Although a decade has passed since diamonds were first discovered in Canada, the potential for further discoveries has not yet diminished, as evidenced by the success of
(Ashton also made a significant find in the Otish Mountains region of north-central Quebec this past fall with the discovery of two kimberlitic bodies. Confirmation that both bodies are diamondiferous has spawned a Quebec area staking play.)
Ashton was formed in 1993 as a North American diamond exploration vehicle for Australia’s Ashton Mining, which held a minority interest in the Argyle diamond mine in Western Australia. The junior was listed on the Toronto Stock Exchange in October 1993 after completing an initial public offering that raised almost $27 million. In the past eight years, Ashton has discovered a total of 54 kimberlites in Canada, 36 of which are in Alberta.
In late 2000, London-based
Argyle is the world’s largest producer of diamonds by volume. In 2000, the open-pit operation produced 26.5 million carats. However, most of the diamonds produced there are of relatively low value. The Argyle stones are independently estimated to be worth a long-term price of US$12 per carat, compared with an average price of US$168 per carat commanded for diamonds mined during 2000 from the Panda pit at Canada’s Ekati mine in the Northwest Territories.
Rio Tinto picked up a controlling stake in Ashton Canada with the takeover of its Australian parent company. The Rio group already explores for diamonds in Canada through its wholly owned subsidiary, Kennecott Canada Exploration. Separately, Kennecott has made a significant kimberlite find south of the Coronation Bay area on a large claim block optioned from
A perceived conflict between Ashton and Kennecott triggered Rio’s decision last May to shop around its Ashton block. However, after taking down a $2-million financing in Ashton in August and half of an $8-million financing priced at $1.10 in November, Rio Tinto told Ashton it intended “to review all of the available options for its beneficial shareholding in the corporation.” This statement has been interpreted by many to mean Rio has taken down the “for sale” sign in light of Ashton’s recent discoveries. Ashton’s share price has been on an upward trend since the company announced the Nunavut and Quebec discoveries in September. In recent weeks, Ashton has doubled in value, reaching a new 52-week high of $4.10 before falling back to $3.79 on Dec. 31, 2001. There are 48.7 million shares outstanding, with Rio Tinto holding a 63.8% share.
Ashton discovered two new kimberlites, Artemisia and Potentilla, in the north Slave Craton region in early September. The area is about 500 km north of Yellowknife and 100 km southeast of Kugluktuk (formerly known as Coppermine). The Artemisia kimberlite, discovered on the Kim property, 50 km south of Coronation Bay, has returned 342 microdiamonds and 38 macros from 103.2-kg of sampled drill core. (A macro is here defined as exceeding 0.5 mm in at least one dimension.)
Thirteen of the macros are greater than 0.5 mm in at least two dimensions, and the largest stone measures 1.23 by 1.15 by 1.1 mm. Further material from the discovery hole is undergoing microdiamond analysis.
Listed below, for comparison purposes, are the initial micro counts from the discovery holes drilled into four commercial pipes: A-154 South, A-154 North, A-418 and A-21. These pipes comprise the Diavik diamond mine project, owned by Rio Tinto and
– The discovery hole at A-154 South yielded 894 micros and 402 macros, including 112 stones greater than 1 mm in at least one dimension, from a 750.8-kg sample.
– A-154 North returned 376 micros and 170 macros from a 373.2-kg core sample.
– A-418 yielded 487 micros and 235 macros, with 54 of the diamonds exceeding 1 mm in at least one dimension.
– A-21 returned 116 micros and 38 macros from 154.6 kg of core.
These four pipes hold a combined reserve of 25.6 million tonnes grading 4 carats per tonne, equal to 101 million carats. Startup of the Diavik project is scheduled for April 2003.
Ashton returned to the Kim property this past summer to investigate unexplained indicator mineral dispersion trains identified in previous years. Follow-up till sampling returned high indicator mineral counts. One sample in particular returned more than 300 indicator grains, as well as a diamond measuring 0.7 by 0.56 by 0.45 mm. Further work identified kimberlite float dispersed over an area of 150 by 140 metres. A vertical hole collared in the centre of this area intersected 169.2 metres of breccia diatreme facies kimberlite before shutting down while still in kimberlite.
During the fall drilling program, Ashton collected a 1-tonne test sample of outcropping kimberlite from Artemisia for macrodiamond analysis. Results should be available in the weeks ahead.
The Kim property is part of the Slave regional joint venture between Ashton and
Potentilla
The Kim property adjoins the western property boundary of the Kikerk Lake property, which hosts the diamondiferous, but small, Potentilla kimberlite, 10 km east of Artemisia. Ashton can earn up to a 59.5% interest in Kikerk Lake from
Potentilla has yielded 230 micros and 22 macros from a 207.8-kg aggregate drill sample of two distinct facies. Samples of the diatreme phase weighing 129.1 kg returned 160 micros and 15 macros. Seven of the macros measured more than 0.5 mm in two dimensions, with the largest stone measuring 2.13 by 1.94 by 0.87 mm.
