Kennecott targets GQ stones (October 17, 2001)

An agreement with Band-Ore Resources (BAN-T) sets the stage for Kennecott Canada Exploration to earn a majority interest in the GQ diamond property, near Wawa, Ont.

Kennecott, which is a unit of Rio Tinto (RTP-O), can earn a 70% stake in the project by spending $15 million over seven years and subscribing for $150,000 worth of Band-Ore treasury shares at a 10% premium to prevailing market prices. An additional $250,000 worth of treasury shares must be purchased each year thereafter until a feasibility study is completed.

To date, Band-Ore has recovered 13,000 diamonds from the 39-sq.-km property. More than 92% of the stones were extracted from the Engagement zone, which has been exposed by stripping and trenching along a length of 325 metres and across a width of 85 metres. Boulders displaying similar characteristics were recovered 300 metres to the northwest.

Band-Ore has made another discovery 100 metres northeast of Engagement. So far, 12 microdiamonds (stones with no dimensions greater than 0.5 mm) have been recovered from the area.

Additional samples have been taken from the Engagement zone and other areas of the property. Results are pending.

As part of the agreement, Kenneccott must spend at least $500,000 in the first year and $750,000 in each of the following years. Initial plans call for the extraction of several large samples, including a 100-tonne bulk sample.