Diamonds North gets busy up North
Diamonds North Resources Ltd DDN
Shares issued 13,047,885 Aug 7 close $0.77
Fri 8 Aug 2003 Street Wire
by Will Purcell
Diamonds North Resources Ltd. seems headed for its busiest summer yet on Victoria Island, with the help of a new partner, Teck Cominco Ltd. Teck has an option to earn a stake in the Blue Ice portion of the Victoria Island
diamond play, about 200 kilometres northwest of Cambridge Bay and
approximately 400 kilometres to the north-northeast of the core region of the North Slave diamond district on the mainland of western Nunavut. Diamonds North now has partners for all but its Hadley Bay ground, and the company and its various partners have plans to spend several millions of dollars on exploration this year. That work should provide a clearer picture of the potential of the diamondiferous kimberlites on Victoria Island, especially on the Blue Ice portion of the play. De Beers had been a big believer in the merits of the Victoria Island diamond hunt through most of the 1990s, and Chuck Fipke's Dia Met Minerals Ltd. took up the challenge in the late 1990s on ground owned by Major General Resources Ltd., which is now known as Commander Resources Ltd. The company spun off its diamond projects to what was aptly dubbed Diamonds North, and the new company promptly appointed Mark Kolebaba, a former BHP senior geologist, as its president. Victoria Island seemed a tough sell, as De Beers had called it quits. So did BHP Billiton, which had acquired Dia Met's option through its takeover of the company in 2001. Nevertheless, Mr. Kolebaba and Diamonds North set to work last year, and in September, a 6.49-kilogram batch of kimberlite from an old find managed to produce enough hope to trigger a new surge of speculative attention. Although subsequent batches of kimberlite from that find failed to match the initial result, there has been enough in the way of encouragement from other bodies to sustain the Victoria Island promotion through the long Arctic winter. Mr. Kolebaba knows a few things about diamonds. He has been involved with diamond exploration since the early 1990s, although he had a rather unusual introduction to the pursuit of gems. He began working for BHP in the early 1990s, although his primary focus was gold and metals. He was involved in exploring the Boston gold deposit, a part of the Hope Bay gold project that was owned by BHP at the time. Mr. Kolebaba first heard of the diamond play at Exeter Lake, well to the southwest of Hope Bay, when he was giving a tour to a group of BHP executives. Mr. Kolebaba was intrigued by the new play, but BHP's diamond division was
not in a hiring mood, so he decided to part company with the
Australia-based major and begin his personal diamond hunt in the Guaniamo region of Venezuela. South America, primarily Brazil, has been well known as a source of alluvial diamonds, but coming up with primary sources of the gems has been a much tougher proposition. Nevertheless, there were several kimberlite dikes discovered in the Guaniamo district. A number of them were significantly diamondiferous, but the bodies were apparently too small and shallow to be mined. Nevertheless, the Guaniamo job gave Mr. Kolebaba enough experience that BHP Diamonds hired him around the time that it was opening its office in Kelowna. With BHP, Mr. Kolebaba worked extensively on the Ekati project, helping with the discovery of several kimberlite pipes and with the Ekati mine feasibility study. As well, Mr. Kolebaba managed BHP's diamond hunt in Eastern Canada. Mr. Kolebaba left BHP and Kelowna in the spring of 2002 to take the top job at Diamonds North. That took the Regina-born Mr. Kolebaba farther west to Vancouver, while his diamond focus seemed to shift farther to the north, to Victoria Island, about 600 kilometres north of the Ekati mine. Since then, Mr. Kolebaba has been a big booster of the Victoria Island diamond hunt, despite the meagre results that had been obtained by Major General and De Beers through the last decade. Most of the initial finds were sampled with just one hole, which provided kimberlite samples that Mr. Kolebaba believes were too small to do the project justice. There are signs of encouragement that he could be right. Surface sampling through the years has produced an array of kimberlite indicator minerals that attracted De Beers, as well as a number of former employees of the diamond giant who are now running their own junior explorers. Mr. Kolebaba said that there was a good peridotitic signature to the minerals, with a "very nice high-chrome portion," but it was the eclogitic signature that seems paramount, which he described as being "as good as it gets." Mr. Kolebaba and Diamonds North hope that all that adds up to two mantle sources of diamonds. Mr. Kolebaba said that eclogitic diamond deposits could be quite enriched, although he added that they were not well understood. Mr. Kolebaba has had a good opportunity to become familiar with eclogitic deposits through the years however, as he has worked with both peridotitic and eclogitic deposits. Although most of the Ekati pipes are thought to be dominated by peridotitic diamonds, the diamonds in the rich pipes to the southeast, including Ekati's Misery and the four Diavik pipes, are largely eclogitic. As well, the Guaniamo dikes are thought to contain diamonds almost entirely from an eclogitic source. Victoria Island lies on an Archaean-aged craton, and its cool geotherm of about 38 milliwatts per square metre is quite favourable for diamonds. The value compares well with the 40 milliwatts per square metre on the Kaapvaal craton in the southern part of Africa, which covers much of South Africa and Botswana. The Slave craton, which hosts the Ekati and Diavik mines, lies on a geotherm of about 37 milliwatts per square metre, while parts of the South Slave, near Snap Lake, are thought to be significantly cooler, with a geotherm as low as 31 milliwatts per square metre. Age can be another influence, and more work will have to be done on Victoria Island for Diamonds North to zero in on the optimum age for its kimberlites. In many kimberlite clusters, the