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Gold/Mining/Energy : A CANADIAN DIAMOND HUNT -- Ignore unavailable to you. Want to Upgrade?

To: Ed Pakstas who wrote (254)	2/18/1998 8:15:00 AM
From: Famularo	Respond to of 930

Yorkton says buy Ashton Mining of Canada Inc ACA Shares issued 20,836,399 Feb 16 close $4.00 Tue 17 Feb 98 Research Art Ettlinger and Douglas Leishman say why The company has experienced early and rapid success as operator of the Buffalo Hills exploration program and has set the standard by which other junior explorers working in Alberta will be judged. Since December 1996, when Ashton, Pure Gold Minerals Inc (PUG TSE) and Alberta Energy Company Ltd (AEC TSE) agreed to explore for diamonds in the Buffalo Hills area of north central Alberta, 14 kimberlites have been discovered for less than $6 million of expenditures. All but four of these occurrences are diamond bearing. Furthermore, these initial discoveries were made on geophysical targets prioritized principally on logistical considerations, meaning the highest priority targets likely remain to be tested. Ashton became interested in exploring for diamonds within the Buffalo Head terrane after a geologist with the Alberta Energy Company identified several airborne magnetic anomalies suggestive of kimberlite intrusions. A check of seismic records led further credence to this theory. As an experienced diamond explorer Ashton also realized that the location of these anomalies, near the centre of a possible craton with a deep penetrating structure (the Peace River Arch), was a valid geologic environment for diamond-bearing pipes. Detailed geophysical (magnetic) interpretation led Ashton to drill 10 initial anomalies resulting in the discovery of ten pipes. Further drilling has led to the present known total of 14 pipes with more than 50 geophysical targets remaining to be tested. Both positive and negative magnetic anomalies have been identified as kimberlite pipes. The kimberlites discovered to date by Ashton are located near the axis of the Peace River Arch and occur in two loosely defined clusters. The northern cluster of pipes show a possible north-south alignment while the cluster to the south may be controlled by a northeast striking structure. Whether these apparent structural controls are real and related to the Peace River Arch is not clear. Younger (?) northwest trending structures may also contribute to kimberlite emplacement. Kimberlitic material recovered from the pipes is interpreted by Ashton to consist dominantly of crater facies, the fragmented, uppermost portion of a kimberlite pipe. This suggests that the pipes in the Buffalo Hills are largely intact and untouched by glaciation. Surrounding the initial discoveries within the 1.45 million acre Buffalo Hills property, at least 13 priority 1 and 10 priority 2 geophysical targets remain to be tested. During the second half of 1997 Ashton began mini bulk sampling of the K-14 pipe cluster. The company has stated that the object of current mini bulk sampling is to "look for qualitative evidence that there is a population of larger stones" within the pipe. This mandate is unlikely to change in the near future. Thus a final determination of pipe economics from Alberta could be several years away. Initial bulk sampling results from the K-14 kimberlite have been erratic, with potentially economic and clearly uneconomic diamond counts reported. The economic importance of K-14 is still unknown. But more importantly, less than 50 tonnes of material have been recovered to date from K-14, and it is only the first pipe that Ashton has systematically sampled. For comparison, Dia Met Minerals' initial discovery at Point Lake in the Northwest Territories, which was bulk sampled in 1992 and sparked that area play, does not appear to be economic as it is not included in its current mine plan. We anticipate Ashton and their joint venture partners will spend approximately $15-20 million exploring the Buffalo Head terrane over the coming year. This amount does not include further bulk sampling of the K-14 pipe cluster or mini bulk sampling of pipe K-91. Final results from 1997 sampling of pipe K-6, which yielded a bright yellow, 0.76 carat diamond crystal from a small preliminary sample, are pending. We anticipate further sampling of this pipe in 1998. Exploration drilling of untested geophysical targets will run concurrently to sampling and could possibly result in new kimberlite discoveries. At the same time, it is likely new targets will be generated as additional airborne and ground magnetic surveys are completed and Ashton develops and refines its exploration techniques. Alberta is still clearly an exploration play and will remain so until Ashton demonstrates it has discovered an economically viable diamond deposit. Similarly, investor interest in the Alberta diamond play will continue until it is systematically demonstrated on a repeated basis that the kimberlites discovered in the province are uneconomic to mine. We recommend Ashton based on its solid management capabilities, remarkable exploration success, and large strategic land position within the BHT. Ashton's diamond projects elsewhere in Canada and the US also offer the investor both blue sky exploration potential and some measure of downside risk protection