CANADA
In September 1997, the Company signed a Letter of Understanding with Canabrava
concerning the formation of several separate joint ventures regarding diamond
exploration and development in Canada and Brazil.
The Kap Project
Canabrava had identified certain prospective target areas for the discovery of
diamondiferous kimberlites in the Superior Province (Canadian Shield/Wawa East
Area). The Company has earned a 50% interest in the KAP project by paying 100% of
the acquisition costs of acquiring the mineral rights and paying 100% of all costs of an
airborne survey over the area in which the joint venture had acquired interests to
January 31, 1998. The partners now share 50/50 all benefits,costs, expenses, liabilities
and obligations and risks accruing to the joint venture or arising from its activities.
The Kap project area is located within the eastern part of the Wawa Sub Province, of
the south central Superior Province within the Canadian Shield in north central Ontario.
The Kap project is
comprised of four property blocks totaling approximately 150,000 hectares of staked
claims.
Background and History
Diamond bearing kimberlite dikes, untested “kimberlike” intrusions, alluvial diamonds
and diamond indicator minerals including G-10 pyrope garnets have been discovered in
the eastern Wawa and the Western Abitibi subprovinces of the south central Superior
Province of the
Canadian Shield. These recent discoveries have confirmed a new and unexplored area
within the old stable cratons of Canada that has high potential for the discovery of
economic kimberlite hosted diamond deposits.
Diamondiferous kimberlites are largely confined to ancient stable cratons and the
Southern Canadian Shield is the largest Archean craton in the world. It represents a
highly permissive geological environment for the discovery of diamond-rich kimberlites.
Kimberlite indicator
minerals including diamonds are present in surficial deposits in a number of areas around
the Shield, confirming the high probability of discovery of economic diamond deposits
and the recent
discovery of the Northwest Territories deposits has encouraged the search for new
kimberlite fields in Canada. Within the Canadian Shield there are three primary areas
that exhibit the most favourable conditions for kimberlite/diamond deposit presence; the
Slave Province in the north western Shield (Dia Met/BHP discoveries); the south central
Superior Province (Wawa/Kapuskasing) and; the Ungava area of northern Quebec in
the eastern Shield.
The Superior Province is a two million square kilometre stable Archean craton. Heat
flow studies confirm a low flow rate and that the uperior Province is underlain by a
deep, cool, seismically anisotropic mantle root. Regional magnetic and gravity fields
define deep structures indicating variations in depth to the Moho and inhomogenities in
the Mantle. Refraction and reflection seismic surveys show a strongly layered crust cut
by deeply penetrating faults, some of which displace the Moho. This stable craton has
undergone little penetrative deformation except locally around its margins and along
internal structures such as the Kapuskasing Structural Zone (“KSZ”)and has not
experienced significant post-Archean heating. Crystal features corresponding to the
three major types of kimberlite controlling structures recognized by a number of
workers are present in the south central Superior Province. These include riffing such as
the Temis Kaming and Lake Superior Rifts; intracratonic sheer-deep fault zones such as
the KSZ and; zones of anomalous Mantle (Elliot Lake-Englehart High). The KSZ is a
zone of “high permeability” with respect to kimberlite intrusive activity and extends from
the Lake Superior Rift in the south to the James Bay Lowland in the north. All four
properties of the Kap project are situated within a pronounced corridor of deeply
penetrating northeasterly trending faults subparallel to and just west of the KSZ.
Diamonds and diamond indicator minerals have been found in Pleistocene glacial
deposits and
recent alluvium in a number of areas around the southern Superior Province in the Great
Slave Region and within the Wawa area specifically.
The Ontario Geological Survey (“OGS”) recognized the potential of this area and
following the discovery of diamonds in modern alluvium in 1993 they initialized a
sampling program for kimberlite indicator minerals (“KIM”) in 1994. This work was
successful in recovering
significant KIM's. A second study was completed over an expanded area in 1996.
KIM's including pyrope garnet, chromite, Mg-ilmenite and chrome diopsides were
recovered and analyzed from a total of 157 samples collected. The data collected by
the OGS confirmed a
correlation between the presence of KIM's and regional faults associated with the KSZ
and all fell within a well defined north/east trenching corridor and associated north/south
cross structures.
The Work Program The Kap project is a direct result of the early success of
Canabrava's Whitefish Lake Project. By January 31, 1998 Canabrava had completed
the original staking of approximately 120,000
hectares at a cost of $258,723 to the Company. In February 1998, a high-resolution
airborne magnetic/EM-VLF survey over the Kap project was completed by High Sense
Geophysics at a cost of $232,933. Addition ground was staked during 1998 with costs
incurred equally by the
joint venture partners. An extensive program of recent alluvium and glacial deposit
sampling was initiated in early June and completed in mid-September, with a total of
969 samples collected. The aim of the program was to obtain sample coverage at a
density of one sample per square kilometer within the claim blocks, as well as broader
spaced reconnaissance coverage over the region. A geophysical consultant has
completed an interpretation of the airborne geophysical dataset acquired earlier in the
year, and the numerous targets identified have been field checked and sampled. Initial
results are encouraging in that indicator minerals, including pyrope garnet, chrome
diopside, picro-ilmeniteand chromite, have been visually identified in 41 of the 110
samples processed to date.
