From Stockwatch-Will Purcell.......Frank
Contact Diamond Corp. recently wrapped up two drill campaigns in what is shaping up to be a busy exploration program in the Timiskaming region of Northeastern Ontario. The company produced some intriguing results last year from a mini-bulk test of an old kimberlite find, and has high hopes of coming up with some potentially economic finds this year. The recent drill programs plumbed the depths of two newer finds that yielded promotable diamond counts last year. As well, Contact will test many new targets in the area west of its 95-2 pipe.
The Klock pipes
The company, known as Sudbury Contact Mines Ltd. until last fall, turned up its two Klock kimberlites last spring. After its encouraging results at 95-2, Contact added blocks of ground to the west and its Klock property grew to about 36,000 hectares.
The company's new president, Dr. Matt Manson, said the added property contained some interesting regional indicator anomalies. Contact quickly flew a geophysical survey over its new ground and produced two particularly clear targets. The company poked holes into both features last spring, adding the KL-01 and KL-22 kimberlites to its inventory of Timiskaming pipes.
Contact processed about 88 kilograms of kimberlite from KL-01, coming up with 27 microdiamonds larger than a 0.105-millimetre cut-off. That worked out to just over 300 diamonds per tonne. Just one of the diamonds was large enough to remain on a 0.30-millimetre sieve, and that 3.7-per-cent proportion does not suggest the sample had a promotable diamond size distribution.
That could be misleading however, because of the modest diamond counts and the small size of the sample. As a result, it will take significantly larger batches of rock to find out the diamond grade and size potential of KL-01. Adding to the confusion is the likelihood that the pipe has several phases of kimberlite.
In fact, the discovery hole hit two types of material. Contact processed about 32 kilograms of hypabyssal kimberlite from the top part of the hole, and about 56 kilograms of tuffisitic kimberlite breccia from the deeper regions. The diamond count was higher in the upper material, although the lower rock may have had the better size distribution. Still, finding any differences in the diamond content within KL-01 will have to wait for the next set of counts.
Contact drilled 18 new holes into KL-01 this year, concentrating on the northwestern and southeastern regions of the four-hectare pipe. That program provides a reasonable hint of the geometry of the large pipe, which seems roughly the size of 95-2.
The tonnage potential of KL-01 is still unclear. The latest drilling shows that the walls of the body taper inward with increasing depth, but the body should still hold a significant amount of kimberlite. As well, there is not much overburden above the pipe. Contact uncovered the kimberlite while making a drill pad, and the overburden is generally less than five metres across the pipe. That would bode well for taking larger samples, if the next sets of diamond counts are promising.
It is a similar situation with KL-22, a potentially larger pipe a few kilometres southeast of KL-01. Contact processed about 85 kilograms of rock from its discovery hole, coming up with 19 microdiamonds. That works out to about 225 stones per tonne, somewhat less than in its sister pipe.
Two of the diamonds sat on a 0.30-millimetre screen, or just over 10 per cent of the entire parcel. That was a bit better than KL-01 delivered, although once again the tiny sample size does not allow for any conclusions. All the rock was hypabyssal kimberlite.
Contact poked 20 more holes into KL-22 this year, and that effort produced multiple phases of kimberlite. The geophysical signature covers nearly 10 hectares at the surface, although Dr. Manson now describes the pipe as a six-hectare body.
The drilling shows the walls slope inward in the northern region of the pipe, but are vertical in the south. As a result, KL-22 is nearly 400 metres long and up to 150 metres wide at a depth of 150 metres, an area of roughly four hectares at a considerable depth. KL-22 would therefore have considerable tonnage potential. The kimberlite lies under roughly 25 metres of overburden.
The plan
Contact still has a major drill program ahead of it. The company is systematically poking holes into many other geophysical targets identified on its property. As well, Contact found some intriguing indicator mineral anomalies that are worth a closer look. The drilling effort will consume most of the $4-million earmarked for the Timiskaming play this year, but ground geophysics and till sampling are also in the plan. The earlier results suggest Contact should have a decent shot at adding to its pipe tally.
