Hello Ted
I just reread Sedar's latest info on MTX and SRM and thought that it might be of interest. I've highlighted a few key points in each document:
METALEX VENTURES LTD.
FORM 51-102F1
MANAGEMENT DISCUSSION AND ANALYSIS
QUARTER ENDED OCTOBER 31, 2004
The following discussion and analysis, prepared as of December 19, 2004, should be read together with the unaudited financial statements for the quarter ended October 31, 2004 and related notes attached thereto, which are prepared in accordance with Canadian generally accepted accounting principles. All amounts are stated in Canadian dollars unless otherwise indicated.
The reader should also refer to the annual audited financial statements for the years ended April 30, 2004, April 30, 2003 and 2002, and the Management Discussion and Analysis for those years as well as the unaudited accounts for the quarter ended July 31, 2004 and the Management Discussion and Analysis for that quarter.
Statements in this report that are not historical facts are forward-looking statements involving known and unknown risks and uncertainties, which could cause actual results to vary considerably from these statements. Readers are cautioned not to put undue reliance on forward-looking statements.
Additional information related to the Company is available for view on SEDAR at www.sedar.com.
Description of Business
The Company's principal business activity is the acquisition, exploration and development of mineral properties for diamond mineralization and it is considered to be at the exploration stage. The Company has not yet determined whether the properties contain ore reserves that are economically recoverable. The recoverability of the amounts shown for mineral properties and
related deferred exploration costs in the financial statements are dependant on the existence of economically recoverable reserves, the ability of the Company to obtain necessary financing to discover and complete the development of those reserves and upon future profitable production. The Company trades on the TSX Venture Exchange under the symbol MTX.
The Company’s main areas of work are the Attawapiskat area in Northern Ontario where the Company has a 60% contributing interest in the James Bay Joint Venture; and, subject to an agreement executed on September 21, 2004, a 50% contributing entitlement in the Dumont Joint Venture. In Quebec the Company has a 33.3% contributing interest. The Company also explores in the Northwest Territories, Canada where it has rights to 27 claims; in the Kyle Lake area in
Ontario where it has an 80% interest in 44 claims; in the Republic of Mali; in Morocco where is has an agreement covering 13,500 km2; in the Umiiviit area West of Greenland where it owns an exploration licenses covering 751 km2 and in Angola where it has certain rights for alluvial diamonds in a 3000 km2 concession.
Performance Summary
The following is a summary of significant events and transactions that occurred during the period:
Private Placements
No private placements were made during the quarter.
The reader is referred to the Management Discussion and Analysis for the year ended April 30, 2004 for details of private placements made during fiscal 2004.
Attawapiskat Property, Ontario
Agreements:
During fiscal 2002, the Company entered into an agreement to acquire an interest in various mineral claims located in the Attawapiskat area of Ontario, Canada from Kel-Ex Development Ltd. (“Kel-Ex”), a company controlled by a director of the Company, in consideration for $300,000 and the issuance of 2,000,000 common shares of the Company valued at $450,000. During fiscal 2003, the Company issued 1,000,000 common shares valued at $225,000 pursuant to the agreement and is committed to issue the remaining 1,000,000 common shares valued at $225,000 upon regulatory approval. The Company has not received regulatory approval to issue the remaining 1,000,000 shares. Accordingly, the commitment to issue shares of $225,000 has been reversed with a corresponding reversal of acquisition costs.
During fiscal 2003, the Company sold, to Arctic Star Diamond Corp. (“Arctic Star”), a 20% undivided interest in certain mineral claims for proceeds of $300,000 and advances of $300,000 towards its share of the exploration program on the claims. Arctic Star also entered into an agreement with Kel-Ex and the Company pursuant to which it acquired a 20% interest in various additional claims from Kel-Ex in consideration for $600,000. Kel-Ex is required to apply the proceeds towards the acquisition of $200,000 of flow-through shares from Arctic Star and $400,000 flow-through shares from the Company.
