May be of interest......
Twin Gold Corp - Street Wire
Twin to prove or kill Torngat
Twin Gold Corp TWG
Shares issued 47,711,572 Dec 7 close $0.34
Wed 8 Dec 99 Street Wire
MORE RESULTS, MORE QUESTIONS AT TORNGAT
by Will Purcell
On Tuesday, Twin Gold Corp. announced additional diamond recoveries from
larger kimberlite samples taken from the Torngat-1 dyke at the company's
100-per-cent-owned diamond project on the eastern shore of Ungava Bay in
northern Quebec. The company acquired the rights to the property in June of
this year, and has moved quickly to advance the play.
The initial results from Torngat-1 were released in mid-October. Sample
material weighing 212.2 kilograms was submitted for caustic fusion, and 112
diamonds were recovered. Of these, 13 were macrodiamonds with one dimension
exceeding 0.5 millimetre, and the largest macro was a reported 1.65
millimetres in length. The results were encouraging, but also represented a
markedly lower diamond presence than the very preliminary results from the
neighbouring Torngat-2 and Torngat-3 dykes, which had been received two
weeks earlier.
The current results demonstrate a marked difference in diamond grade
contained within the Torngat-1 dyke. Samples of fine-grained kimberlite
material, taken from a narrow contact zone attached to the dyke walls,
proved to be only marginally diamondiferous. Samples of this fine-grained
material, weighing 244.8 kilograms, contained only 17 diamonds, only one of
which was a macrodiamond. Meanwhile, coarse-grained kimberlite, collected
from the interior of the dyke, proved to contain a much higher proportion
of diamonds. The coarse sample, weighing 109.8 kilograms, contained 214
stones, including 44 macrodiamonds. Of these, eight were found to be larger
than one-millimetre in length. The macro to micro ratio was a fairly modest
0.26 to 1, however. Twin Gold's director of diamond mining, Dallas Davis,
said that a number of the macros were around 1.3 millimetres in length, but
the largest did not exceed the 1.85-millimetre stone recovered earlier from
the Torngat-2/3 material.
The overall quality of the small diamonds appears to be holding up well
compared to the earlier results. Over 85 per cent of the stones were
classified as white, and a further 11 per cent were off-white. Only 4 per
cent of the diamonds were grey or black. The diamonds were of good clarity,
with 82 per cent described as transparent, and 17 per cent were
translucent. Only one stone was described as opaque. The results compare
favourably to the early microdiamond recoveries from the Snap Lake deposit
of Winspear Resources. Initial results indicated that 44 per cent of the
diamonds were white, and an additional 3 per cent were off-white.
Approximately 88 per cent of the Snap Lake diamonds were classified as
transparent. The data continues to offer hope that any large
commercial-sized Torngat diamonds might carry good value, as the Snap Lake
diamonds have been valued in excess of $100 (U.S.) per carat.
The results from the coarse and fine-grained Torngat-1 kimberlite present a
stark contrast. The contact zone material contained only 69 diamonds per
tonne, with a macro to micro ratio of 0.06 to 1. Meanwhile, the
coarse-grained material contained 1,950 diamonds per tonne, with a macro to
micro ratio of 0.26 to 1. Indeed, the latter material contained 400
macrodiamonds per tonne, and 73 one-millimetre stones per tonne. The coarse
material diamond recovery results compare well with some of the early
results from the Northwest Territories. Caustic fusion results from over
two tonnes of kimberlite taken from Aber Resources' A-154 south pipe
indicated that the body contained 1,400 diamonds, 520 macros, and 136
one-millimetre stones per tonne. The macro ratio was a robust 0.54 to 1.
The A-154 south pipe is one of the richest deposits in the world, with a
grade of nearly five carats per tonne. Comparisons with Aber's lower grade
A-154 north and A-21 pipes yield even closer results. A-154 north contained
1,350 diamonds, 400 macros, and 90 one-millimetre stones per tonne, while
the A-21 body contained 790 diamonds, 220 macros, and 60 one-millimetre
diamonds per tonne of kimberlite. There were approximately 0.4
macrodiamonds for every microdiamond recovered from these pipes. The grade
of both Aber pipes is well in excess of two carats per tonne.
It appears that the early samples collected from Torngat-1 were heavily
diluted with the fine-grained material. Mr. Davis said, "When we first went
in and did our sampling, we just sampled along the kimberlite dyke from
float that had collapsed, or was resistant to weathering and had
accumulated in the trench." He stated that a total of about 690 kilograms
had been collected, and results are still pending for just over 300
kilograms of mixed material.
