Canabrava/Paramount to provide Ontario's diamond hope
Paramount Ventures & Finance Inc PVF
Shares issued 27,591,374 Aug 30 close $0.47
Mon 30 Aug 99 Street Wire
See Canabrava Diamond Corp (CNB) Street Wire
KENNECOTT LOOKS TO ONTARIO
by Will Purcell
Kennecott Canada Exploration Inc. recently signed a joint venture agreement
with Canabrava Diamond Corp. and Paramount Ventures and Finance Inc. to
explore three diamond properties in northern Ontario. Included in the deal
are the KAP and Rocky Island Lake properties, which are owned equally by
Canabrava and Paramount, and the Whitefish Lake property, which is
100-per-cent-owned by Canabrava. Under the terms of the deal, Kennecott is
required to spend $25-million on exploration over seven years, to earn a
60-per-cent share. Kennecott must spend a total of $1.5-million of the
required amount by the end of 2000.
The Whitefish Lake property, about 30 kilometres northeast of Wawa, Ont.,
was acquired by Canabrava early in 1997, through staking and by licencing
land from the Algoma Central Corp. Canabrava quickly found kimberlite
indicator minerals, and discovered two kimberlite bodies during the summer
of 1997. The remainder of the year was spent conducting further ground
exploration, and an abundance of indicator minerals, including pyrope
garnets were found. Much of 1998 was spent collecting samples, and a total
of 12 potential targets were identified. Two additional kimberlites were
found on the Whitefish claims during 1998. One was identified as an
outcropping dyke, the other consisted of kimberlite float material.
A short drill program was undertaken during the summer of 1998. Five holes
were drilled into body 115, with three resulting in narrow kimberlite
intersections, suggesting the body was, in fact, a dyke. A 158-kilogram
sample of kimberlite was analyzed for microdiamonds, but found to be
barren. A single hole was drilled into target 121, but no kimberlite was
found. Kimberlite float material was found in the area, however, which
suggests a source may be nearby.
The KAP project consists of staked claims in three areas to the northeast
of Wawa. The KAP south block is approximately 60 kilometres to the
northeast of Wawa, just southeast of Missanabie. The central block is 130
kilometres northeast of Wawa, just southeast of Peterbell. The north block
is still further to the northeast, about 180 kilometres northeast from
Wawa, straddling the Kapuskasing River, about 40 kilometres to the
southwest of Kapuskasing.
The claims were originally acquired by Canabrava during 1997, and Paramount
acquired a 50-per-cent stake in the project through a joint venture
agreement with Canabrava. Paramount financed the property acquisition
costs, and conducted an 8,600-line-kilometre airborne electromagnetic
survey over the three blocks to complete its earn-in. During the fall of
1998, the partners conducted a sampling program. Nearly 1,000 samples were
collected, testing alluvial lake sediments and glacial deposits. Kimberlite
indicator minerals were identified, and three high-priority targets were
identified in the south block, which were considered to have excellent
potential to host kimberlite intrusions. Six secondary targets have also
been identified in the south claims. Two target areas were located in the
central block, and 10 potential targets are believed to exist in the north
area.
The Rocky Island Lake project now consists of three primary areas to the
east and south of the KAP claims. Two areas are southeast of the KAP south
block, about 25 kilometres to the southeast of Chapleau. The remaining area
is to the east of the KAP north project, about 50 kilometres to the
southeast of Kapuskasing. Paramount earned its 50 per cent share of the
Rocky Island Lake properties by spending a total of $800,000 on exploration
of the properties. An extensive reconnaissance geochemical sampling program
was conducted during 1998, and once again, an abundance of kimberlite
indicator minerals were discovered during a surface sampling program.
Kennecott's participation in the three projects is perhaps somewhat
surprising. Indeed, no diamonds have yet been found on any of the three
properties. There is however, quite a history to diamond exploration in the
region, which may explain Kennecott's interest in the region.