During fiscal 2003 Kel-Ex entered into an Agreement with Dumont Nickel Inc to acquire the right to earn up to 90% interest in certain mineral claims owned by Dumont in the Attawapiskat area. This agreement provides that Kel-Ex will earn 50% interest in the claims by spending $1,500,000 over a three-year period. Kel-Ex may earn an additional 25% interest by funding a mine feasibility study on any part of the claims. Kel-Ex may earn a further 15% interest (90% in total) by bringing
any deposit on the claims into production. Kel-Ex subsequently entered into an agreement whereby Metalex has the right to earn 70% interest of the Kel-Ex interest in the Dumont Joint Venture. The Metalex entitlement is subject to a 7.78% free carried interest in favour of Kel-Ex. Big Red Diamond Company (“Big Red”) asserted that it was entitled to a 20% interest in the Dumont Joint Venture. Following lengthy discussions an agreement was entered into as of September 21, 2004 between Kel-Ex, Metalex and Big Red whereby Big Red was assigned a 20% working interest of the Kel-Ex interest from Metalex in consideration of payment of $909,747, comprised of expense recovery $892,001 and interest $17,746. As a result, Metalex’s working interest was reduced to 50% of Kel-Ex’s right to earn 90% in the Dumont Joint Venture. It remains to be negotiated between the parties as to whether Metalex or Big Red shall be liable for payment of the proportionate share of the Kel-Ex free carried interest.
Work Carried out and Results
Since August 2003, work on the Company’s Attawapiskat project has focused on follow up of the locations where high counts of diamond indicator minerals were found in the D6 glacial fan. This fan is located less than 10 kilometres from De Beers Victor diamond deposit, lies within the Attawapiskat kimberlite trend and straddles ground subject to both the Big Red and Dumont Joint Ventures. To date, some 552 power auger holes totaling 5,358 metres and 67 core holes totaling 2,370 metres have been drilled. Some 1,385 power auger samples have been collected and results are available for 940 of them. A combined aeromagnetic and electromagnetic survey was flown over 6,000 line kilometres and ground electromagnetic with or without gravity surveys have been carried out over approximately 23 line kilometres. Some 122 samples of kimberlitic material and glacial till have been analyzed for diamonds.
Results from the power auger sampling show that the D6 diamond indicator fan is more than 3.6 km long and 3.5 km wide. Within the D6 fan there are 18 separate interpreted glacial trains of diamond indicator minerals within the joint venture claims which do not appear to originate from any of the known kimberlite pipes. The presence of multiple sources within the D6 fan is further supported by the high counts (<6 – 564 grains (Av 19) per 20 kg) of diamond indicator minerals present in 856 samples occurring throughout the D6 fan. These trains are characterized by varying amounts of fresh (near source) grains of pyrope and eclogitic garnets, chrome diopside, picroilmenite and olivine contained within glacial deposits. The freshness of many of the grains suggests that their source is nearby and this is supported by the discovery of an angular fragment of kimberlite, containing purple pyrope garnets, in one of the trains. As many of the diamond indicator grains have chemistries analogous to those minerals that grow with diamonds in commercial diamond deposits (e.g. Orapa), it is inferred that the source of the grains may contain significant diamond grades. The main method used to date to locate these postulated sources has been by systematic backtracking of the diamond indicator minerals up the inferred ice direction by power auger sampling, supplemented by core drilling at selected localities.
Kimberlite, and possible kimberlite, has been field logged in power auger holes in four areas (K1, K2, K3 and K4) which occur over an area of at least 900 by 200 metres within the D6 fan. In each case the kimberlite, and possible kimberlite, occurs between 11 and 18 metres depth and is overlain by glacial till. The kimberlitic rocks are extremely weathered and identification is based on appearance and texture and high counts (111 – 657 (Av 348) grains per 20 kg) of kimberlite
indicator minerals. Of the 26 kimberlite or possible kimberlite samples processed, diamond indicator mineral counts ranged from 2 – 29 (Av 14) grains per 20kg.
