WinspDiamonds Inc -
Winspear reports on progress at Snap Lake
Winspear Diamonds Inc WSP
Shares issued 51,634,088 2000-08-09 close $4.3
Thursday Aug 10 2000
Mr. Randy Turner reports
Winspear Diamonds has provided an update of activities at the Snap Lake diamond project of which Winspear is the joint venture operator and holds an undisputed 67.76-per-cent interest.
"This study demonstrates to shareholders and third parties that the De Beers offer substantially undervalues the Snap Lake diamond project," said Randy Turner, president and chief executive officer. "The indicated resource alone has increased over 130 per cent from the September, 1999, resource study as a result of drilling during the past year. Three step-out holes to the northeast not included in the resource calculation have hit kimberlite indicating that the dike is open to beyond present drilling. The board of directors continues to strongly recommend rejection of the De Beers offer."
Value recognition program -- updated resource study
In response to a takeover bid by De Beers, Winspear commenced a value recognition program to demonstrate to the board of directors, shareholders and third parties the value and potential of the Snap Lake diamond project. Under this program, the compaodera in the Central Mackenzie Valley. As well, we are very pleased that EOG (formerly Enron Oil & Gas Company), one of the largest independent non-integrated oil and gas companies in the U.S., has seen fit to participate in this play through their Canadian subsidiary. We
The updated resource study documents a mineral resource comprising indicated resources of 21.6 million tonnes containing 41.1 million carats and additional inferred resources of 24.0 million tonnes containing 45.3 million carats. The results of the updated resource study, divided into indicated and inferred resource categories, are described in the table below.
Snap Lake Northwest and Southeast Dikes
Indicated(1) and Inferred(2)
Resource Summary(3)
Average
Vertical
Tonnes Grade Carats Thickness
(million) (cpt) (million) (m)
Dike
vertical
thickness
greater
than
2.0
metres
Indicated 20.0 1.9 38.2 2.9
Inferred 16.2 1.9 30.9 2.7
Dike
vertical
thickness
greater
than 1.0
less than
2.0 metres
Indicated 1.6 1.8 2.9 1.6
Inferred 7.8 1.8 14.4 1.6
Total, dike
vertical
thickness
greater than
1.0 metres
Indicated 21.6 1.9 41.1 2.8
Inferred 24.0 1.9 45.3 2.2
(1) Currently, no indicated resources have been established for the southeast dike.
(2) Total inferred resources include 5.4 million tonnes from the southeast dike, with the remainder from the northwest dike.
(3) These mineral resources assume a strict 1.18-millimetre bottom cutoff for diamond recovery plus identical liberation and recovery to that which was obtained during processing of pits three and four bulk sample material through a DMS diamond recovery pilot plant located at the Lupin mine site. A commercial plant may have different recovery characteristics.
MRDI completed the following work in undertaking the updated resource study:
review of the additional 45 holes drilled since the preparation of the September, 1999, resource study, which includes the seven holes completed to date under the value recognition program;
update of the three-dimensional model of the northwest dike developed by MRDI for the September, 1999, resource study and preparation of a model for the southeast dike based on Winspear's drill logs and the current understanding of the geological model;
estimation of mineral resource tonnage and grade in anticipation of feasibility-level mine planning;
classification of the mineral resource according to guidelines outlined in the CIM Standards on Mineral Resources and Reserves, Definitions and Guidelines -- Draft -- Oct. 28, 1999 (Canadian Institute of Mining, Metallurgy and Petroleum). This code is very similar to the code of the joint ore reserve committee in Australia.
A total of 384 holes has been drilled in the Snap Lake area. The updated resource study includes the results of an additional six holes drilled in late 1999 and 39 holes drilled in 2000. Three additional holes to the northeast of the inferred outline announced in Stockwatch July 31, 2000, have significant kimberlite intersections, indicating that the dike is open to beyond the present drilling.
The following comments are pertinent to information presented in the updated resource study for the northwest and southeast dike areas:
Mineral resources summarized above do not include planned or unplanned dilution and ore loss that may take place during the mining process. This is outside the scope of the updated resource study. It is important to note that the area of the indicated resource includes the area occupied by crown and structural pillars identified in the prefeasibility study of the Snap Lake diamond project prepared by MRDI. These pillars were excluded from the mineral resource tonnage assumed to be available for underground mining. These combined pillars contain a total of 2.3 million tonnes.
