CVV-v...in the news:
CanAlaska explores for new plays
Mon 14 Jan 2002
Street Wire
by Will Purcell
Always on the prowl for a stake in a hot neighbourhood, Harry Barr's
CanAlaska Ventures Ltd. is currently negotiating to acquire a 100-per-cent
stake in a small property in the Otish Mountains area of Northern Quebec.
As well, the company is believed to be poking around the fringes of the
North Slave diamond play in Nunavut. The mere suggestion that CanAlaska
might have diamond projects in two hot regions of Canada has certainly
revived the company's sagging fortunes. The stock had been trading for as
little as seven cents in late November, but CanAlaska rallied to a high of
29 cents to start the new year.
An active exploration program on two hot new properties might do wonders
for the junior explorer, but there are no sure signs that the company will
actually launch a major work program on any new properties, even if it does
make an acquisition or two. Over the past year, CanAlaska actively jumped
onto a number of diamond bandwagons in other districts that were showing
signs of attracting the interest of speculators, but actual work has been
lagging behind the frantic pace of acquisitions.
Mr. Barr has been president of CanAlaska since the mid-1980s, and his
company had shown no real interest in diamond exploration until recently.
Mr. Barr is also an active participant with several other junior explorers,
but none of those companies displayed much interest in diamonds, preferring
to hunt for gold and precious metals. As a result, it was a bit of a
surprise last March, when CanAlaska found the need to engage the services
of Felix Kamensky, a Russian diamond consultant who has been called upon
frequently by a number of Canadian juniors.
Within days, CanAlaska had its first diamond play, in the Attawapiskat
region of Ontario, an old area that was again attracting a fair bit of
interest, thanks to a bulk sample being taken from the Victor pipe by De
Beers. The South-Africa-based diamond company had been poking around
Northwestern Ontario since the 1980s, and it had more than a dozen
kimberlites to show for its effort. The best of the lot was Victor, and the
company decided it warranted a larger sample. Little is known about the
results of the program, although the pipe is rumoured to have a rather low
grade but a healthy diamond value. De Beers now says that its Victor
program did not produce results warranting a feasibility study, but the
numbers were apparently good enough that the company plans to keep trying.
The glory days for the Attawapiskat region occurred in the mid-1990s, when
KWG Resources and Spider Resources tested a series of kimberlite
discoveries about 100 kilometres to the west of the Victor pipe. Two of
those finds warranted additional testing, and the Kyle-1 kimberlite was a
favourite of speculators for a time, until larger samples suggested that
the kimberlite was not likely to be economic. A series of smaller tests
recovered an abundance of microdiamonds and smaller macro-sized stones, and
kimberlite samples weighing about 10 tonnes yielded about six carats of
microdiamonds and macrodiamonds. The result was good enough that Ashton
Mining of Canada joined the play for a time. The company took a 1.8-tonne
sample, looking for macrodiamonds, but the result was sufficiently poor
that Ashton walked away. Only six stones were recovered, and the indicated
grade was apparently less than 0.10 carat per tonne.
Spider and KWG kept at it for a time, but the Attawapiskat play fell out of
favour with speculators, until the De Beers program gave the project new
credibility. That attracted new players to the region. Navigator
Exploration and Canabrava joined forces early last year, and their
exploration program quickly turned up a kimberlite. The partners sent about
261 kilograms of kimberlite from the AT-56 kimberlite off for processing,
but just seven microdiamonds were recovered. That turned out to be the only
real news from their exploration program, which saw Navigator spend in
excess of $1.75-million. Nevertheless, the Attawapiskat project was good
news for Canabrava and Navigator shareholders, as their company's shares
doubled in the early days of their exploration program.
All of that was sufficient to entice CanAlaska into the region. The company
can acquire an 80-per-cent interest in the Fire River property, by paying
$100,000 in cash and issuing 400,000 shares to a private Alberta-based
company, and by spending $1.1-million on exploration over a three-year
period. Curiously, the new project was not received well by CanAlaska's
shareholders. The stock had rallied from 25 cent to a high of 50 cents in
early March, but the move to diamonds seemed to usher in the beginnings of
what was to become a nine-month slump.
In any case, there seemed to be little fire in the company's plans for Fire
River. CanAlaska has been making its option payments on schedule, but
through the spring and summer, the company managed to spend just $16,647 on
geophysical work.
Just a month after landing the Attawapiskat property, CanAlaska jumped onto
the Wawa bandwagon, which was actively being promoted as a hot new play.
Band-Ore Resources and Pele Mountain Resources were both active explorers
in an area just north of Wawa, and Pele Mountain was the first to complete
a small mini-bulk sample. That program did not result in a toutable diamond
grade, but it did produce a 0.10-carat stone, which was encouraging. In
June, that was topped by a 0.254-carat stone that was recovered by
Band-Ore, in a mini-bulk program that resulted in a modest indicated sample
grade of about 0.05 carat.
The Wawa play was another favourite of the market, through the first half
of last year. Band-Ore shares jumped from about 30 cents to nearly $1.20,
and Pele Mountain also provided a wild ride for speculators as well. As a
result it was no great surprise that CanAlaska chose to make an acquisition
in the Wawa area. In April, the company acquired a 100-per-cent stake in
the Mantle Lake property, located about 55 kilometres to the northeast of
Wawa, from a private, Alberta-based company.
