Author: WillP -- Date:2001-09-07 06:47:16
Subject: Street Wire
MAJOR GENERAL SOLDIERS ON AT VICTORIA ISLAND
by Will Purcell
It has been two years since the diamond counts from the last core samples taken from the Snowy Owl pipe were returned and about 19 months since De Beers walked away from its option deal on the Victoria Island diamond play, but Major General Resources Ltd. is still not yet ready to throw in the towel just yet. The company hopes to renew speculative interest in the play, and perhaps mount a new drilling program, but the company's nine-cent share price would seem to suggest that promoting the Arctic diamond project could be a tall order.
Nevertheless, Major General seems eager to give it a try. In all, Major General spent about $330,000 last year, in its attempt to resurrect the Washburn Lake project that it shares with Ascot Resources Ltd. A portion of the cash was spent on a magnetic survey and till sampling, but some of the money was used to obtain more diamond counts from the Snowy Owl kimberlite find, as well as a new kimberlite dike that was discovered last year.
The company laid its hands on some Snowy Owl drill core that De Beers had drilled back in 1999, and sent it for processing. About 195 kilograms of rock was sent for microdiamond recovery, but at least 25 per cent of the weight is believed to have been country rock, not kimberlite. If so, the actual weight of kimberlite may have been around 145 kilograms.
Those latest samples yielded 132 diamonds. Of those, just 10 were large enough to be considered macro-sized stones, with at least one dimension measuring longer than 0.5 millimetre. There were some larger macros present, however. Several of the diamonds were longer than one millimetre in length, and one of the diamonds was 1.2 millimetres long, and it apparently exceeded one millimetre in all three dimensions. If so, the stone probably weighed about 0.01 carat, approaching a commercial weight.
The diamond counts from the first samples from Snowy Owl were received in the fall of 1998, and they created a bit of a stir, despite the relatively modest number of stones recovered. The initial batch weighed 80 kilograms, and it contained 75 diamonds. A further 15 stones were recovered from an additional 8 kilograms, bringing the tally to 90 diamonds in 88 kilograms of kimberlite.
That worked out to just over one diamond per kilogram, which was enough to attract interest and carried Major General's shares to a high of 38 cents late in 1998, as speculators seemed willing to overlook the small size of the stones. All of the diamonds were smaller than 0.5 millimetres, and just two of the diamonds were large enough not to fall through a 0.3-millimetre mesh. A majority of the diamonds were tiny indeed, as 51 of the 90 stones were sufficiently small to pass through a 0.105-millimetre screen. Just 16 stones were large enough to be collected on a 0.15-millimetre mesh.
De Beers went back the following year and collected a larger sample. The company sent about 438 kilograms of rock off for diamond recovery, and the results seemed roughly similar. Batch 99-127 weighed 176 kilograms and 180 diamonds were recovered, while batch 99-129 weighed 154 kilograms and contained 83 stones, and a further 20 kilograms in batch 99-101 contained just one stone.
The most diamonds came from batch 99-128, which weighed 88 kilograms and contained 526 stones. A total of 417 of those diamonds were contained in one 20-kilogram sample, and the stones are believed to have been fragments of a larger diamond.
The possibility of a larger diamond notwithstanding, the remaining diamonds in the Snowy Owl samples appeared to be quite small, for the most part. Just four of the 373 other stones were large enough not to fall through a 0.5-millimetre mesh.
When all was said and done, De Beers had processed about 526 kilograms of Snowy Owl core, and they apparently recovered just four stones large enough not to fall through a 0.5-millimetre mesh. By then, many speculators had had enough, and Major General's shares dropped on the result. The stock closed at 21 cents prior to the news, but dropped to a low of 12 cents in the days following the disclosure of the less than spectacular diamond counts.
The latest numbers from Snowy Owl do seem to present a slightly different picture of the diamond content of the kimberlite. In all, the samples weighed a total of about 720 kilograms, and the rock contained a total of 505 diamonds, not counting the 417 fragments. The exact number of macro-sized stones or one-millimetre diamonds was never revealed, but a reasonable guess can probably be made.
Information from other deposits would seem to suggest that the number of diamonds larger than a set length in one dimension is from two to five times larger than the number of stones larger than the same length in all three dimensions. As a result, there may have been about 25 macrodiamonds among the 505 diamonds. Perhaps five of those stones exceeded one millimetre in one dimension.
Although there never was much made of the matter in the past, Major General now touts its diamond counts as indicating that there are low, medium and high counts present in three different phases of kimberlite in the Snowy Owl pipe. That might well be the case, based on the latest results, which clearly indicated a somewhat greater number of larger diamonds than had the earlier results.
