Tahera finds new kimberlite at Jericho

Exploration drilling by Tahera (TAH-T) has uncovered a new kimberlite body at its wholly owned Jericho project in Nunavut, 430 km northeast of Yellowknife.

The kimberlite lies under a small lake, 6 km west of the Jericho pipe. It was the fourth target tested during the current 2001 program, which is scheduled to continue through the summer, following a temporary shutdown during spring break-up. Tahera plans to spend $2.6 million on exploration at Jericho during 2001.

The discovery was based on a re-interpretation of existing airborne geophysical data, combined with new ground magnetic results from the area. The discovery hole was angled at minus 50 and intersected 94 metres of kimberlite from 9 metres of depth down-hole to 103 metres. A second hole will be drilled at a right angle to the first, to help determine the size and shape of the body.

Tahera is committed to advancing the Jericho project to commercial production. Earlier this year, the junior submitted a revised project proposal and draft environmental impact statement (EIS) for a combined open-pit and underground mine on the land-based Jericho pipe, along with a 1,200-tonne-per-day processing facility.

A June 2000 feasibility study by SRK Consulting concluded that such an operation could produce an estimated 3 million carats over an 8-year mine life. The study is based on a probable mining reserve of 2.5 million tonnes grading 1.19 carats per tonne.

The Jericho pipe, discovered in early 1995, is a multi-phase complex measuring 280 metres long and up to 120 metres wide. It has been traced by drilling to a depth of more than 350 metres. The pipe is covered by 10-50 metres of unconsolidated overburden.

Underground bulk sampling was carried out in 1996. A 275-metre-long decline, driven to a depth of 75 metres below surface, was used to collect a 9,402-tonne bulk sample, representing all phases of the Jericho pipe, from which 10,528 carats of diamonds were recovered. The largest stone recovered weighed 40 carats, and the largest gem-quality diamond was 23.89 carats.

The Jericho pipe contains a total estimated resource of 7.1 million tonnes grading 0.84 carat per tonne, equivalent to 5.9 million carats.

Approximately 80% of the minable reserve (2 million tonnes at a recovered grade of 1.29 carats per tonne) is contained in the higher-grade central lobe. A further 500,000 tonnes grading 0.77 carat per tonne will be mined from the north lobe and processed at the end of the mine life.

The current mining plan entails the open-pit mining of some 1.9 million tonnes of reserves averaging a grade of 1.26 carats per tonne, equivalent to 2.4 million carats, during the first four years at an overall stripping ratio of 8.4-to-1. This would be followed by underground mining of a diluted 614,000 tonnes grading 0.99 carat per tonne, equal to 610,000 carats, from the central lobe. The underground reserves would be accessible by a decline from the open pit. A combination of sub-level caving and open-bench mining methods will be used. Operating costs over the life of mine are projected at $52 per carat.

Additional resource

As part of the mine plan, an additional 780,000 tonnes of inferred resource in the southern lobe and 870,000 tonnes of inferred resource in the northern lobe will be mined by open-pit methods and stockpiled.

Capital costs for the open-pit operation are estimated at $44.5 million, plus a further $10.4 million for underground and sustaining costs.

SRK assumed an average modelled diamond value of US$75 per carat, which translates into a pretax internal rate of return of 34.3% and a payback period of 2.7 years. Using a carat value of US$88 assigned by WWW International Diamond Consultants in late 1999, the pretax internal rate of return improves to 50.7%, with a payback of 2.1 years.

In addition to the Jericho pipe and the new kimberlite find, Tahera has discovered three other kimberlites on the Jericho properties, namely JD-2, JD-3 and Contwoyto-1. The JD-2 kimberlite was discovered close to the Jericho pipe in early 1995, but, at 0.03 ha in size and with a diameter of 20 metres, JD-2 was considered too small to be of commercial interest.

The JD-3 kimberlite pipe was discovered in the fall of 1996 under a small lake, 8 km southwest of the Jericho pipe. Delineation drilling indicates that the body is semi-circular, measures 160 by 140 metres and extends below 300 metres of depth. The surface area of JD-3 is about 1.95 ha.

Preliminary estimates have the pipe containing a kimberlite resource of 9 million tonnes to a depth of 250 metres. Based on the recovery of 16.6 carats of diamonds from drill samples weighing 46.6 tonnes, JD-3 has an implied grade of 0.36 carat per tonne. The largest stone recovered weighed 3.63 carats.

Tahera says results to date indicate JD-3 is not economic as a stand-alone operation but that it could represent supplementary feed for the proposed Jericho diamond project.

Contwoyto-1

Contwoyto-1, discovered in the fall of 1998 about 38 km southeast of the Jericho pipe, was put on the backburner after mini-bulk sampling showed it to be of relatively low-grade. A 50.1-tonne drill sample returned 13.6 carats for an implied grade of 0.27 carat per tonne. The Contwoyto-1 pipe measures 60 by 80 metres on surface and has been defined to a depth of 140 metres, with the deepest intersection at 222 metres.

In a separate campaign, Kennecott Canada Exploration is targeting the Hood River and Rockinghorse properties with $2.2 million of exploration work in 2001. Last year, Kennecott discovered the Tenacity kimberlite on the Hood River property, 110 km north of Jericho. A 558-kg core sample yielded 211 microdiamonds and seven macros. A second kimberlite discovery, Nanurjuk, made at the southern end of the Rockinghorse claims, 100 km west of Hood River, proved to be barren.

This year, Kennecott is using a light, mobile drill rig to test the heads of several indicator mineral trains. If any kimberlite should be discovered, a larger rig will be brought in to delineate the target.

Kennecott can earn a half-interest from Tahera in the Ice, Hood River and Rockinghorse properties by spending $50 million on exploration by 2008. To date, the Rio Tinto (rtp-n) subsidiary has spent about $18 million and found nine kimberlite bodies.

Tahera has $3-4 million in cash and 269 million shares outstanding, or 400 million fully diluted. The final tranche of a $13-million financing with Edensor Nominees, a trustee for the Joseph Gutnick family trust, will close April 23. Tahera will issue 21.7 million shares to Edensor at 15 each for proceeds of $3.2 million. On full dilution, Edensor will own a 44.5% stake in Tahera.