The deeper hypabyssal phase returned 70 micros and seven macros from 78.7 kg of drill core. Three of the macros were greater than 0.5 mm in two dimensions, with the biggest stone measuring 0.8 by 0.52 by 0.39 mm.
Ashton discovered the Potentilla kimberlite while drill-testing magnetic targets associated with two distinct mineral trains. A diamond shard, measuring 1.37 by 0.99 by 0.87 mm, was recovered, along with more than 1,900 indicator mineral grains from a single till sample taken near the head of the dispersion train associated with the Potentilla discovery.
Potentilla is represented by a 140-by-60-metre magnetic anomaly. A vertical and an angle hole were drilled in the centre of the anomaly, and both intersected diatreme facies kimberlite underlain by hypabyssal kimberlite. The vertical hole intersected kimberlite breccia to a depth of 142 metres, before passing into a hypabyssal phase of kimberlite. The hole was terminated while still in hypabyssal facies at a depth of 185 metres. The angle hole intersected 97.3 metres of predominantly breccia diatreme before punching through into sedimentary rock.
Ashton optioned the 154-sq.-km Kikerk Lake property from Caledonia in 2000 and can earn an initial 52.5% interest by spending $750,000 on exploration. By funding Caledonia’s share of expenditures on the property through completion of a bankab
le feasibility study, Ashton can boost its interest to 59.5%, thereby diluting Caledonia to a 10.5% stake. Northern Empire can maintain its 30% interest by contributing its share of exploration costs.
The Kikerk Lake property was originally staked in 1993 by the Hunter Exploration Group and optioned to Caledonia in early 1994 based on preliminary results from regional stream and till sampling. Caledonia conducted till sampling, geophysical surveys and limited drilling between 1994 and 1997, before optioning a 30% stake to Portree, a private company controlled by Caledonia’s former chairman, Dennis McLeod.
Portree completed four holes in 1997 while testing geophysical targets but encountered no kimberlite.
G10s
Northern Empire Minerals (formerly known as Condor International Resources) acquired Portree’s option and interest in the property in early 1998. Northern Empire zeroed in on a 5-by-5-km anomalous area in the northwestern section of the property, where several clusters of indicator mineral trains were defined. The kimberlite indicator minerals included G10 and eclogitic garnets. That summer, Northern Empire carried out further till sampling and geophysics. One particular till sample returned 5,000 indicator mineral grains. Many of the grains were adhered with kimberlite alteration rinds or kimberlite material, suggesting a nearby source. An 11-hole drilling program at the end of the 1998 season failed to intersect kimberlite.
In the fall 2000, Ashton conducted heavy mineral sampling over a 5.5-by-2.5-km grid in the central northwestern section of the property, collecting 512 samples at 100-to-200-metre spacing. This work, combined with the results of 400 previous samples, delineated at least three distinct mineral trains with varied chemistry and fresh abrasion characteristics. A follow-up ground geophysical program was done at the head of the dispersion trains in April 2001, resulting in the identification of five magnetic targets.
In late August and early September, Ashton completed a 538-metre, 4-hole drill program testing two of the anomalies. Drilling on the first target intersected the Potentilla kimberlite. A second target, 1 km further to the east, was tested with two angle holes. A highly altered clay-rich, serpentine-, carbonate- and phlogopite-bearing breccia was hit. The brecciated host rock contained two narrow kimberlite dykes, 45 cm and 15 cm in thickness, along with abundant thin stringers of kimberlite. Based on the initial analysis, Ashton believes that there may be another source of the second indicator mineral train, which is 1.5 km long and 500 metres wide.
The third dispersion train is loosely scattered over the most northwesterly claim. Ashton collected 321 additional till samples last summer to define the anomalous zones and provide coverage over the remaining unexplored areas of the property. In addition, a ground geophysical survey over the Potentilla discovery area has isolated two subtle but large anomalies.
Brokered financing
Northern Empire recently closed a brokered financing of 2.8 million units priced at 41 apiece for net proceeds of just over $1 million. The offering consists equally of flow-through units and non-flow-through units. Each unit consists of one share and one non-flow-through warrant. Two warrants entitle the holder to buy an additional share at 45 for one year. Northern Empire is trading at 82 in a 52-week range of 88-12, with approximately 10 million shares outstanding, or 13.2 million fully diluted.
Just 15 km southwest of Kikerk Lake sits
De Beers collected nine tonnes of kimberlite from six holes drilled into the pipe last spring for macrodiamond analysis at its South African lab. Results have been pending for some time now. The South African major can earn a 70% interest in the 10-sq.-km property, situated 80 km south of Coronation Bay, by spending $10 million on exploration over six years. Rhonda will retain a 30% interest carried to production.
