Arctic diamond hunt heads east - The Northern Miner

Arctic diamond hunt heads east

STORNOWAY DIAMONDA drill platform at Stornoway Diamond's Aviat project in eastern Nunavut, where the company plans to focus the lion's share of its exploration dollars in 2006.

STORNOWAY DIAMOND

A drill platform at Stornoway Diamond's Aviat project in eastern Nunavut, where the company plans to focus the lion's share of its exploration dollars in 2006.

Vancouver — With most of the best prospects in the Lac de Gras diamond camp already in senior company hands, Canadian diamond exploration companies have shifted their focus to less explored areas considered prospective for significant discoveries, notably the eastern Arctic where several major drilling programs are in full bore.

At a recent investment seminar in Vancouver, Spotlight on Canada’s Eastern Arctic, mining analyst Eric Zaunscherb and newsletter writer John Kaiser (of Kaiser BottomFish.com) agreed that eastern Nunavut is one of the best places to watch for the discovery of the “next generation” of Canadian diamond mines.

Four diamond companies — Stornoway Diamond (SWY-T, SWYDF-O), Shear Minerals (SRM-V, SRMUF-O), Diamonds North Resources (DDN-V, DNORF-O) and Indicator Minerals (IME-V, IMEEF-O) — are the dominant players in the region, with each junior holding millions of hectares of ground from which their core projects were discovered and developed. The companies share another common element; all are managed by geoscientists involved in the diamond exploration boom spurred by the Lac de Gras discoveries north of Yellowknife, N.W.T., in the early 1990s.

Kaiser said these companies survived, where hundreds of others failed or abandoned the quest, by virtue of doing the necessary work over many years to advance and upgrade their projects.

“The technical work is intense and the timeline is brutal in the diamond exploration business, and that has winnowed out the juniors not committed to the business,” he said.

Experience matters in diamond exploration, which explains why Stornoway was able to raise more than $53 million for exploration since 2002. The company is led by Eira Thomas, who played a key role in the discovery of the Lac de Gras kimberlites later developed into the Diavik mine operated by Rio Tinto (RTP-N) with 40% partner Aber Diamond (ABZ-T, ABER-Q).

Stornoway has exposure to more than 16 million acres of prospective properties in northern Canada, whittled down from 52 million acres, and has discovered three new kimberlite fields in eastern Nunavut. Aviat, which encompasses about 1.6 million hectares on the Melville Peninsula, is the most advanced target. Nine kimberlites have been discovered to date, each containing significant initial diamond counts.

“Aviat is going to remain our focus in 2006,” says Thomas, adding that the AV-1 kimberlite body has returned a sample grade of 0.83 carat per tonne from 10.4 tonnes analyzed.

Stornoway’s sampling programs in the region have revealed a 70-km-long trend of elevated kimberlite indicator mineral counts, referred to as the “Tremblay corridor.” More than 350 kimberlite boulder occurrences were discovered from five distinct and as yet unsourced dispersion trains within the corridor. Differences between the indicator-mineral assemblage of known kimberlites and the promising geochemical results from regional till samples have yet to be explained.

“We believe there may be a second generation of targets at Aviat,” Thomas says, adding that more sampling is planned, as geophysics is not particularly helpful. “Most of our discoveries resulted from our prospecting and (geochemical) sampling efforts.”

Stornoway plans to spend at least $15 million on its northern diamond projects this year, which climbs to $22 million after factoring in contributions from joint-venture partners.

In addition to Aviat, Stornoway owns or has interests in the Churchill and Churchill West projects in eastern Nunavut, along with projects in the western Arctic, the Coronation Gulf region and northern Manitoba, and a joint venture in Botswana.

Shear Minerals is the 51% owner and operator of the Churchill project, with the balance held 35% by Stornoway and 14% by BHP Billiton (BHP-N). In late April, the partners approved a $4.6-million budget for the project, which covers more than 800,000 hectares near Rankin and Chesterfield Inlets, in the Kivalliq region of Nunavut.

The 2006 field program is under way, and will include drilling to test up to 25 geophysical targets situated at the heads of discrete indicator mineral trains, including one containing diamonds and highly prized G10 garnets.

Churchill West encompasses about 160,000 hectares near Rankin Inlet. BHP has opted not to participate in this project, which reduced its interest to 6.1%, with the balance held 26.8% by Shear, 18.4% by Stornoway, and 48.7% by International Samuel Exploration (SAZ-V, SAZEF-O).

About $400,000 will be spent at Churchill West this year, including ground geophysics, till sampling and prospecting of select targets.

Shear president Pamela Strand notes that the kimberlites identified to date at the Eastern Arctic projects are land-based, with the data suggesting two distinct types of pipes on the property.

“The first type has strong magnetic signatures, but low diamond-bearing capacity, while the second has a subtle geophysical signature and positive indicator mineral counts from geochemical sampling.”

Shear Minerals has other diamond projects, and has raised more than $19 million in the past few years to advance its portfolio of projects.

Diamonds North, meanwhile, has reduced its holdings to 6.2 million hectares from 10.8 million across Canada’s North. The company has also advanced five priority projects to the drill-ready stage.

President Mark Kolebaba and Bruce Kienlen, vice-president of exploration, are particularly encouraged by results from the Amaruk property in the Pelly Bay region. Microdiamonds from the Umingmak kimberlite pipe and the WMC kimberlite float occurrence at Amaruk were submitted to Mineral Services Canada, a firm that has analyzed microdiamond data from mines and exploration projects around the world.

The 209 microdiamonds submitted for analysis were described as having “absolutely exceptional” colour, with all but two classified as colourless, with 75% showing octrahedral crystal morphology, and also “exceptionally high” clarity. The favourable shapes, lack of colour and absence of fractures and inclusions are all positive features, particularly if carried through into a macrodiamond population.

Diamonds North notes that every kimberlite sample from the Pelly Bay region has yielded diamonds. More work is planned for this year. The company’s other priority projects are situated on Victoria Island, and in the Northwest Territories, near known diamond-bearing projects.

Indicator Minerals holds about 3 million hectares in Canada’s Eastern Arctic, and has enjoyed the most success at its Barrow and Darby projects in the emerging Franklin diamond district. President Bruce Counts says this year’s program is mostly focused at bringing several “high-confidence” targets to the drill-ready stage.

Barrow became a high-priority project last year after a 25.5-kg sample of kimberlite float yielded 176 diamonds, including five macros. Previous work at Darby over two years has identified three distinct kimberlite float trains, and more than 35 geophysical targets. A priority at Darby is the Iceberg target, where numerous G10 pyrope garnets coincident with a geophysical anomaly were recovered.

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