DIAMONDS — Newcomer picks up Kelsey Lake

London-based Redaurum (rrk-t) has signed an agreement to sell North America’s first diamond mine to McKenzie Bay International (MKBY-O).

The company will transfer all the shares of its subsidiary, Diamond Company, in exchange of 100,000 shares of the unlisted company. Kelsey Lake straddles the Colorado-Wyoming border.

Once the transaction is completed by year-end, McKenzie Bay will rename the subsidiary Great Western Diamond.

Kelsey Lake is the continent’s first open-pit diamond mine, operating at 210 tonnes per hour. The processing plant consists of two 14-ft. coarse pans and two 14-ft. fine pans. The stones are hosted in three kimberlite pipes.

To date, Redaurum has mined from only two of the three pipes, namely KL-1 and KL-2, each of which occupies more than 10 acres. Drilling to a depth of 350 ft. has outlined a minimum resource of 18.7 million tons of kimberlite material.

Redaurum has recovered more than 10,000 carats from the mine since production began in October 1996. Operations were suspended in late 1997, only to be reopened in mid-1998 on a limited basis. As part of the reopening, the company installed a crushing circuit and an X-ray sorter.

Most of the diamonds recovered were of gem quality, and 28% weighed 1 carat or larger. The largest stone recovered at the mine measured 28.3 carats.

McKenzie Bay, a newly listed company based in Michigan, owns a vanadium-titanium project in Chibougamau, Que. It has 15.1 million shares fully diluted.

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