Diamondex hopes diamonds are King
Thu 18 Apr 2002
Street Wire
by Will Purcell
The King property was an afterthought for several years, but the project
now ranks as the top play for Randy Turner's Diamondex Resources. The
company continues to plug away on a number of diamond fronts in Canada's
North, but for the second year in a row, Diamondex is expected to direct a
considerable amount of attention at King, which lies just to the north of
the Snap Lake property, originally owned by Mr. Turner's Winspear Diamonds,
but now being developed by De Beers.
Diamondex has plans to drill at least four targets on the King property,
after the company processed the results of a ground geophysical program
that had been conducted over 10 anomalies identified by an airborne survey.
The company is now completing a ground survey over an additional 10
targets, and Mr. Turner said that it was likely that a few more targets
would be drill tested this spring, as a result.
The initial four targets are believed to have created a bit of excitement
with Diamondex, and they have the freshly promotional Mr. Turner bubbling
with superlatives. The four targets display coincidental magnetic,
resistivity and gravity anomalies, and Mr. Turner reckons that all of them
are "extremely good" drill targets. He added that "one of them was
exceptional, a perfect looking target." That target is believed to have
topped the priority list of Diamondex because of the steepness of the
gravity anomaly, the depth of the water, as well as the magnetic and
resistivity signatures it displayed.
The pursuit of the more traditional geophysical targets is a bit of a
change for Diamondex, which had been devoting most of its attention on King
toward proving that the Snap Lake dike indeed extended northward onto
ground held by Diamondex. The Snap Lake dike surfaces to the west of Snap
Lake, and dips gently to the northeast, and it now appears to cover an area
about four kilometres square. The bulk sampling program conducted in 1999
by Winspear indicated a grade of about two carats per tonne, with the
stones valued at about $118 (U.S.) per carat. Diamondex knows nothing about
the value of the diamonds on the portion of Snap Lake that extends onto the
King property, but the diamond counts from a number of deep drill holes
into the dike returned diamond counts that seemed consistent and possibly
superior to the numbers obtained further south, by Winspear.
None of that may mean much for the current drill program, as all of the
drill targets could be entirely unrelated to the Snap Lake dike. Geophysics
never played a major role with Winspear, during its investigation of Snap
Lake, as the dike itself had no geophysical signature, due to its
flat-lying nature. The company did come up with one geophysical target at
Snap Lake that was worthy of drill testing, and it produced an interesting
result that might be a good sign for Diamondex.
Winspear poked two holes into the CL-186 anomaly in 1997, coming up with
intervals of about 100 metres that encountered a complex kimberlite
breccia. The material at the top had a modest diamond content, but the
portion of the kimberlite in the bottom regions seemed to produce diamond
counts that were fairly healthy, although the results from the Snap Lake
dike were roughly double what was obtained from the lower reaches of
CL-186. In all, about 78 kilograms of material produced 114 diamonds,
including 40 macro-sized stones, of which at least two were longer than one
millimetre, and the anomaly was a sign that there was more to Snap Lake
than just the dike itself.
It remains to be seen if the four drill targets on King have anything in
common with the Snap Lake dike, but they may well lie in a favourable area
on the property. Diamondex recently picked up a new property in the region,
just to the west of the existing King claims. Named Czar in deference to
Nikolai Pokhilenko, a Russian diamond expert who played a key role with
Winspear's exploration program through the mid-and-late-1990s, and now with
Diamondex, the new ground may well have been acquired due to the proximity
of the enticing new targets to the western boundary of King. Mr. Turner did
not say just where the four new holes would be poked, but he did state that
Diamondex had wanted to make sure that they were comfortable with their
land position.
If the drill targets are on the western half of the King property, they
could lie in a region that Diamondex suspects that the source of Snap Lake
might lie. The initial work to find an extension of the dike assumed that
the main portion of the kimberlite continued to dip northeastward, toward
the southeastern corner of the King property, but holes in this area did
not come up with much to get excited about. Meanwhile, holes further to the
west were more encouraging, and the result suggested, to Mr. Turner at
least, that the main portion of the Snap Lake dike took the shape of a
crescent moon, first running northeastward, away from the outcrop on the
northwest peninsula of Snap Lake, then northward across the north shore of
the lake, then curling northwestward across the southern portion of King,
as it spirals down to greater depths. (Any similarity to the John F.
Kennedy assassination bullet is purely coincidental.)
All of that has Mr. Turner quite confident that they have a good idea of
roughly where the ultimate source of the Snap Lake kimberlite might be
found, and Diamondex had apparently narrowed down the area to a region on
the northwestern quadrant of the King property. The degree of confidence
apparently hinged on the results of three more drill holes that the company
had planned however. The results of those holes appear inconclusive
however, especially since the hole furthest to the northwest had to be
abandoned before it encountered kimberlite.
