The Canadian exploration arm of
De Beers must spend a total of $25 million to earn a vested 51% participating interest in the property, though Pele maintains the right to carry out prospecting, exploration and development work.
Further details are as follows:
— De Beers must spend $10 million before 2007 to earn an initial 51% participating interest and form a joint venture, and must spend no less than $1.5 million per year on exploration.
— The 51% interest will be vested upon the expenditure of $25 million or completion of an approved feasibility study, whichever comes first.
— The major must spend a minimum of $500,000 on exploration this year, including the taking of a bulk sample of at least 300 tonnes.
— De Beers will make $500,000 annual share subscriptions in Pele through to 2008 at a minimum of 50 per share (Pele shares were trading at 23 prior to the deal, and jumped to 35 afterwards).
— Pele will be carried through to an approved feasibility study, after which time De Beers will have earned an additional 4% participating interest in the joint venture.
— Pele may elect to receive a 45% share of diamonds in kind by funding its share of mine construction and exploration costs. Alternatively, the company may elect to be carried through to commercial production and receive a 40% participating interest.
De Beers has already made an initial payment of $150,500 in cash to Pele to reimburse it for certain costs incurred and has subscribed for 1 million Pele shares at 50 per share.
In late 2001, De Beers processed, at no charge to Pele, a 100-tonne bulk sample from the Cristal volcanic complex at Festival. The sample returned 96 small but commercial-sized diamonds, including some clear, well-preserved octahedrals with sharp edges.
Early this year, Pele recovered a white, 0.72-carat gem-quality diamond from the Cristal showing. The stone, which was recovered from a 13-tonne sample of bedrock extracted previously, measured 4.42 by 4.28 by 3.58 mm, making it the largest ever recovered in the Wawa region.
The Wawa diamond play is unusual in that claims in the area contain diamonds hosted by 2.7-billion-year-old volcaniclastic ultramafic flows rather than the better-known kimberlite pipes and dykes being explored elsewhere in Canada (T.N.M., Dec. 2-8/02).
In March, initial drilling by Pele cut a wide intersection of diamond-bearing volcanic rock at the Cristal diamond occurrence. A single, angled hole, designed to test the thickness and continuity of the occurrence, cut a true width of 90-100 metres, beginning at a depth of 21.5 metres below surface. The hole also confirmed that the Cristal occurrence dips to the northeast on to Pele’s property.
South of Festival,
Other companies active in the Wawa diamond play include
In other news, Pele has acquired five mining claim blocks within and adjacent to the Attawapiskat cluster of diamond-bearing kimberlite pipes. The claim blocks are within a 20-km radius of De Beers’ Victor pipe. Pele’s new holdings, known collectively as the Attawapiskat River project, cover 89 sq. km and constitute the second-largest land position in the area.
Pele has also been active in Ontario’s Shebandowan greenstone belt at its revived, wholly owned Ardeen gold-silver mine project, 110 km west of Thunder Bay.
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