K1, which is associated with a ground electromagnetic anomaly 150 metres in diameter, and K2 have been tested by core drilling with 11 holes totaling 430 metres being drilled. The holes bottomed in limestone and it is concluded that the kimberlite does not continue at depth. At K3, located 700 metres west northwest of K1, kimberlite and possible kimberlite, was encountered in 7 power auger holes over an area of 170 metres by 70 metres. Although three core holes, totaling 143 metres, drilled in the eastern part of the anomaly bottomed in limestone these holes do not adequately test the kimberlite occurrence and further core drilling is planned. A macrodiamond, of maximum dimension 0.819 mm, was recovered from a sample of glacial till weighing 19 kg down ice from K3. At K4, located approximately 150 metres to the northwest of K3, kimberlite was encountered in two power auger holes 50 metres apart. This occurrence which is open on three sides, contains strong counts, (13 – 23 per 20 kg), of diamond indicator minerals and a microdiamond was recovered from a 12 kg sample. K4 is currently being delineated by power auger sampling and will be tested, along with K3, by core drilling when this work is complete.
A ground electromagnetic anomaly (“EM2”) measuring at least 700 metres by 400 metres was tested by power auger sampling and core drilling. Power auger sampling located variable amounts of green kimberlitic clay and strong counts of unabraded diamond indicator minerals within glacial deposits at the anomalous site. A single microdiamond was also found. Two core holes (totaling 189 metres) drilled in the anomaly bottomed in Paleozoic sediments and it is concluded that the electromagnetic anomaly reflects near surface conductors here, consisting of till and green kimberlitic clay, and that the source of the diamond indicator minerals lies up ice.
There are several sites within the D6 indicator fan containing strong diamond indicator count (e.g. OT 134 which contains 44 diamond indicator and 466 kimberlite indicator grains per 20 kg) that have not yet been followed up. These are additional priority targets for ongoing work.
In addition to the 16 samples of kimberlite and green clays, a further 83 samples of glacial till containing high counts of diamond indicator minerals were analyzed for diamonds by caustic fusion. A macrodiamond was found in glacial till down ice from K3, a microdiamond was found in kimberlite encountered in a power auger hole in K4, a microdiamond was found in till at EM2 and a fourth diamond was found in glacial till within another fan 1.8 km from K3. The remaining samples are negative.
The helicopter geophysical survey yielded three anomalies and these are scheduled for testing by core drilling.
Whilst the glacial geology in the area is complex, and locating the kimberlite sources of the diamond indicator minerals is proving difficult, the Company is confident that it is just a question of time until the source rocks of the angular (near source) indicator minerals containing diamond inclusion compositions are found. Further work will consist of continued systematic back tracking of the best diamond indicator minerals up ice in the D6 fan by power auger sampling and core drill testing of discovered kimberlite and possible kimberlite occurrences. In addition, drill testing of the 3 helicopter geophysical targets as well as follow up of several other areas of strong diamond indicator counts and testing of several untested aeromagnetic anomalies will also be carried out.
Metalex has a 60% contributing interest in the Big Red Joint Venture and a 50% contributing interest of Kel-Ex’s entitlement to earn 90% interest in the Dumont Joint Venture. Both interests are subject to a net carried interest in favour of Kel-Ex Development Ltd (7.5% in the Big Red Joint Venture and 5.55% - 7.78% in the Dumont Joint Venture). These Joint Ventures control a total of 162 mineral claims totaling 306 km2.
Kyle Lake Project
The Kyle lake area is located approximately 100 km west of the Company’s Attawapiskat project. The area is prospective for diamond bearing kimberlites as shown by the discovery of 5 deposits of kimberlite, two of which are diamond bearing, by the KWG/Spider Resources Joint Venture. The Company has staked 44 mineral claims covering 44 aeromagnetic anomalies similar to those seen over the known kimberlites. Drill testing of these anomalies commenced in June, 2004.
In July, 2004 the Company sold a 20% contributing interest in the project to Arctic Star Diamond Corp for $100,000. Artic Star also reimbursed the Company for 20% of previous staking and exploration costs incurred on the property and will pay 20% of ongoing exploration costs. The property is subject to a 10% free carried interest in favor of Kel-Ex Development Ltd. This free carried interest will be paid for on a pro-rata basis by the Company and Artic Star. The free carried interest will be carried through to commercial production at which time it will be repaid out of 90% of Kel-Ex’s share of mine profits.