In any case, none of that suggests that any of Diamondex's drill targets
will actually prove to be the source of the Snap Lake kimberlite, but Mr.
Turner said that it was possible that there could be some sort of
relationship between at least one of the anomalies and the dike, adding
that only drill testing would tell for sure.
The possibility of finding a kimberlite on King has Diamondex spending a
significant amount of cash on King for the second year in a row. The
company spent close to $5-million on the property last year, including more
than $3-million on drilling the deep holes. Mr. Turner believes that his
search for the extension of the dike paid off, but the market had high
hopes that the King program would produce instant results. Diamondex shares
climbed from less than 60 cents as the summer of 2000 began, hitting a high
of $2.60 just two months later, long before drills began turning on King,
but the stock again dipped below the 60-cent mark last fall, as the
kimberlite intersections proved to be too thin to arouse the market and a
number of speculators proclaimed the hunt a failure.
The initial plan for this year called for another $500,000 to be spent on
King, but with the round of drilling now in the works, the budget is
expected to grow significantly. It was not always that way however.
Winspear picked up the King property in the mid-1990s, and it promptly
spent about $150,000 on exploration, including an airborne geophysical
survey and a small till sampling program. By the summer of 1996, Winspear
had drilled one hole on King, but it was on a base metal target that came
up empty. After that, things slowed down, as Winspear's Snap Lake play took
shape and claimed priority.
King was one of the properties that Winspear spun off to Diamondex on the
spring of 1999, in what proved to be a fortunate move, with the hostile bid
for Winspear by De Beers a little more than a year off. The bouncing baby
Diamondex began life with a number of prospective diamond plays, but King
was not high on the list. By the end of 1999, a total of just $250,000 had
been spent on the property in four years, but things picked up in 2000, as
Mr. Turner began to direct his attention further to the north, after the
bid for Winspear by De Beers was successful. Still, Diamondex spent only
$130,000 on exploration that year at King. The situation is much different
today, on what Mr. Turner now describes as his company's top priority, and
its major asset.
Several Diamondex drills will be turning this spring, and the King property
is just one of several that could have at least one hole poked into a
potential kimberlite this spring. The company will drill four priority
targets on the Bear Head property, which is located immediately south of
the Snap Lake block held by de Beers. The property was acquired by
Diamondex a little over a year ago, and it flew a high-resolution
geophysical survey last year. These will be the first holes Diamondex will
have drilled on Bear Head.
The company may soon decide to drill a few holes into the Kelsey property
as well. Diamondex is partners with Tyler Resources on Kelsey, which lies
immediately east of the Gahcho Kue project of Mountain Province Diamonds
and De Beers at Kennady Lake. Three potentially economic kimberlite pipes
have been found at Kennady Lake, and several other smaller bodies with
potentially healthy grades have been discovered along a northeasterly
trending line that lies just west of the border with the Kelsey property.
Diamondex is believed to be considering a drill program on Kelsey,
depending on the results of its preliminary exploration, and Mr. Turner
said that any plans for drilling could be made later this week. The company
identified 15 priority drill targets last spring, but it managed to drill
only two of them before spring breakup. Neither of the targets proved to be
kimberlites, and Diamondex apparently went back last summer, collecting
more till samples to help it prioritize its targets in what is generally
considered a complex area to explore.
Things are progressing slowly on the Peregrine property, in the developing
Coronation diamond district. The company completed a geophysical survey
over its ground, but the results are not expected for another few weeks.
Mr. Turner said that the work in the Coronation region was taking longer
than expected, apparently due to logistical problems. Although the final
results are not yet available, Mr. Turner said that the preliminary
information looked encouraging, although he was noncommittal about a spring
drill program. Diamondex does have cash allotted for a drill program at
Peregrine this spring, and drilling could well be possible on the ice into
early June, which is perhaps the one advantage to the more northerly
location of Peregrine.
Meanwhile, the initial exploration of the new Czar property has begun, with
an airborne geophysical survey now under way. That will most likely be
followed by a till sampling program this summer, again led by Mr.
Pokhilenko. With Czar and Bear Head, as well as the earlier acquisitions of
King, Hilltop and Athenia, Diamondex has the Snap Lake property of De Beers
all but surrounded, and the market continues to hold hope that Mr. Turner
can make a second big find in the area. As a result, Diamondex has
recovered from its October low of 50 cents, closing Wednesday up four
cents, at $1.14. |
