion of sample
from K-14B offered two macros and 39 micro diamonds in only 36 kilograms of
kimberlite. The K-14C body was even more prolific, containing 421 diamonds
including 93 macros in only 43 kilograms of rock. Two of these macros
weighed 0.10 carats in total. Subsequent analysis showed the high number of
stones was due to fragmentation of larger diamonds, however. Caustic fusion
of an additional sample weighing 46 kilograms contained 95 diamonds, only
one of which was a macrodiamond.
Encouraged by these results, the joint venture chose to take a small
minibulk sample from the K14 body. A total of 8.17 tonnes was recovered by
reverse circulation drilling at seven sites. A total of 2.99 carats of
diamonds were recovered, which implied an average grade of 0.37 carats per
tonne. An additional 1.87 carats were recovered from 19.25 tonnes of
surface sample, for a grade of 0.10 carats per tonne. The largest stone
recovered was 0.60 carats, and four others weighed between 0.18 and 0.30
carats. At the time, Ashton felt the results achieved by drilling were more
representative of the body than was the surface sample.
Further samples were recovered from the K-14 anomaly late in 1997. An
additional 4.4 tonnes recovered from K-14A yielded 0.94 carats. Kimberlite
weighing 10.36 tonnes from K14-B contained 1.93 carats, or 0.19 carats per
tonne, while K-14C kimberlite weighing 2.7 tonnes contained only 0.06
carats. The two largest diamonds recovered from this latest round of
sampling weighed 1.31 and 0.32 carats respectively.
Taken as a whole, 44.9 tonnes of kimberlite from the K-14 structure had
contained 7.79 carats of diamonds, with a resulting grade of only 0.17
carats per tonne. Further, it should be noted that the lower size cutoff
was a very low 0.8 millimetres which would unrealistically inflate the
grade. Undaunted, the joint venture proceeded to take a much larger bulk
sample in the spring of 1998.
A total of 479 tonnes of kimberlite was recovered from the K-14 bodies.
Dense media separation was performed in Arkansas to recover diamonds larger
than 1.2 millimetres. The process revealed 56.45 carats of diamonds, which
implied a grade of only 0.12 carats per tonne. The two largest stones
recovered weighed only 0.90 and 0.88 carats. These results were considered
disappointing. The largest stone recovered from the 479 tonne sample was
actually smaller than the largest found in the samples one tenth that size,
which had been processed earlier. No valuation was performed on the
recovered diamonds, however it appears that the percentage of clear and
colourless diamonds was relatively low. At this point, Ashton conceded that
K-14 was "unlikely to support an economically viable mining operation".
Yet another kimberlite returned promising initial caustic fusion results in
the spring of 1998. The K-11 body was shown to contain 106 microdiamonds
and 14 macros in 189.5 kilograms of sample. At least three of these
exceeded one millimetre in length. Again, these results were promising
enough to proceed to the small minibulk sample stage.
A total of 21.85 tonnes was extracted by reverse circulation and core
drilling. Dense media separation yielded only 0.96 carats of diamonds for a
very disappointing grade of 0.04 carats per tonne. The two largest stones
recovered weighed just over 0.09 carats each.
A fourth kimberlite progressed to this stage. The K-6 body was contacted by
drilling in 1997, and caustic fusion analysis revealed that 321.5 kilograms
of sample contained 58 diamonds, of which five were macrodiamonds. Ashton
proceeded to take a small minibulk sample by drilling and extraction from a
surface pit. A total of 13.95 tonnes underwent dense media separation and
only 0.876 carats of diamonds were recovered, for a grade of 0.06 carats
per tonne. One of the recovered stones weighed 0.75 carats and was
described as clear and yellow. Once more, the joint venture met with
disappointment.
The recent decision by Pure Gold to dilute its interest from 15 to 10 per
cent rather than pay its share of exploration costs is perhaps a sign that
interest in the Alberta diamond play is waning. Clearly, the current
exploration program must return some success to keep market interest alive.
The region has been proven to host a large number of kimberlites, but to
date none of them have approached the threshold of being an economic
producer.
The costs to develop and run an open pit mine in the region should be
significantly lower than the costs faced by the Ekati mine in the Northwest
Territories. The joint venture has estimated an ore value of $22 per tonne
might support a mine in north Alberta. This value appears optimistically
low, however.
No formal valuation results have been released on any of the recovered
diamonds. Only one stone exceeds one carat weight, and only four were
reportedly larger than 0.75 carats. At least two of these larger stones
appear to be of poorer quality. Indeed, there is little supporting
information to suggest that the Buffalo Hills diamonds recovered to date
would have significant value per carat. To achieve a $40 (U.S.) value per
tonne, a sample would require a grade of 1.0 carat per tonne with a value
of $40 (U.S.) per carat.
The results released today suggest body BH-225 contains 747 diamonds per
tonne, with a macro to micro ratio of 0.07. This very small sample
contained macros exceeding one millimetre in length at the rate of 20 per
tonne. These figures appear quite similar to the cumulative results from
the four pipes which have been minibulk sampled. The K14, K91, K11, and K6
caustic fusion results revealed 758 diamonds per tonne, and a macro to
micro ratio of 0.07. Six macro diamonds per tonne exceeded one millimetre
in length.
Ashton traded above $6 late in 1997, as speculators gambled that good news
would be forthcoming. The stock has steadily retreated since then on less
than favourable news, trading as low as 85 cents by mid April. Ashton has
since rallied to its $1.13 close today on the news of yet more promising
caustic fusion results. With Ashton and the Alberta diamond play, hope does
spring eternal, but the spring in the stock grows less and less.
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