The Mantle play was off and running before CanAlaska arrived on the scene.
A logging road had just been constructed through the property, which
resulted in the discovery of kimberlitic boulders and outcrops. A
47-kilogram sample of kimberlitic rock had produced a macrodiamond large
enough to remain on a 1.5-millimetre mesh, which was an encouraging
development.
Despite that find, work at Mantle Lake has been limited this year.
CanAlaska did a minor amount of poking around in the early spring, and the
company laid plans to conduct a sampling program based on its findings.
Helping things along was the fact that an airborne geophysical survey had
been completed over the property and the available information indicated
that a number of circular magnetic anomalies were present. Nevertheless,
CanAlaska has been plodding along slowly, spending just $32,918 on general
exploration through to the end of September.
The snail's pace at Wawa did nothing to stop the slide in CanAlaska's share
price, but the company was quick to strike again, in another developing
region. In late April, the company struck a deal that would allow it to
acquire a 100-per-cent interest in a 50,000-hectare property located in
Manitoba, about 120 kilometres to the southeast of Gillam. The region had
attracted a number of explorers in recent years, including De Beers, BHP
Billiton and Kennecott Canada.
Several junior explorers also flocked to the region as the play began to be
noticed by analysts and the press, and CanAlaska quickly landed its third
diamond project. The Starlight property was hardly a burden on the
company's treasury, as CanAlaska is required to pay just $25,000 and issue
200,000 shares to earn its interest. The company did not go it alone for
long however. In October, Valerie Gold Resources made a small payment to
CanAlaska and agreed to spend $1-million over the next several years in
order to earn a 60-per-cent stake in the property.
Although there was not much of any good news from the Manitoba diamond play
last year, CanAlaska seemed to be more active on the Starlight property
than it was elsewhere. The company managed to spend about $60,000 on the
property prior to the Valerie deal, and an airborne magnetic survey was
completed during the fall, on Valerie's tab. That work produced 14 of what
are described as isolated, circular or ellipsoid features. Such anomalous
magnetic features are often kimberlitic in nature, but in Northern Manitoba
they could be anything. Valerie continues to examine the data, and a ground
program is planned for the coming months.
If CanAlaska manages to land properties in the Otish Mountains and Nunavut,
it would bring its number of diamond plays to five. The focus on diamonds
would seem to represent a major departure from the company's past, although
jumping on a hot play has always been the company's style. In the
mid-1990s, CanAlaska was active in the Voisey's Bay play, chasing after
nickel in the wake of the big strike by Diamond Fields Resources. The
company was quick to acquire ground in the area, and the frenzy drove
CanAlaska shares from pennies to a high of $2.70 in the spring of 1995.
That bubble burst and a share could be had for less than 50 cents before
the year was out, but early in 1996, the company joined the Indonesian
play, hot on the heels of the supposed Bre-X discovery in the Busang
region. The hype surrounding the Indonesian play sent CanAlaska shares back
close to the $2 mark, but once again, a share could be had for about 50
cents late that year. Bre-X blew up in investor's faces early in 1997, but
CanAlaska just moved on to other plays. Early in 1998, the company acquired
an interest in a Mexican base metal play, following a discovery by Western
Copper and Teck. Later, a good drill hole by Nuinsco Resources drew the
company to the Lac Rocher area of Northern Quebec. None of those later
moves seemed to excite speculators, as the Bre-X scandal had taken the
bloom off the exploration rose. Late in 1998, a CanAlaska share could be
had for just nine cents, and it was time for a hot new play.
In the spring of 1999, CanAlaska seemed poised to abandon the resource
sector and commence mining the high-tech sector. Once again, the company
seemed to be making the right move at the right time, but a series of
attempts to enter the technology field did not pan out. Late in 1999, the
company's shares were trading for just six cents, and the company
consolidated its shares on a 1 for 5 basis.
It did not help matters. Early in 2000, CanAlaska made an investment in
WebDispatchers.com, a company offering software to couriers, and another in
Chris Bunka's NewsGurus.com, which was offering news and investment
commentary through the Internet. The deals helped CanAlaska's consolidated
shares struggle back above the $1 mark in the spring of 2000, but by then
the high-tech frenzy was fading rapidly.
CanAlaska threw more than $500,000 at WebDispatchers, but continuing losses
forced the company to write off nearly all of its investment last year.
CanAlaska also walked away from its acquisition of NewsGurus late in 2000,
after making an initial investment of about $300,000 to acquire 675,000
shares of the company. Those shares were worth just $70,000 last month, but
their value has quadrupled since a decision by the head gurus at NewsGurus
to abandon news and opinions for biometrics, aircraft security and
aerospace. With interest in the latest high-tech schemes all but dead and
its stock trading for less than 20 cents late in 2000, it was no surprise
that CanAlaska would be looking for a hot new bandwagon to climb aboard.
That new bandwagon is diamonds. Although the company's first three
acquisitions did little for its share price, just the suggestion of an
acquisition in one of the current hot plays has had a significant impact of
late. That could continue, if the company actually follows through on its
plans to become a diamond explorer. CanAlaska closed down one cent Friday,
at 23 cents.
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