Mr. Davis described the fine-grained contact zone as being 10 to 15
centimetres wide, and added, "We only observed it really in one place,
because there is only one place where the dyke has been washed clear, just
before the break from the plateau to the cliff, where the water has been
running down the eroded or weathered out dyke." He stated that the material
was more resistant to weathering, and as a result the mixed samples
contained a high proportion of the lower grade material. "In retrospect, it
was more heavily weighted in terms of the fine material, quite a bit more
heavily weighted," he said, adding that, "We hadn't sampled the coarse
material to see if it contained a separate or different diamond population
than the finer material, so this past sampling campaign was to test that."
Mr. Davis also said that the fine-grained material was, for some reason,
quite a bit higher in iron content. As a result, he said, "With a magnetic
susceptibility meter we can tell if we're looking at a block that is wall
rock, or material from the core of the dyke." He stated that he expected
the lower grade, fine-grained material to be present on all dykes, but in
proportion to their overall width. He added that some very narrow dykes,
perhaps of the order of five to 10 centimetres in width contained a contact
zone only 0.5 centimetre wide. Mr. Davis stated, "Obviously this material
came in as a very fluid mass, and very fast, and then cooled equally fast."
The low-grade material appears to make up only a small fraction of the
overall kimberlite, and Twin Gold currently estimates the higher-grade
fraction of the kimberlite is about 90 per cent.
In the meantime, work goes on. In addition to the processing of the
additional Torngat-1 mixed sample, an airborne magnetic survey is under
way. Mr. Davis said that the survey began last week, but has been hampered
by bad weather, magnetic storms, and mechanical problems. He said: "They
have picked up the dykes quite clearly and have done enough lines to
establish that they can pick them up with continuity. We've selected the
line orientation to make sure they fly as perpendicular to the dyke trend
as possible." The orientation of the recently discovered Torngat-South
dykes differs by about 20 degrees from the more northerly Torngat-1 and
Torngat-2/3 dykes. Mr. Davis said that analysis of air photos revealed a
set of lineaments quite clearly. These lineaments join Torngat-1 with
Torngat-South. He added, "Whether they're lineaments that have kimberlite,
or how much kimberlite, is yet to be known, but the survey will give us a
very good idea about that."
Mr. Davis said that Twin Gold was planning a drill program, which was
scheduled to begin in March. The drill program on the more northerly dykes
would select sites that were accessible and close to a nearby source of
water. On Torngat-South, he said, "We would probably locate our first drill
holes where we get the strongest and most continuous magnetic anomaly."
While a spring drill program appears in the cards, Twin Gold has much more
energetic plans for next year. Mr. Davis said: "We have a budget of about
$5.6-million. That's what we've put forward. I'm not an exploration person
who believes in doing a lot of unnecessary work, or academic work. I
believe in proving something or killing it, one or the other, as quickly as
possible." As a result, the company apparently has plans to extract a
number of modest-sized minibulk samples next year. Mr. Davis went on to
add, "We could take the chance, depending on the results of the airborne
survey, and do a 10 to 30-tonne minibulk sample on a number of points, and
do less reconnaissance drilling."
Twin Gold appears anxious to advance the project in a serious fashion, as
quickly as possible. Mr. Davis said that tentative plans were to take a
number of samples, from 10 to 30 tonnes each, from each of the more
northerly dykes. As well, additional sites might be selected based on the
results of the survey. He stated that at least three separate sites would
probably be required to provide meaningful information on diamond
population variability.
It now appears that Torngat-1 is a prime target to be minibulk sampled. The
dyke is fairly wide and would be amenable to mining, and appears to have a
high diamond population, if Twin Gold's interpretation of the low grade,
fine-grained material is accurate. Mr. Davis said, "Ideally we would want
to develop what is the most logistically low cost, which would be a dyke
such as Torngat-1, Torngat-2/3, or Torngat-South which are on a cliff and
allow themselves to be accessed very cheaply by adit."
Following extraction by blasting, and separating out the kimberlite, the
samples would be transported by boat. Mr. Davis said that the company was
now making inquiries about using an existing dense media separation plant.
He said that sea transportation costs would be low, and the material could
be processed anywhere in the world.