There may have been as many as five one-millimetre stones in the latest samples, and the 500 kilograms of earlier samples may not have contained any such diamonds. Whatever the actual counts were, it does seem certain that the latest samples were more encouraging than the initial results.
Unfortunately, Major General is not able to make any preliminary guesses about the different grades across the different phases of kimberlite. The company apparently separated its latest samples based on phase, but the processing laboratory combined the samples, making any separate calculation impossible without further drilling. That would seem to indicate that Major General is wistfully contemplating having another go at Snowy Owl, especially since only the western portion of the kimberlite has been drill tested.
Snowy Owl was not the only Victoria Island kimberlite to produce diamond counts this year. Major General also scraped about 77 kilograms of kimberlite from the Ptarmigan dike, which was exposed last year. A total of 45 diamonds were recovered, and five of the stones were considered to be macros, with one dimension larger than 0.5 millimetre. The result seems roughly similar to the Snowy Owl counts, although the total diamond content may be somewhat less.
Several additional kimberlites had been tested during the height of the interest in the Victoria Island play. Although Snowy Owl was considered to be the best of the lot, the largest diamond in the initial samples actually came from the Longspur kimberlite. Samples of kimberlite from Longspur weighing a total of 90 kilograms yielded 39 diamonds, and one of those stones was large enough not to fall through a one-millimetre screen. A second diamond was sufficiently large enough not to pass through a 0.5-millimetre mesh. Nevertheless, most of the Longspur diamonds were tiny. All but 13 of the stones were sufficiently small that they would fall through a 0.15-millimetre mesh.
At least two additional macros were recovered from a third kimberlite. About 180 kilograms of rock from the Golden Plover kimberlite contained just 44 diamonds, and two of the stones did not pass through a 0.5-millimetre screen. Two other stones did not fall through a 0.3-millimetre mesh.
Two other kimberlites were also tested, but the diamond counts were minimal. Samples of kimberlite weighing 180 kilograms were collected from the Phalarope body, but only six tiny macrodiamonds were recovered. Just one stone was recovered from a 180-kilogram sample of kimberlite taken from the Whimbrel body.
The modest counts at Longspur, Golden Plover and Phalarope were deemed by De Beers to be of sufficient interest to warrant more work, but in the end the company did not do much additional work on the kimberlites. Early last year, De Beers decided not to renew its third year option on the project, walking away from the Victoria Island play after spending about $1.3-million on the play.
In order to continue, De Beers would have been required to spend a further $885,000 last year in order to earn its interest. The departure of De Beers left Major General with a 52-per-cent share in the Washburn project, with Ascot Resources Ltd. holding the remaining share in the 72,000-hectare property.
Meanwhile, Major General remains hopeful that additional targets will prove to be diamondiferous kimberlites. The company completed an aeromagnetic survey over about 9,000 hectares of the property, over a region just to the west of the cluster of pipes around the Snowy Owl pipe. One dozen new near surface magnetic anomalies have been identified as a result of this latest work, bringing the total number of untested anomalies to 17. The company also draws encouragement from the fact that a number of indicator minerals have been found that have not been traced to known kimberlites. About 150 till samples yielded approximately 360 kimberlite indicator minerals, of which about 40 per cent were believed to have originated from Snowy Owl. The remaining 206 indicator minerals apparently originated from kimberlites that have not yet been found. The Washburn play represents only a small fraction of Major General's Victoria Island diamond play. The company has a large property optioned to BHP-Billiton Ltd. through a deal that originally had been signed by Dia Met Minerals Ltd. Dia Met spent about $1.5-million on the 500,000-hectare property, largely on detailed magnetic surveys, till sampling, surface mapping and processing the 1999 till samples. Results of that work are still outstanding.
Hawkeye Gold International Inc. holds an option on the 40,000-hectare Yankee property, and the company spent about $200,000 on a magnetic survey and still more till sampling. The results of that work are still not available.
In the meantime, investors do not appear to be holding their breath for promising news from Victoria Island, due to the remote location of the play and the modest diamond counts from several kimberlites in the area. To be economic, a Victoria Island diamond deposit would probably have to be rather large and have a fairly high grade, due to high capital and operating costs in the area.
Major General was last a two-bit stock last September, but the company's shares have been mired in a narrow range just below the 10-cent mark for most of the past year. The sad little soldier closed down one cent on Wednesday, at eight cents, where it remained Thursday. (c) Copyright 2001 Canjex Publishing Ltd. |