An independent review undertaken by MRDI of drill core, drill logs and the prevailing geological interpretation, confirmed Winspear's interpretation that the northwest dike and southeast dike areas have a high degree of continuity and probably represent kimberlite emplaced from a single magmatic source. Earlier reviews have been supplemented by further independent review of the holes drilled since the preparation of the September, 1999, resource study and this continues to confirm the probability of a single magmatic source.
The stone-size distribution linking microdiamonds and macrodiamonds was developed using diamonds recovered from bulk sample pits three and four collected in 1999. This relationship was then used to estimate grade (in carats per tonne) for diamonds above 1.18 millimetres for the northwest and southeast dike areas using microdiamonds recovered from drill core obtained during definition drilling of those areas during 1998, 1999 and 2000. These results were reported in the microdiamond analyses described in Stockwatch July 31, 2000.
For the inferred resource area, grade has been estimated on a global basis because of lower drill density.
MRDI assessed the relative error for estimating carats greater than 1.18 millimetres in the indicated resource area to be within 15 per cent at the 90-per-cent confidence interval.
In addition to the relative error noted above for estimation of recoverable carats in the indicated resource area, MRDI states that other non-quantifiable risks exist with respect to the resource estimates. These potential sources of error are listed below.
The error in modelling the stone size distribution linking the microdiamond and macrodiamond data. Sensitivity analysis indicates it could be in the order of 10 to 20 per cent.
Error in the assumption of constant stone size distribution throughout the northwest and southeast dike areas.
Error in extending the bulk sample dollar/carat value into the northwest and southeast dike areas.
Shareholders should also consider the risk factors associated with the development of mineral deposits. Risk factors specific to the company include those applicable to diamond mining and underground mining in Canada and are stated in its annual information form dated May 9, 2000.
Winspear is currently undertaking an advanced exploration program which includes collecting three 2,000-tonne bulk samples. In addition to providing information on the quality and size distribution of extractable diamonds down dip from pits three and four, the bulk samples will also provide required information on continuity and thickness of the northwest dike as well as the range of underground mining conditions that will be encountered. This information is required before calculating a mineral reserve. See advanced exploration program below. Under the code, mineral resources do not have demonstrated economic viability until converted to mineral reserves.
Value recognition program -- drill update
Six surface drills are currently operating at the Snap Lake diamond project. Three drills are drilling step-out holes while the remaining drills are drilling infill holes as previously reported. Since the release of drill results on July 31, one additional infill hole in Quadrant N15 recovered 2.67 metres of continuous hypabyssal kimberlite. This occurred at anticipated depths and is consistent with nearby intersections.
The company has received microdiamond analyses results for the first six holes completed under the value recognition program. The new results confirm that diamond distribution in the northwest dike remains uniform and abundance increases marginally down dip toward the northeast.
Most drill holes completed at the Snap Lake diamond project did not extend more than 30 metres below the main northwest dike intersection. A total of four drill holes has been drilled to greater depths east of the north-south line separating quadrants 15 and 16 and excluding the area of the southeast dike resource, all of which have intersected kimberlite at a substantially lower depth than the northwest dike. Drill holes drilled to greater depths outside of this area have not intersected kimberlite at substantially lower depth than the northwest dike. Where analyzed, this lower kimberlite has a microdiamond count consistent with the northwest dike. Additional work is required to understand the significance of these intersections.
Advanced exploration program
The purpose of the advanced exploration program is to test underground mining conditions and to obtain and process three 2000-tonne bulk samples of kimberlite to confirm diamond grade and value.
As of Aug. 8, the decline had been driven 896 metres from the portal, has been out of permafrost for approximately 80 metres and is under Snap Lake. The company anticipates that at this rate, it will complete the decline of 1,015 metres and intersect kimberlite on or about Aug. 20, 2000. Ground conditions continue to be very good. Minimal groundwater has been encountered and it has not affected the development rate. Throughout the decline to this point, no structures have been encountered that could be interpreted as potentially interfering with mining conditions on the northwest dike.
The company continues commissioning the bulk sample plant. At the present time, processing of stockpiled kimberlite from the 1999 bulk sample is scheduled to begin the week of Aug. 14.
The board of directors of Winspear have approved a notice of change of information to the director's circular relating to this press release as well as to other matters. This notice of change to information will be mailed to shareholders and will be available on the company's Web site and on Sedar.
(c) Copyright 2000 Canjex Publishing Ltd. canada-stockwatch.com
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