Whichever kimberlite target is selected, and wherever the processing takes
place, the minibulk program appears to be a certainty. Mr. Davis said: "We
will definitely take those samples. Because of these results from Torngat-1
and 2/3, we have to sample those. We will do that as soon as is physically
possible."
In addition to physical limitations, there appears to be a financial one as
well. The company is attempting to raise the required funds by way of a
private placement. In mid-November, Twin Gold announced its intention to
issue up to 11 million units at 45 cents. If fully subscribed, the
placement would raise nearly $5-million, and the attached warrants could
add an additional $2.75-million. Twin Gold spokesperson, Roswitha Derbuch,
said that the placement was slated to close on Dec. 15, but she could not
comment on its progress. Ms. Derbuch spoke in even more optimistic terms
than Mr. Davis. She said that exploration costs next year might well exceed
Mr. Davis's estimate, and stated that the company's intention was to
advance the project to the prefeasibility stage by the end of next year.
While the results continue to offer hope that an economic diamond deposit
may ultimately be found in the Ungava region, the amount of processed
kimberlite is far to small to make any truly meaningful conjectures about
the ultimate grade or value of the Torngat dykes. The diamond counts for
the coarse-grained kimberlite compare well with the results from the
Northwest Territories, but there is a high variability expected in the
populations taken from very small samples. As well, it appears that
investors will have little opportunity to assess the progress of the play
at intermediate stages. If Twin Gold conducts the minibulk samples as
planned, there may be no interim stage whereby the potential viability of
the project economics may be assessed.
A similar situation existed with Winspear's Snap Lake play. Early caustic
fusion microdiamond counts were released on small samples collected in 1996
and 1997, but the orientation of the dyke made collecting drill core a
formidable and costly exercise. As a result, the company chose to extract
two 100-tonne samples from surface outcrops. Heading into the minibulk
sample, the company had submitted drill core weighing 137.14 kilograms, and
recovered 2,900 diamonds, 1,090 macros, and 182 one-millimetre stones per
tonne. The largest diamond recovered measured 1.82 millimetres in length. A
second sample was also submitted, which had been collected from boulders on
the south shore of the lake, some distance away from the proposed sample
site. A total of 214.1 kilograms of material contained 2,300 diamonds, 789
macros, and 117 one-millimetre stones per tonne. The largest stone
recovered from this sample measured 3.48 millimetres in length, and may
have weighed about 0.2 carats. The Snap Lake caustic fusion results were
certainly encouraging, but the market was not prepared for the results of
the minibulk sample. As the bulk sample was in progress, Winspear's share
value slumped, reaching a low of 43 cents in June, 1998. Within days, the
company announced the sample graded 1.14 carats per tonne, with the
diamonds worth an astounding $301 (U.S.) per carat, and a Winspear share
was suddenly worth $2.
Certainly not all surprises are good. The most celebrated failure in Canada
remains the Tli Kwi Cho bust of 1994. Six drill cores extracted from the
central portion of the pipe contained an average of 1,090 diamonds and 270
macros per tonne, with a macro to micro ratio of 0.33 to 1. The project
operator chose to skip the preliminary minibulk sampling stage, and
proceeded directly to extract an underground sample. The results were poor,
and resulted in the collapse in the market value of the joint venture
partners. The Yamba Lake bust followed close on the heels of Tli Kwi Cho.
Early results suggested the Torrie pipe was highly diamondiferous, with a
200-kilogram sample containing 1,100 diamonds and 268 macros per tonne,
with 0.32 macros per microdiamond. De Beers became interested, and
collected a 24.5-tonne minibulk sample as part of their due diligence
program. The results were dismal, with a reported grade of only 0.026
carats per tonne. It is worthy to note that the results from Tli Kwi Cho
and Torrie provided no indication that any larger sized macrodiamonds were
recovered at the caustic fusion stage, however. Perhaps the only additional
clues available prior to the minibulk sampling will be the presence or
absence of any diamonds larger than two or three millimetres in the next
caustic fusion results of already collected samples.
Ultimately economic or not, the Torngat diamond play has certainly
revitalized Twin Gold in recent months. The company's shares traded for
less than 10 cents in late June, prior to the acquisition of the Ungava
play, but rallied to a high of 72 cents by the beginning of autumn, as the
initial results became available. Twin Gold shares have recently given back
half of the gains however, closing Monday at 37 cents. Shareholders
initially appear to be less than thrilled with the most recent news, as
Twin Gold traded down to 33 cents in an intraday low after the release.
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