Geochemical data for these minerals is still pending. Laboratory work is expected to
becompleted during early 1999.
The total acquisition and exploration costs for 1998 were $ 389,312 being the
Company's 50% portion of the Kap joint venture project.
Rocky Island Lake, Ontario In April 1998, the Company formed a joint venture with
Canabrava to explore for diamonds on the Rocky Island Lake Project within the
Eastern Superior Province, Ontario. During 1998 the Company funded the first
$800,000 in acquisition and exploration costs to earn a 50% interest in the joint venture
area. The two companies will contribute further exploration funds on a 50/50
basis. To date the project is comprised of approximately 130,000 square kilometers
located to the east of the Kap project.
The Work Program
An extensive reconnaissance-sampling program was completed in mid-September with
a total of 645 samples collected. The program consisted of collecting recent alluvium
and glacial till samples at a density of approximately 1 sample per 10 square kilometers.
Laboratory processing of samples is proceeding ahead of schedule and preliminary
results received to date are encouraging. Based on visual microscope observations,
potential kimberlite indicator minerals have been recovered from more than half of 537
samples processed to date. These minerals define discrete plumes in certain areas, the
best of which occurs within a group of claims staked by the
joint venture earlier in the year. Over 100 pyrope garnets as well as abundant chrome
diopside, ilmenite and chrome spinel have been recovered to date. Microprobe data is
required to determine whether these minerals have been derived from kimberlitic source
rocks.
Joint Venture Partner Acquired
In March 1999 the Company and Canabrava signed a major Option/Joint Venture
Letter Agreement with Kennecott Canada Exploration Inc. (“Kennecott”) to explore the
partners' Ontario properties for diamonds. The new Ontario project will include
Canabrava's 100% owned
Whitefish Lake Project, as well as the KAP and Rocky Island Lake Projects which are
owned 50% by Canabrava and 50% by the Company. These projects are located north
east of Wawa, Ontario and include more than 200,000 hectares of staked and leased
lands. Under the terms of the Letter Agreement, Kennecott will have the exclusive right
to acquire a 0% interest on all of the Canabrava and Canabrava/Paramount Properties
by spending twenty-five million dollars (C$25,000,000) within seven years, or by
advancing the project to a decision to begin development and construction of a mine,
whichever occurs first. Kennecott must also commit to a minimum exploration
expenditure totaling one million five hundred thousand dollars (C$1,500,000) within
eighteen (18) months of executing the Option Agreement. Once Kennecott has earned
its 60% interest, the parties will form a joint venture and fund ongoing
exploration/development programs on a pro-rata basis. Kennecott will be the operator.
The terms outlined in the Letter Agreement are subject to the completion of a formal
Option
Agreement, and management and regulatory approvals.
The Work Program
Planning with Kennecott for a Phase #1 spring and summer exploration program is well
advanced. The focus of the program will be to follow-up on the highest priority areas.
Kennecott geophysicists are currently evaluating the full airborne dataset and several
high potential anomalies have already been identified. Details of a more extensive
summer, fall program will be finalized once the spring program is underway.
OTHER DIAMOND PROJECTS
Macapá and North Bahia Projects Paramount and Canabrava signed a Letter of
Understanding in September 1997 to enter into a joint venture Agreement to explore for
diamonds on Canabrava's Macapá and North Bahia properties. To earn a 50% interest
in the properties, Paramount was to spend US$500,000 on exploration for the benefit
of the joint venture by March 31, 1999. Thereafter, the joint venture
partners would share all benefits, costs, expenses, liabilities and obligations and risks
occurring to the joint venture or arising from its activities in proportion to their
participating interest in the
joint venture. Canabrava will operate the exploration programs on behalf of the joint
venture.
Location
The Macapá Project is located in Amapa State northeastern Brazil, approximately 400
km northwest of the city of Belem. The Project consists of 2 contiguous concessions
totaling 20,000 ha in area and is easily accessible by paved and gravel road from the
city of Macapá and from a number of smaller towns and villages in the immediate area.
The North Bahia Project is located in Piani State approximately 700 km northeast of the
capital city of Brasilia and is comprised of 3,000 ha in 3 contiguous exploration
concessions. The Project is easily accessible by both paved and gravel roads.
1998 Work
During 1998 Canabrava completed a sampling program on the North Bahia Project
along the Redondao kimberlite pipe. A full suite of indicator minerals, including pyrope
garnet, chrome diopside, chromite and picro-ilmenite, were recovered and subjected to
microprobe analysis. The geochemical characteristics of these minerals are not
consistent with a high diamond potential and consequently, no further work is planned
on this property.
During late 1998 Canabrava completed a reconnaissance field trip to the Macapá
property to investigate a number of circular magnetic anomalies that could potentially
represent the source for diamonds occurring in the local riverbeds. Future work has
been temporarily suspended and the project will be re-assessed during 1999. The
Company has spent $ 112,479 to date on the twoprojects. |
