Ashton to continue hunt for more Otish pipes
Ashton Mining of Canada Inc (TSX:ACA)
Shares Issued 84,137,875
Last Close 3/13/2006 $1.40
Tuesday March 14 2006 - Street Wire
by Will Purcell
A modest rival find spells added encouragement for Ashton Mining of Canada Inc. and its Foxtrot diamond hunt in the Otish Mountains region of Northern Quebec. Majescor Resources Inc. and Forest Gate Resources Inc. pulled just a few diamonds from boulders at a new site on their Portage property earlier this month and the test failed to interest investors. Still, the new find proves kimberlite intrusions cover a wider area that appears centred on Ashton's property.
So far, the only worthwhile discoveries in the Otish region lie within a tight cluster in the centre of Ashton's Foxtrot-2 block, although Majescor did produce an intriguing result from float at a second site in the fall of 2004. Majescor's latest Portage tallies might raise concerns with new discoveries beyond Renard, but individual bodies within kimberlite clusters typically have major variations in their diamond content.
Kimberlite pipes are nearly as tough to find as diamonds in the Otish district, and the Portage finds suggest there is ample room on Foxtrot for Ashton to make some promotable new finds this year. Ashton and Soquem Inc. will be busy with a bulk sample of three key Renard pipes, and mini-bulk tests of a few other dikes and pipes. Tonnage remains an issue with what could be Quebec's first diamond mine, so Ashton will also keep its exploration crews busy beyond the Renard area.
The Portage tests
Kimberlite hits came easy to Ashton at first, but other explorers in the area struggled to make discoveries. The neighbouring Portage play was particularly reluctant to reveal any diamonds and Majescor went through a few partners over the years before it scored its first drill success in the spring of 2005.
A string of kimberlite rocks led Majescor to the Remick dike, and a quick test of the float proved it diamondiferous. Majescor recovered 20 diamonds larger than a 0.106-millimetre sieve from 136.65 kilograms of material, or about 150 stones per tonne.
The rate is low, but Ashton managed toutable grades from pipes with modest stone counts. There also is a hint of diamond size potential at Remick. One-quarter of the 20-stone parcel sat on a 0.30-millimetre mesh, and two of those gems clung to a 0.425-millimetre sieve. Those proportions are comparable with some of the better finds in Canada, although the tiny parcel leaves much room for error. Majescor and its partner are busy drilling at Remick, which lies just west of the Foxtrot property on the northern part of Portage.
Majescor's latest find lies about 12 kilometres southwest of Foxtrot and about 40 kilometres south of Remick, expanding the area of interest considerably. The new boulders produced just five diamonds from 104 kilograms of kimberlite, or less than 50 stones per tonne. Still, one of the stones sat on a 0.30-millimetre mesh, so the size distribution might be comparable with Remick and some Ashton finds.
That leaves Majescor and its partner clinging to hope for Portage, but it could have a greater impact on Foxtrot because of the proximity of the Renard cluster. As well, Ashton has plenty of cash to sustain another big exploration push on the property.
New targets
The cash is important, because of the peculiar challenges of diamond exploration in the Otish Mountains region. Ashton had luck at first with its interpretation of geophysics at Renard, but its magnetic and electromagnetic data is of just limited use on other parts of the property.
Geophysics led to particularly frustrating outcomes on Portage over the years. BHP Billiton Inc. had an option on the property, but it quit in frustration late in 2002, when a major drill program came up empty. Majescor did not find geophysics of any use in finding Remick and it eventually had to drill holes along a fence until it hit kimberlite.
That puts added pressure on geochemistry and prospecting. Fortunately, many of the Otish Mountains kimberlites lie close to the surface, and boulder finds seem the main indicator for new finds in the district. Kimberlite boulders led Ashton to its Lynx and Hibou dikes and those two bodies may well find their way into plans for a Quebec diamond mine.
Ashton had some success with its hunt to the north of Renard, where indicator sampling produced mineral promise and six diamonds turned up in the till samples. That led to a lengthy hunt for suitable drill targets. Ashton finally hit a narrow kimberlite dike in a feature dubbed G04-222.
