FORT A LA CORNE FOREST --The buzz of activity at the Star Kimberlite project this year is a small sample of the economic spin-off that the diamond-bearing kimberlites 100 metres below the sandy forest here could provide Saskatchewan some day.
The kimberlite project, owned and operated by Shore Gold Inc. of Saskatoon is at the end of a long, winding and bumpy road through the sandy, scrub forest of Fort a la Corne, roughly 70 kilometres straight east of Prince Albert.
It provides a dramatic vista as visitors cross a small rise on the road and the Shore camp comes into view.
The camp consists of a small-scale mining operation, complete with head frame and winch buildings, a 200-metre-long Cover-All structure that houses the South African-built kimberlite processing plant as well as assorted outbuildings, kitchens, bunkhouses, and offices. They are all powered by a group of thirsty diesel generators.
It's an operation that will soak up about $8 million in investor dollars, a remarkable achievement for a Saskatoon-based junior mining company which still has some cash to spare and is now getting noticed on the world mining stage.
Shore's president and CEO Ken MacNeill -- raised in a family that has invested and led gold and diamond development for many years in Saskatchewan -- is obviously proud of what Shore has done with the kimberlite property it first staked out in the mid-1990s.
On a media show-and-tell trip this week, he explained how Shore, on its own, has been able to raise so much money and get a bulk sampling operation underway without losing control of the exploration play to one of the world's big diamond players.
"A lot of junior mining companies at this stage have already given up 51 to 60 per cent of the project," said MacNeill.
He says Shore will be recognized next week at a Vancouver mining show by the prestigious British based London Mining Journal for the work done so far.
"We're nominated for an exploration award so people are starting to recognize us outside of the country," he said.
The reason the bulk sampling effort is underway is to provide investors with a clear idea of what the real potential of Saskatchewan's huge kimberlites might hold.
MacNeill says the numbers that will come out of the bulk sample may well determine if the Star kimberlite -- as the company has dubbed its ancient underground volcanic formation -- becomes a giant open pit mine a couple of square kilometres in diameter.
If the diamond mines in the Northwest Territories are any indication, a similar mine could employ 500 or more people.
Shore's goal at this point is to have its bulk mining and processing done by mid-summer and then to have the evaluations completed and released by independent third parties before the end of the year.
Those numbers will include key determinants, such as the total number of macrodiamonds and carat weight of the stones extracted, the average carat value of the stones found, and the estimated grade per hundred tonnes of kimberlite.
"With a diamond mine, you can often have low values per carat but high grade," MacNeill said.
As his South-African born exploration vice-president George Read explains, there are many diamonds mines in the world that have high grades, but low carat values. And there are mines with low grades per tonne, but high carat values.
Either way, Read says those kimberlite deposits can become profitable working mines.
"You have these two factors -- value and grade -- and they can slide up and down," Read said.
The other question is mining costs. Large-scale open pit mines are cheaper to operate than underground.
"We are considering this would be an open pit operation. The method of removal of the overburden is similar to that used in the Alberta tar sands north of Fort McMurray. The technology exists for that.
"The mining costs for a bulk volume mine would be low."
Read stresses the high tonnage in the kimberlite could make Shore's deposit viable even if grades are low.
"We're standing on the cusp of results of finding what we think will be a fantastic deposit. These kimberlites are among the biggest in the world. If we can show that the rocks can be extracted and the diamonds recovered in an economic fashion, there could be enormous potential for this part of Saskatchewan."
Officials at Shore were careful this week not to leave the impression that getting a bulk sample of at least 3,000 carats out of perhaps 25,000 tonnes of kimberlite should be considered the end game for their huge investment in the company.
"We don't believe this is all or nothing," MacNeill said.
He says the part of the Star kimberlite being investigated this year probably represents 25 million tonnes of a 500-million-tonne deposit.
"Definitely, this is not a do or die for Shore Gold. We have several other (kimberlite) pipes we haven't worked on."
One of the key things that allowed Shore to go ahead with its project is backing from Magna Diamond Resources Ltd., a South African company which was issued a chunk of shares in Shore two years ago. That amounts to about seven per cent of the share float of the company.
MacNeill says Magna helped Shore in another way. It paid for half of the $3-million kimberlite processing plant on site that was shipped here last fall from South Africa, stuffed into 29 ocean-going containers.
MacNeill said the processing plant will probably be there for some time to come and he hints that it would be available for rent should another company working in the forest also be interested in doing a bulk sample.
The other company wasn't mentioned by name, but is undoubtedly the Fort a la Corne Joint Venture where diamond giant De Beers leads the exploration effort on a property that adjoins Shore's.
Some have speculated that a large open pit mine might include both Shore's large Star kimberlite and the adjoining 140/141 kimberlite in the joint venture lands owned by De Beers and its Canadian partner, Kensington Resources Ltd.
However, neither MacNeill and Read were willing to speculate.
"What occurs on the other side of the fence is rumour and hearsay," Read said with a grin.
However, he did concede that if the kimberlites on both sides of the property prove to be good diamond-bearing deposits there may be some reason for an alliance.
"We are looking at the Star kimberlite which, on its own and within the boundaries of our plans, has probably 500 million tonnes of rock which is more than enough for a mine," he said.
One of the things the Shore executives like to point out is the potential economic impact of a mine as well as the benefits accrued so far from the spending that has gone on.
MacNeill noted that almost all of the males in last year's graduating Grade 12 class at Choiceland's William Mason School have worked on the Star site.
Those young men signed on with a local company, T & P Enterprises Ltd., which is operating the heavy equipment on site and doing most of the surface work, including getting training from the South African engineers on how to run the kimberlite processing plant.
T&P co-owner Terry Doerksen says his company has done heavy equipment work for both Shore and other companies looking for diamonds in the forest.
"We had probably 40 people on staff last year," Doerksen said.
For MacNeill, hiring local is a top priority for the company. And he says the local area is rife with experienced people.
"Most people around here grew up on farms. They are very capable people who know how to drive most machinery," he said. "This project is successful in part because of our people and the resources of the local communities and the resources they have supplied to us.
"This is labour-intense and 80 per cent of our people are from Saskatchewan."
At the height of construction last fall, Shore had nearly 100 people on site, including its many contractors, as a 4.5 metre diameter shaft was carved through the 107 metres of glacial overburden.
These days, there are still about 40 to 50 people a day who work on the site on various shifts which go 24 hours a day, seven days a week.
The key contractor is Thyssen Mining Ltd. which has done work for many of the potash and uranium mines in Saskatchewan. Its people are experts in using the freeze-wall technology that was employed last fall to get through the 100 metres of soupy glacial till that sits on top of the kimberlites.
Thyssen currently has three shifts a week on site, blasting and mucking the kimberlite and sending it up in a two-cubic metre steel basket three tonnes at a time.
© The StarPhoenix (Saskatoon) 2004
Murray Lyons
The StarPhoenix
May 8, 2004 |