Rhonda also holds a 100% interest in 325 sq. km of ground contiguous with the Knife property. The junior carried out a reconnaissance summer sampling program across the Inulik property, collecting 571 till samples. The junior is trying to raise $1 million through the sale of 1.7 million flow-through units priced at 40 each. A unit will consist of one common share and a share purchase warrant exercisable at 60 for one year. Proceeds will be used to fund follow-up exploration at Inulik in the 2002 season.
Rhonda has 28.6 million shares outstanding and is trading at 39 in a 52-week range of 70-30.
Ric property
Farther to the southeast lies Ashton and Pure Gold’s Ric property, where the Perseus kimberlite dyke system was discovered in 2000. After uncovering diamond-bearing kimberlite float widely distributed over a distance of 1.4 km, Ashton sunk five holes into the Perseus target in the fall of 2000. Four of the holes were spotted from the same site; the fifth stepped out 50 metres to the east. The holes all cut 10-metre-thick intercepts of kimberlite. In total, 55 micros were recovered from 211 kg of core sample.
Ashton returned in late August and further tested the dyke system with two angle holes collared at 290 and 420 metres along the interpreted strike length from the initial discovery area. Both holes encountered 10-metre-thick intervals of kimberlite, confirming Perseus is a gently dipping body that extends over a distance of at least 470 metres.
Farther to the south, Kennecott Canada Exploration made three kimberlite discoveries on the Rockinghorse property in the second half of 2001, including the highly diamondiferous Anuri kimberlites. Kennecott can earn up to a 62.5% interest in the large block of claims from Tahera by funding all costs through completion of a bankable feasibility study. The joint venture now covers more than 1,500 sq. km of mineral claims.
The Anuri kimberlite was discovered in July in a small bay at the head of a prominent indicator mineral train and is significantly diamondiferous. In total, 600 micros and 337 macros were recovered from 656 kg of processed kimberlite core. Sixty-one of the macros exceeded a 0.5-mm square mesh screen size, and nine of the macros were larger than a 1-mm square mesh size. The largest stone recovered weighed three-quarters of a carat.
The discovery prompted Kennecott to stake more ground in the area and carry out geophysical surveys and till sampling within a 20-sq.-km radius around Anuri. Kennecott followed-up with the discovery of a second kimberlite body right beside Anuri. Caustic fusion analysis on 129.4 kg of drill core from Anuri East has yielded 75 micros and 34 macros, including five diamonds greater than a 0.5-mm square mesh size, and a single stone exceeding 1 mm square mesh.
Qamutiik
A third kimberlite, known as Qamutiik, was found 9 km northwest of the Anuri kimberlites. The land-based kimberlite was tested by two holes. A vertical hole intersected a 59-metre interval of kimberlite between a depth of 6 and 65 metres. An angle hole collared from the same site intersected 78 metres of kimberlite interspersed with 19 metres of broken granite. Microdiamond counts remain pending.
Exploration drilling at Rockinghorse will resume in February. The program, budgeted at $1.5 million, will further evaluate the potential of the Anuri kimberlites, along with 25 other targets.
In related news, Kennecott uncovered diamond-bearing kimberlite float while conducting reconnaissance work this fall on Tahera’s Jericho project, 120 km southeast of Rockinghorse. The field program was designed to generate drill targets within a 10-km radius of the Jericho pipe, which contains a total resource of 7.1 million tonnes grading 0.84 carat per tonne. Kennecot
t’s work identified four distinct occurrences of kimberlite float in association with previously defined indicator mineral trains.
A 7-kg sample of float found at the end of a mineral train terminating 900 metres west of the Jericho kimberlite, yielded one micro and six macros. Kennecott has taken an option on the Jericho project and will have a year in which it can elect to incorporate the project into the existing joint venture with Tahera. Kennecott is required to spend at least $1 million drilling a minimum of 20 targets.
The major has agreed to take down a $1.2-million private placement in Tahera, which will issue 3.8 million shares at a price of 32.5 per share. Tahera is currently trading at 16.5 in a 52-week range of 20-11. The junior has 304 million shares outstanding, or 429 million on a fully diluted basis.
A staking rush is under way in what has been labeled the Coronation Gulf district, with a number of individuals and mineral exploration companies picking up ground along the ever-expanding fringes.
Stornoway
Northair Group’s
The company has also entered into a joint-venture arrangement with three other juniors on a separate property. Each of the four companies can acquire a 20% interest in the Jubilee property by spending $200,000 on exploration and issuing varying amounts of shares.
Stornoway has beefed up its board of directors by adding Eira Thomas, a director of Aber Diamond and president of
Randy Turner’s
Other juniors with various levels of participation in the North Slave include: Navigator Exploration,
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