Meanwhile, Contact thinks its two Klock pipes have a decent shot, based on the first set of counts. The tallies did top the raw numbers from 95-2, although the latter body had clear signs of a coarse size distribution from the start. Either way, the potential of the two Klock kimberlites will remain uncertain until the company processes its next set of samples.
Contact sent a few hundred kilograms of kimberlite from each pipe off for microdiamond recovery, directing equal portions of each batch to two processing laboratories. The tallies could be back by the end of the month, but delays are not uncommon and the wait could stretch into spring.
The samples came from sites scattered across the large bodies, and that could provide the first signs of any variability in the diamond content within the multiphased pipes. At 95-2, Contact's work suggested grades that ranged from just 0.04 carat per tonne, up to nearly 0.20 carat per tonne. As a result, it is likely there will be comparable variations within the Klock kimberlites.
If the latest samples deliver microdiamond encouragement, Contact may send more of its rock off for processing. As well, the company would likely proceed immediately with a mini-bulk test, although such a sample would likely weigh just a tonne. A decent outcome could eventually lead to a 10,000-tonne test, although the company would try a smaller test first, probably comparable with the 650-tonne sample at 95-2.
Contact's new president revealed Contact's kimberlite goal for the Timiskaming region. The company believes that a mine is possible, based on the discovery of about 20 million tonnes of kimberlite that has an average value of about $20 (U.S.) per tonne.
The company came close to its target at 95-2, according to Dr. Manson. He said that Contact had identified about 15 million tonnes of kimberlite within the richer parts of 95-2, and the mini-bulk test suggested a rock value of about $15 (U.S.) per tonne.
That latter figure is the mathematical result of combining a sample grade of 0.15 carat per tonne with a diamond value of $100 (U.S.) per carat. The value seems optimistic, as Contact's sample considered just the retained weight of its kimberlite chips, with possibly one-quarter of the material slipping through a cut-off mesh. That would reduce the sample grade somewhat.
As well, the appraised value of Contact's 95-2 diamonds was just $38 (U.S.) per carat, a far cry from the $100 (U.S.) figure. Still, the larger value may well be the more accurate value. Contact's consultants modelled a $66 (U.S.) figure, but allowed that it could run as high as $98 (U.S.) per carat. In fact, Dr. Manson's rosy assessment of the potential diamond value played a key role in his decision to leave his job with Aber Diamond Corp. to become Contact's president.
Contact's consultant lowered the modelled value as a risk adjustment that it based on the tiny size of the parcel. Nevertheless, Dr. Manson, who was heavily involved with diamond valuation and modelling with Aber, was willing to take his career out on a limb, based on his own assessment of the Contact diamond values. "I thought they were $100 (U.S.) diamonds."
The players
Originally from Glasgow, Scotland, Dr. Manson came to Canada to complete his doctorate when he was 21. He went to work as a diamond hunter in Canada's North in the early 1990s, conducting till sampling for Caledonia Mining Corp. in the Kikerk Lake area. His exploration effort turned up the mineral trains that led to the Artemisia and Potentilla pipes that Ashton Mining of Canada Inc. found in 2001.
Mr. Manson changed companies, climates and minerals in the mid-1990s. He went to work for Ambrex Mining Corp. in Brazil. The company began on a gem hunt, but its search turned to gold and eventually led to a metals find. Now called Karmin Exploration Inc., the company added Dr. Manson to its board in 2000.
Meanwhile, Dr. Manson's career drifted back to gems. While at university, he served as the teaching assistant for Eira Thomas, and his Aber connection sprang from there. He began consulting for Ms. Thomas and Bob Gannicott, and in 1998 he joined Aber as a full-time employee. Dr. Manson ended up as Aber's vice-president of marketing.
Contact's new president should know a few things about diamond values. Dr. Manson was responsible for setting up Aber's diamond sorting facility and he helped devise the procedure for splitting the Diavik diamonds between Aber and Rio Tinto. As well, Dr. Manson was responsible for the sales contract between Tiffany & Co. and Aber.
Still, Dr. Manson was eager to return to exploration, and the Timiskaming play apparently presented enough promise for the Toronto-based geologist to make the move to the decidedly more junior Contact.
Contact lost a penny on Monday, closing at 85 cents on volume of 4,000 shares. |