During the quarter six anomalies were tested by core drilling. A green brecciated rock, provisionally identified in the field as kimberlite, was identified at one anomaly. The anomalies at sites two and three reflect magnetic iron sulfides whilst magnetic granite was found at the fourth and sixth anomalies. The anomaly at the fifth site is unexplained. A second core drill was acquired to accelerate testing of the remaining 38 aeromagnetic anomalies.
The magnetic anomaly in which the possible kimberlite was found consists of two magnetic highs within a broader oval shaped ground magnetic anomaly measuring approximately 400 metres by 180 metres. Vertical drilling at the southern magnetic high, which measures 100 by 150 metres, intersected a green brecciated rock, containing possible kimberlite indicator minerals. The possible kimberlite intersection started at 76 metres and continued to the end of the hole at 147 meters. Drilling of the smaller magnetic high at the northern part of the anomaly also intersected possible kimberlite at a depth of 70 metres to the end of hole at 130 metres. The two intersections are 260 metres apart and it is not known at this time whether they are part of the same body or whether they are separate occurrences. A 105 kg sample of core from the first mentioned occurrence is being processed by the CF Mineral Research Laboratory for diamonds, diamond indicator minerals and kimberlite indicator minerals. Core from the second occurrence, with an approximate weight of 127 kg, will be analysed during the next quarter.
Wemindji James Bay Property, Quebec
During fiscal 2003, the Company entered into an agreement to acquire a 33.3% interest in various mineral claims located in the Wemindji James Bay region of Quebec, Canada from a company controlled by a director of the Company in consideration for 400,000 common shares of the Company valued at $160,000. During fiscal 2003, the Company issued 200,000 common shares valued at $80,000 pursuant to the agreement and is committed to issue 200,000 common shares valued at $80,000 upon regulatory approval. The Company has not received regulatory approval to issue the remaining 200,000 common shares. Accordingly, the commitment to issue shares of $80,000 has been reversed with a corresponding reversal of acquisition costs. The Company is obligated to contribute to the costs of the development program in proportion to its 33.3% interest in the claims.
Five hundred and forty drainage and till samples were collected and have been analyzed. Follow up of positive samples was carried out during the quarter.
Zyena Property, Northwest Territories
The Company staked 27 mineral claims in the Northwest Territories between the Ekati Diamond Mine and the Mountain Province kimberlite field. The claims cover an area of 268 km2. Some of the 143 loam and drainage samples have been collected from the claims and some contain kimberlite indicator minerals. These claims are subject to a 10% free carried interest in favour of Kel-Ex Development Ltd.
Mali Project
Through an arrangement with Kel-Ex Development Ltd., the Company has the ability to identify and rapidly reconnoitre large areas for diamond mineralization in a timely and cost effective manner. Mali is a project of this type. Here the Company identified an area of Archaean basement rocks, prospective for the diamond mineralization that had not been previously explored using systematic modern techniques. This area of 33,650 km2 was secured by authorities to prospect. 325 drainage and soil samples were collected over the project area during Fiscal 2004 and sent to the C.F. Mineral Research laboratory for analysis. No diamond indicator minerals were found. As the area is prospective for both precious and base metals, including nickel, cobalt the samples are being analyzed for these elements.
The Authorities to Prospect were granted in January 2004 and have a term of 90 days, with an option to extend for a further 90 days. They give the Company the right to apply for an Exploration License within their boundaries should the Company desire to do so. They carry no expenditure commitment.
Morocco
On May 14 the Company announced that it had executed an agreement with the Office National de Hydrocarburers et des Mines (“ONHYM”) which will allow Metalex to conduct preliminary exploration over an area of 13,500 km2 located in southern Morocco.
The concession covers part of an Archaean craton and is considered highly prospective for diamond bearing kimberlite, base and precious Metals.
The first tranch of fieldwork for reconnaissance sampling program aimed at simultaneously exploring for all of the abovementioned commodities was completed in June, 2004, with 944 samples being collected. These samples have been sent to the CF Mineral Research laboratory for analysis.
The company believes it is the first company to have signed an accord of this type with ONHYM and is the first company to explore for diamonds, base and precious metals in the vast prospective area of interest.
