DIAMOND SPECIAL — From `down under’ to `up here’ Ashton

If the Cross property in the Northwest Territories is regarded by industry-watchers as a success, it is not simply because it has already yielded a number of diamonds but also because it proves that the Australian-spawned company exploring it can use its expertise to find kimberlites in areas that others have passed by.

For Vancouver-based Ashton Mining of Canada (TSE), it is a new spin on an old twist since its Australian parent is known for finding the unexpected. The parent and its joint-venture partner proved to a surprised mining company in 1970 that lamproites can be diamond-bearing, just as kimberlites were known to be. The high-grade Argyle mine, yielding stones of up to 7.48 carats, demonstrated the potential of lamproite finds even though its value per carat is relatively modest.

The fact that Canadian-based Ashton is finding diamonds in North America testifies to the effectiveness of its exploration strategy.

The company is not content to rely upon private laboratories to process field samples, says President David Hurburgh. To this end, it has established its own laboratory with skilled staff and advanced equipment to implement pre-determined quality-control standards, as well as provide speedier test results.

“If we find something, we can act upon it right away,” says Hurburgh, explaining that the company can dictate field-sampling standards accurately and ensure the sample’s integrity throughout the test process. “We encourage communications between our field and laboratory staff,” he says. Laboratory staff, as well, spend time in the field to ensure they are

“multi-disciplinary.”

These efforts are contributing to the formation of a database of historical research that will guide the company toward potential sites. Moreover, this database can be supplemented with Ashton Australia’s hefty library of research, Hurburgh says. The bottom line is that while Ashton Canada is covering a lot of ground and sifting through a lot of samples, each test result is helping to build a composite of indicators, or clues, that unearth kimberlites missed in the first staking rush. Although lamproites exist in Canada, the company is looking primarily for kimberlite pipes. The same process has occurred in Australia, says Hurburgh, adding that in the past 18 months the parent company has discovered more kimberlites than it has in the past decade.

In terms of staking, Ashton Canada was about a year behind the rest of the companies staking ground in the Territories and therefore missed out on securing a land position within the “Corridor of Hope” — the portion of the Slave Craton where many of the major players have announced kimberlite finds. “Instead, we developed a working relationship with juniors on the west side,” says Hurburgh, who adds that trace minerals indicating kimberlites were found well-removed from the principal corridor. The company focused on an area 100 miles west of the Dia Met Minerals-BHP Minerals claim, and was successful in finding a kimberlite pipe.

“To date, all the kimberlites in the Northwest Territories have been found in, or nearby, a lake,” he says.

The Cross property is no different, and the company has drilled to find a kimberlite which has yielded not just microdiamonds, but macros as well. The fact that macros have been found is encouraging, as some kimberlites contain only micros, Hurburgh points out.

As well, it is well known that kimberlites occur in clusters, which accounts for Ashton’s having formed a joint venture with juniors in the surrounding areas. It now has hundreds of thousands of acres staked and ready to be explored.

The more potential kimberlite targets the company is able to stake, the greater are its chances of finding a major diamond-bearing property. “There are 4,000 kimberlites staked (in the world),” Hurburgh says. “However, only 20-30 are significantly mineralized to be economically viable.” Using its exploration skill, Ashton has been able to demonstrate that diamond potential exists outside the Territories. One of its successes has been in the northern Ontario-Quebec region, where muskeg prohibited it from using indicator minerals to find anomalies. Aeromagnetic imaging has been used to locate an anomaly in the James Bay joint-venture area.

Hurburgh believes initial results on the James Bay property are as significant as some of the early results reported from properties in the Territories. Yet, despite historical evidence of other diamond exploration activity, companies have tended to bypass the region.

“Everyone believed that if you were exploring for diamonds, you should be in the Northwest Territories — we have shown that is not true,” Hurburgh says, adding that competing companies have now moved into the region. “We think Ontario today is comparable, in terms of diamond exploration, to where the N.W.T. was two or three years ago.”

Ashton Canada has entered into the James Bay play by joint-venturing with juniors. As a result, says Hurburgh, it entered the region “without costing the company a cent.”

Results from both the Cross and the James Bay ventures have been modestly encouraging, yielding macro as well as micro counts. At the Cross site, the company expects to announce results of further on-site drilling shortly. Should these be favorable, it could then make the decision to move to larger bulk samples.

“There is a need to go back to the kimberlite and do some further work because it is still open on one end,” Hurburgh says. “This winter we will probably do further drilling.”

All this research is consistent with the company’s long-term investment strategy. Although Ashton Canada was late to jump on the Territorial band wagon, it now has $20 million in the till, which is especially advantageous considering that many of the earlier-staked claims come up for renewal in the next year or so. Hurburgh says companies unable to meet the $4-per-acre expenditure

requirement will be sifting through their holdings and letting lands go, and Ashton Canada may consider buying some of them.

However, it does not plan to work alone. “Our approach towards exploration in Canada is not to fund anything 100% ourselves,” he says. “It is to share the risk with a joint-venture partner. And when we have a site with good potential, we will acquire a 51% interest in the property, or better.” While Ashton Canada is enjoying moderate success in its initial exploration, the Australian parent has more advanced results. These include Argyle diamond production of 8.004 million carats for the quarter, and two more kimberlite pipes discovered at Merlin in the Territories (bringing the total to nine). Bulk sampling will begin this fall at Merlin.

— The author is a freelance writer based in Vancouver, B.C.