The moniker is uninspiring but the diamond counts are promising. The company pulled 662 stones from 56.5 kilograms of kimberlite, and 16 per cent of them sat on a 0.30-millimetre mesh. A dozen stones sat on a 0.85-millimetre sieve, proving the body contains an encouraging supply of commercial stones.
The microdiamond haul was unusually high for the Otish area, but over half of the diamonds were fragments from a single large gem that broke during the processing. That is nothing new for the area, as Ashton broke a few large diamonds in an early test of Renard-3, which is still the best of the company's kimberlites.
Ashton and Soquem face a busy summer at the northern site, looking for wider intersections and some other bodies. The chances seem good in the northern area as Ashton still has unexplained mineral finds to the north of G04-222, and some narrow dike hits are undoubtedly whetting the company's appetite for more drilling.
Ashton still has an unexplained anomaly to the southeast of Renard. The company found pieces of kimberlite a few kilometres southeast of Renard-3 a few years ago and it thought it had a good geophysical handle on potential kimberlite targets. So far, the company's magnetic data is letting it down, but given the proportion of rich pipes in the area, Ashton's hunt will continue.
The diamonds
The proximity of the Renard pipes and the Lynx and Hibou dikes make Foxtrot a better exploration bet than Portage, for now at least. Most of the richer pipes in Canada occur in tight clusters, making location a prime consideration when laying bets on possible new finds.
The main Ekati pipes occur along one line running southwesterly toward Lac de Gras, while a few other Ekati pipes lie at the northeastern end of a second line running through the four rich Diavik pipes. The Snap Lake dike that De Beers is developing lies all on its own in the southern part of the Slave craton, but the company has a stake in a cluster of economic pipes about 90 kilometres to the east. That Gahcho Kue project is now at the permitting phase.
The diamond giant is also making a mine at Victor, in Northern Ontario. The pipe lies along a line of pipes running northwesterly through a few more intriguing bodies that warranted closer looks. De Beers is also busy in Saskatchewan, where it owns a piece of several huge pipes that have potential, just north of the Star pipe that Shore Gold Inc. is pushing to prefeasibility.
The modest diamond counts from the rival Portage play might appear to limit the area of interest, given the propensity of richer pipes to occur in tight clusters. That is not necessarily the case, as many duds occur near the richest of pipes. Some nearly barren bodies lie within a few hundred metres of the best of the Diavik kimberlites, and the Ekati hunt delivered comparable results.
In fact, some of the kimberlites in the Renard cluster showed diamond counts comparable with what Majescor pulled from its Portage sites. For instance, Ashton processed 101 kilograms of rock form Renard-7, which lies about one kilometre to the north of Renard-4. The rock produced just 33 diamonds, barely double what the Remick float delivered. About 15 per cent of the Renard-7 stones clung to a 0.30-millimetre sieve.
Ashton had less luck at Renard-8, which lies in the core of the small Renard cluster. The company tested 112 kilograms of kimberlite, but recovered just nine diamonds. That worked out to just 80 stones per tonne. Only one of the stones remained on a 0.30-millimetre screen.
Larger tests proved the bodies to be duds. Ashton processed 4.1 tonnes of rock form Renard-7, coming up with a grade of just 0.023 carat per tonne. A 6.1-tonne test of Renard-8 gave a grade of 0.077 carat per tonne. Meanwhile, the better Renard pipes and the Lynx dike have grades of about one carat per tonne, or more. So far, most Ashton's finds have at least potentially economic grades. As a result, continued exploration in an expanding area has a reasonable chance of diamond success.
The Foxtrot partners spent over $40-million on the property over the past decade. With the bulk sample now rolling, Ashton will go through cash at a faster clip again this year. As a result, the company is taking the opportunity to top up its treasury, through the sale of 10.7 million shares, priced at $1.40 each. The company's majority shareholder, Rio Tinto PLC, is maintaining its 51.7-per-cent share of the company by buying 5.54 million of the shares.
The Tell Fund was another significant Ashton shareholder at last report. Patrick Schegg's Grand Cayman-based fund quietly held several million Ashton shares at last report. It also has a substantial investment in another Canadian gem hunter, Diamondex Resources Ltd.
Ashton added one cent Monday, closing at $1.40 on 108,000 shares.
© 2006 Canjex Publishing Ltd. |