Greenland
On June 1, 2004 the Company announced that it had been granted an exploration license totalling 751 km2 covering Precambrian basement rocks in south western Greenland. This license secures ten apparently untested target area previously reported to contain outstanding (Ekati Quality) mineral chemistry by the Diamet-Citation-Cantex joint ventures. This joint venture also reports that 5 rock samples from the area contain microdiamonds. Five hundred and eighteen loam and drainage samples were collected from these target areas during August and September. These have been submitted to the CF Mineral Research laboratory and will be analysed for diamond indicator minerals later in the year.
Angola
The Company entered into a letter agreement dated March 12, 2004, with subsequent addendums, with a consortium of 3 private company’s (later to become 4) (the “Consortium”) whereby by the Company was granted the exclusive right to carry out a due diligence review of 5 kimberlite properties in Angola for the purpose of determining the merits of acquiring an interest in some or all of the properties. As a consideration, the Company paid US$300, 0000. Two of the underlying properties were subject to Memorandums of Understanding (“MOU”) and the other three were being negotiated between Consortium and the owners of the concessions. The exclusive rights pertained to kimberlite only and alluvial diamond deposits were specifically excluded.
After discussion with various authorities in Angola by the Company, it became apparent that Consortium would be granted kimberlite rights to only two the properties and Metalex would have to apply for alluvial and kimberlite rights in another two of them. Kimberlite rights to the fifth one are unlikely to be granted at this time. As a result Metalex applied for alluvial and kimberlite rights for the Chitamba area. The license agreement for alluvial diamonds in this area executed on April 20, 2004 and the license was promulgated on July 30, 2004. This is the date the license came into effect. The kimberlite rights to this area have not become effective. Should the kimberlite license be granted, and Metalex exercises its option with Consortium to pursue the kimberlite rights, then it will be obliged to make a payment to Consortium of US$285,000 and certain staged
progress payments.
Although the alluvial rights to the Chitamba license were granted to Metalex, the underlying agreement with Consortium provided for Consortium to retain 100% of the foreign investor’s interest in alluvial diamonds and to fund all alluvial work in this license. As Consortium has not been unable to fund any exploration, Metalex agreed to fund US$400,000 of alluvial exploration in return for earning 51% interest, of Consortiums interest, in the Chitamba alluvial license. Once Metalex has earned its interest each of Metalex and Consortium will contribute to ongoing exploration in proportion to their interests or dilute on a straight line basis. At the present time, there is a dispute between Metalex and some members of the consortium as to their rights under the various agreements.
The Chitamba license is some 3000 km2 in aerial extent. It is located in north central Angola and contains part of the Chitamba – Lulo kimberlite field, a field said to contain more than 60 kimberlite pipes. The Cuango River passes through the eastern part of the Permit and drains part of the Chitamba – Lulo kimberlite field. The Cuango River is mined downstream from the Chitamba license by SDM and others. In years 2000 to 2003 SDM inclusive, SDM produced
approximately 1.6 million cts of diamonds and generated US$331 million in revenue with an average price of US$202 per ct. The Company has not seen any records of alluvial mining within the Chitamba license but has been told by representatives of its partner, Endiama, that a 216 ct diamond has been recovered from, or near, the license. The Company has been told, by an independent party, that test sampling by diving recovered more than 12,000 cts of diamonds over a 3-week period from one river in the license. This result has yet to be confirmed by the Company. The Chitamba permit is considered prospective for alluvial diamond deposits, as it contains rivers draining the Chitamba – Lulo kimberlite field, a field that is the potential source of the Cuango diamonds currently being mined by SDM. If so, then Chitamba has the potential to provide early cash flow to the Company.
Under the terms of the Chitamba license, Metalex must spend a minimum of US$3,000,000 over a 3-year period. The interest of the foreign investor (Metalex and Consortium) is 51% prior to payback of all the costs of investment and 33% after payback of the investment. The foreign Investor pays 100% of costs through to the end of feasibility studies.
Field sampling commenced on September 6, 2004, and to date (December 12, 2004) more than 100 drainage samples and auger samples have been collected. The drainage samples have been sent to the CF Mineral Research laboratory for analysis.