In 1993, prospector Mickey Clement discovered three diamonds near the mouth
of the Michipicoten River, about 10 kilometres to the south of Wawa. These
diamonds were not of gem quality, but their size certainly was impressive,
measuring 1.13, 1.05, and 0.41 carats weight. The Ontario Geological Survey
conducted sampling in the area, and concluded that the bedrock source of
the diamonds was nearby. Consolidated Cline Development Corp. acquired a
land holding in the area, as did a few other juniors on the prowl for an
area play, but it was Currie Rose Resources Inc. that made the greatest
commitment to the search for Wawa diamonds. Early in 1995, the company
acquired a large number of claim blocks in the immediate area, through a
series of deals. In all, a total of 6,550 acres were acquired, for $96,000
and 605,000 shares. The claims belonging to Mickey Clement were included in
this acquisition program. Suddenly, Currie Rose the gold junior was in the
diamond exploration business.
The company undertook a preliminary exploration program during 1995,
conducting surface sampling, line cutting, and analyzing earlier work.
During that fall, a five-hole drill program was carried out, but no
kimberlite was found. Just as the drill program was winding down, a beaver
dam broke through a strange quirk of fate, exposing a kimberlite dyke just
upstream from the Clement discovery site. Subsequent drilling of the dyke
yielded samples of kimberlite. Additional dykes were discovered during
1996, but the dykes were apparently barren. Currie Rose performed only
nominal work on the properties during 1997, and 1998, but still carries the
property as an active project.
During the fall of 1995, Sandor Surmacz and Marcelle Hauseux discovered
diamonds in exposed bedrock, just north of Wawa, near the Trans-Canada
Highway. A sample of 18.1 kilograms was found to contain six diamonds,
including one macrodiamond, measuring 0.71 millimetres. The property was
promptly optioned to Spider Resources Inc., who began an exploration progam
during 1996. Spider collected two samples from outcropping bedrock on the
west side of the Trans-Canada Highway, and subsequent analysis revealed a
significant number of diamonds. Just over 67 kilograms of tuff material
contained 64 stones, including eight macrodiamonds. The material had a
reported grade of 0.34 carats per tonne, based on all recovered diamonds.
This suggests only 0.0023 carats were recovered, therefore all eight macros
were very small. During the summer of 1996, geologists from the Ontario
Geological Survey visited the site, and found two macrodiamonds with length
in excess of one millimetre in a sample of just 16 kilograms, however.
By the spring of 1997, several samples had been collected and submitted for
caustic fusion. A total of 288 kilograms of rock, from several sites along
a nine-kilometre stretch of the highway, had been collected. A total of 90
diamonds were recovered, 13 of which were macros, and two had dimensions
exceeding 0.8 millimetres. The rock was certainly diamondiferous, but there
was increasing evidence that commercial sized stones would be few and far
between. More samples were taken during the summer of 1997. A
164.7-kilogram sample from a road cut on the Trans-Canada, about 25
kilometres north of Wawa, contained 95 diamonds, including 15 macros. The
largest was a transparent fragment, measuring 0.82 millimetres in length. A
high number of the recovered diamonds were described as white and
transparent, but also as fragments. A second sample, weighing 170
kilograms, was taken during 1997 from a site 10 kilometres to the south of
the original discovery, contained 19 microdiamonds and two macros. By the
end of the year, a grand total of just under 800 kilograms of rock had
yielded 226 diamonds, including 32 macros. Only five of those were larger
than 0.8 millimetres, however.
Spider did no work on the Wawa project during 1998, primarily due to a lack
of funds and a change of focus to the company's recently acquired Brazilian
joint venture diamond property. Early this month, a rejuvenated Spider
reaffirmed its commitment to Brazil, and it appears that the company will
perform little or no further work on the Wawa property. Spider is
apparently actively seeking a joint venture partner to work the project,
however.
Further east, Sudbury Contact Mines Ltd. discovered a kimberlite in late
1991, just east of Kirkland Lake, about 250 kilometres to the southeast of
Kapuskasing. Sample from this discovery contained a reported nine
microdiamonds. The company pursued diamonds for a few years, and discovered
two kimberlite pipes during 1995. The first, 95-1 was barren, but a
1026-kilogram sample from kimberlite 95-2 contained 43 diamonds, including
16 macros. Two of the macrodiamonds had a length exceeding two millimetres.
The results were interesting, but apparently not sufficiently encouraging
to keep the company actively involved in the diamond hunt.