bodies with the highest diamond content have a roughly similar age, while nearby barren pipes are often significantly older or younger. So far, all of the Victoria Island pipes are believed to be just a bit over 250 million years old, although Mr. Kolebaba said that more work was required on that front. At this stage, the oldest Victoria Island kimberlite erupted about 286 million years ago, while the youngest occurred roughly 257 million years ago. Diamonds North and Teck are working on a three-stage program on Blue Ice this year. The first phase has the partners taking more material from the existing kimberlites. Those samples will likely weigh in the order of a few hundreds of kilograms, far too small to be considered even a tiny mini-bulk test, but large enough to beef up the microdiamond parcels sufficiently to allow a few conclusions about the size distribution of the stones, as well as perhaps providing a few vague notions about the diamond content within the body. That would be an important next step for the play. Mr. Kolebaba said that about 225 kilograms of split core had been extracted from Snow Bunting, and about 125 kilograms had been recovered from Sandpiper East, and a number of other kimberlites will be tested. Mr. Kolebaba said that the company's strategy is to get enough material from several kimberlite finds to provide those first clues, rather than concentrating its drilling efforts on one or two deposits. Mr. Kolebaba said that the company had to drill enough kimberlites to give itself a chance. "It is a numbers game, both in the amount of material that you sample, but also in the number of kimberlites you test," he added. The second phase of work this summer will have Diamonds North and Teck test some new targets, primarily on the Northwest Territories side of the property. At least two of thee targets have yet to be tested, but one of the drill targets is already known to be a kimberlite. The size of the anomaly has prompted the partners to take a new look at that old find. The Snow Goose body was discovered in 1997 by De Beers, and it was never extensively sampled. There is a dike that is associated with Snow Goose, and De Beers processed just 151 kilograms of kimberlite from the Gosling dike. About 55 diamonds were recovered, including a 0.23-carat stone, which makes a closer look at both Gosling and Snow Goose an interesting proposition. One of the benefits of the Teck deal is that the remaining portion of the Blue Ice property will get a good look starting his year. About 75 per cent of the property remains relatively unexplored. There was a magnetic survey flown over the property in the early years, but that was at a resolution of 250 metres, and many smaller features would elude detection, and larger ones could easily be missed as well. Diamonds North and Teck will be fling a lower-level geophysical survey using a helicopter, at a resolution of about 100 metres or 125 metres. That work will be followed by a sampling program in the area covered by the new geophysical data. As well, there are a number of indicator mineral anomalies that were found in the area covered by the current airborne survey. Mr. Kolebaba said that Diamonds North did not know what the source of those minerals was, and the chemistry of the minerals is different from what had been discovered to date. As a result, there will be a detailed geophysical program conducted over those areas, in an attempt to find the source of the mineral anomalies.
Mr. Kolebaba said that the partners had been playing around with
ground-penetrating radar over the Galaxy structure, which hosts a number of kimberlite bodies with potentially coarse diamond size distribution curves. The radar program seems to have a good shot at determining the areas with shallow overburden, which will make trenching and taking still larger samples an easier proposition. Mr. Kolebaba said that the system found the permafrost layer very easily, and he thinks that they can see the bedrock interface. As well, the ground-penetrating radar was run over known kimberlites as a baseline, and it may prove beneficial in identifying new kimberlites in other areas. Mr. Kolebaba's Victoria Island diamond promotion continues to attract notice, thanks to a number of sample results from the Galaxy structure last year. Most of the samples contained just a modest number of microdiamonds, but it was the presence of some larger stones in a number of kimberlites that continued to catch the market's eye.
The 6.49-kilogram batch of kimberlite that initially revived the
speculative interest in the Victoria Island play came from Sandpiper. Although two larger batches failed to match the numbers, the cumulative sample of 245 kilograms still seems intriguing, and a larger sample should help to refine the size distribution curve somewhat. One of the best of the Galaxy results came from a find made last year by Diamonds North, however. The Sculptor kimberlite provided a 209-kilogram sample, and 254 diamonds were recovered. Just over one-quarter of those stones were large enough to remain on a 0.30-millimetre mesh, and over 13 per cent clung to a 0.425-millimetre screen. Those proportions supported a coarse diamond size distribution curve, as did the recovery of four diamonds large enough to remain on a 0.85-millimetre screen, which is the typical cutoff that is used in mini-bulk tests. Those four stones may have weighed about 0.05 carat in all. Those results are enough to warrant another test of Sculptor, which apparently is in the works. After trading just above the 30-cent mark last summer, the renewed interest in the Victoria Island play sent Diamonds North's stock to a peak of 95 cents by early this year, and the company's shares have remained above the 60-cent mark since then, despite a lack of hard diamond news through the long winter and spring. The recent activity has sparked a modest new rally of late. Diamonds North gained a penny on Thursday, closing at 77 cents.
(c) Copyright 2003 Canjex Publishing Ltd. stockwatch.com
Click here for company snapshot:
new.stockwatch.com
Click here for recent SEDAR documents:
new.stockwatch.com |