The auger samples were processed on site and, after inspection for diamonds, the concentrates were sent to the CF Minerals
Research laboratory for further analysis.
General
Metalex's exploration projects are managed by Kel-Ex Development Ltd., a company owned by Dr. Charles Fipke, the Chairman of Metalex. Dr. Peter Gregory, the President of Metalex is also an employee of Kel-Ex. The arrangement with Kel- Ex provides Metalex with access to the advanced proprietary data bases and interpretational techniques of Dr. Charles Fipke, an internationally recognized diamond geologist. In return, Kel-Ex receives a 10% administration fee and, in the case of the Canadian projects, a 10% interest in the project carried to production. (Kel-Ex will repay its proportionate share of the costs of mine development out of its share of mine profits). Dr. Fipke also owns the CF Mineral Research laboratory where samples collected in the exploration programs are analyzed. Dr. Peter Gregory, a qualified person, has verified that the work carried out by Kel-Ex, manager and operator of the Company’s projects, is being carried out in a professional and diligent manner and that the appropriate quality controls are in place. Dr. Gregory has also inspected the CF Mineral Research laboratory and is satisfied that the work performed there meets or exceeds international best practices; that the work is performed on an arms' length basis and in accordance with standard commercial arms' length terms; and that the results provided by CF Mineral Research are accurate and reliable. On this basis the Company has not sought any independent analyses. However, should significant diamond grades be discovered the Company may seek independent verification of such results. Dr. Gregory is responsible for preparation of this Management Discussion and Analysis.
Selected Annual Information
The following table provides a brief summary of the Company’s financial operations. For more detailed information, refer to the Financial Statements.
***
Shear Minerals NR
November 12, 2004
"In 2004 we learned from every drill-hole and every surface sample,” said Pamela Strand, President and CEO of Shear. “More importantly, we laid the foundation for a systematic and stepped-up drill program in 2005. We remain confident that we will be able track the G10 chemistry back to diamondiferous kimberlites in the upcoming year. We will not stop drilling until we have located the source of the high diamond potential chemistry.”
The 2005 program will be well funded. It will test lake-bound targets and new types of targets with a focus on a far wider range of more subtle geophysical signatures. The Spring drilling program is planned to commence in the first quarter of 2005 and together with the targets drilled this summer, will test up to 40 targets.
"The source of the high interest mineral chemistry at Churchill remains elusive but we have made great progress in advancing our knowledge of this prospective area and remain optimistic that results from the 2004 till sampling campaign will help us to narrow our search and increase our chances of success in 2005. The partners remain committed to the project and recognize that a thorough assessment of this large, prospective, new kimberlite field will take time,” said Eira Thomas, President and CEO of Stornoway.
Churchill is host to high-interest G10 mineral chemistry and the partners continue to narrow down the source to these high-interest grains. Results from the 4,213 till samples collected on the property this year will be received over the next several months. These results are integral to ongoing target definition and to narrowing down the indicator mineral corridors in order to locate and refine the source area of the property’s high-interest indicator mineral chemistry. In addition, full data from the high resolution helicopter-borne airborne EM-magnetic survey has been received and it is anticipated that more than 1,500 targets will be chosen as a result.
The 8.5 million acre Churchill Diamond project, located near the community of Rankin Inlet in the Kivalliq region of Nunavut is a new and expanding kimberlite district which Shear and its partners discovered in 2003. Success at Churchill has contributed to a major staking rush in the Eastern Arctic where diamond exploration investment is expected to exceed $100 million in 2004. Shear has a 51% interest in the project and is operator. Stornoway Diamond Corp. and BHP Billiton Diamonds Inc. have 35% and 14% interests respectively. The 2004 field program is under the supervision of Jennifer Burgess, P. Geol., a Qualified Person under NI 43-101.
On behalf of the Board
STORNOWAY DIAMOND CORPORATION
Eira Thomas
Eira Thomas
President
On behalf of the Board
SHEAR MINERALS LTD.
Pamela Strand
Pamela Strand, P. Geol.
President
Hope you found the read worthwhile.
Based on the respective document release dates and indicated ongoing activities, it would appear that similar reports/NR's should be out shortly from both companies.
Regards
Vaughn |