The Kirkland Lake area is also the site of the well explored C-14, or
Clifford pipe. Dia Met Minerals Ltd. acquired the rights to this body in
1989, when Lac Minerals sold the company all of its diamond assets. Dia Met
was primarily interested in Lac's processing plant at Fort Collins,
Colorado, and optioned the Kirkland Lake property to Regal Goldfields in
1991. The following year, KWG Resources Inc. acquired an option to earn a
50-per-cent stake in the property, and proceeded to conduct a minibulk
sample of the pipe. Processing of a 123-tonne sample yielded only seven
diamonds larger than one millimetre, weighing a total of 0.544 carats. The
largest stone weighed just over 0.2 carats. Six of the diamonds were of gem
quality, and the remaining stone was of near gem quality. The pipe was far
from economic, and the company turned its attention to the James Bay
lowlands.
KWG and its joint venture partner, Spider Resources, actively pursued
diamonds in the James Bay lowlands region for several years. For a time,
the project caught the interest of Ashton Mining of Canada Ltd., but poor
minibulk sample results from the Kyle-1 pipe quickly cooled Ashton's
interest, and the company accepted a $1-million payment and relinquished
their interest in the James Bay play. KWG and Spider went it alone, and
continued to drill several kimberlite pipes over the next year. In all, a
total of 12.17 tonnes of kimberlite was extracted from the Kyle-1 pipe. A
total of 4,665 diamonds were recovered, including 875 macrodiamonds.
The largest diamond reported was a mere 0.1 carats, however. Several other
pipes were sampled on a smaller scale, but with generally disappointing
results. Little work has been done on the project over the last two years,
as KWG ran into serious financial difficulty.
The Timmins area, to the east of the KAP and Rocky Island Lake projects,
has also attracted some interest from diamond explorers. The Jarvi diamond,
which weighed 0.225 carats, was found in this region. Moss Resources
acquired the Curregan property and paid lip service to the diamond hunt,
but its program primarily centred on base metals. During 1997, Tandem
Resources encountered kimberlite while drilling its Guibord property, about
70 kilometres east of Timmins. Three microdiamonds were recovered from core
samples weighing 86 kilograms, as were 1,790 rubies. A 16-tonne sample was
extracted during 1998, and was found to contain 96 macrocorundums,
sufficiently red to be classified as rubies. Of these, nine weighed in
excess of one carat. Most of the rubies were not of gem quality, however,
and diamonds were few and far between.
Ontario has attracted attention from diamond hunters over the years, and a
large number of kimberlites have been found, mainly in the northeastern
regions of the province. Many of these bodies are diamondiferous, but to
date there has not yet been a discovery that even remotely appears likely
to approach economic levels, although results have been sufficiently
tantalizing to keep interest in the region alive. As a whole, the Ontario
results are certainly no poorer, or less encouraging, than any of those
obtained by Ashton in the northern Alberta play, or by Kensington Resources
in the Fort a la Corne region of Saskatchewan.
The area between Wawa and Kapuskasing now appears to be the hot spot in the
Ontario diamond play. The James Bay lowlands project may not be dead, but
it is certainly in a deep coma, as is Spider's Wawa dyke property. Unless a
better financed partner emerges for these plays, it seems likely that
Kennecott's project with Canabrava and Paramount will be the main story for
Ontario diamonds over then next year. With a firm commitment to spend
$1.5-million in exploration on the three projects, Kennecott should be
expected to at least generate some excitement for its junior partners. Some
good news may even ignite renewed interest in some of the slumbering
projects in the neighbourhood.
Paramount traded above $3 in 1995, on the strength of other exploration
properties, but has dropped steadily since, reaching a low of 20 cents in
December of 1998. The stock gapped up to 60 cents in March, on the strength
of the Kennecott announcement. Paramount closed Friday at 50 cents, up five
cents on the day.
Canabrava has followed a similar pattern. The stock traded as high as $7 in
mid-1996, fueled by the company's interest in the Brazilian diamond play,
but tailed off late in 1997, reaching $1.50 early in 1998. The share price
sank slowly thereafter, reaching a December low of 42 cents. The thinly
traded Canabrava last traded on Thursday at 80 cents, up 10 cents on the
day.
(c) Copyright 1999 Canjex Publishing Ltd. canada-stockwatch.com
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