Diamonds verified in Dia Met sample ignite N.W.T. play (May 25, 1992)

Gem-quality diamonds recovered from a kimberlite pipe in the Lac de Gras region of the Northwest Territories indicate that Dia Met Minerals (VSE) and BHP-Utah Mines may be sitting on Canada’s first diamond mine.

Diamonds in a 160-ton bulk sample from the Dia Met property collectively weigh at least 90 carats, according to BHP-Utah, which is doing the processing at its diamond recovery plant near Ft. Collins, Colo. Investors who have been waiting eagerly for that news rushed into the market and sent Dia Met shares rocketing to $13.50 from $8.13 after 249,822 shares had changed hands May 20, the date of the announcement. Results from Colorado also sparked heavy trading in other Lac de Gras area property holders including Aber Resources (TSE), which gained 55 cents on a volume of 1.1 million. Argus Resources (ASE) moved up 9 cents to 47 cents on 587,600 shares. BHP said a preliminary examination reveals that about one-quarter of the diamonds found in the sample are likely to be of gem quality and a few of the stones are in the 1-3-carat range. The sample was shipped out two months ago after Dia Met reported finding 81 small diamonds, some of gem quality and all less than two millimetres in diameter from a 465-ft. core sample of kimberlite.

But Roger Kuhns, BHP-Utah’s senior geologist, warned that the sample being processed in Colorado is much too small to be representative of the Dia Met kimberlite which spans a surface area of 50 acres. He told The Northern Miner that more processing and testing are needed to determine the size and economic significance of the discovery.

The company has hired experts in San Francisco to evaluate the diamonds to provide a better estimate of the quality of the Point Lake pipe. Sources close to the play were clearly enthusiastic about the possibility of establishing Canada’s first diamond mine and some were drawing comparisons to mines in South Africa and Australia.

“We are very pleased and positively encouraged by these results,” said Dia Met President James Eccott, who expects further sampling and analysis to be conducted on the kimberlite and other potential pipes in the Lac de Gras project.

Under an agreement signed two years ago, BHP is earning a 51% stake in the Dia Met property by spending $2 million on exploration annually, financing a feasibility study and arranging up to $500 million in production funding. Confirmation by BHP that a few stones are in the 1-3-carat range is significant because the bigger stones are worth a lot more money, said Ronald Stokes, a Vancouver-based gemologist and consulting engineer. “The results justify the faith that Dia Met has shown in the area and should kick off more exploration around Lac de Gras,” he said.

Rumor has it that eight helicopters have already been reserved for summer exploration by Monopros, the exploration affiliate of diamond marketer De Beers Consolidated. Monopros owns a large block of ground immediately to the west of the Dia Met-BHP play.

Other area players, including Aber Resources and Southernera Resources (TSE), are also considering their summer plans, according to Southernera Vice-President Robert Gannicott.

“Diamond exploration is very much in vogue right now,” added Hugh Harbinson, chairman of Toronto-based Queenston Mining (TSE), which

has acquired 30% of Thermal Explorations (ASE), another player in the Point Lake region.