Inco bails on DFI

A season’s worth of drilling has led Inco (N-T, N-N) to drop its option on Diamond Fields International‘s (DFI-T) Ammassalik Island nickel properties off the southeast coast of Greenland.

Under a deal inked in June, the nickel giant stood to earn a 65% stake in the land package by spending up to US$3 million before the end of 2008. A second deal in August paved the way for Inco to pick up a 51% interest in another 410 sq. km worth of land held under a joint venture between DFI and state-owned Nuna Minerals by spending another $1 million.

Inco’s 2005 drilling campaign tested nickel showings and geophysical targets outlined by DFI during the previous two seasons. DFI says that Inco was not encouraged by its results, and the major will not retain any interest in the land package.

Further, DFI says it is reviewing its own data together with Inco’s report to determine if further exploration is warranted.

The Ammassalik project covers some 634 sq. km of gneiss and supracrustal rocks within an igneous diorite complex composed of three separate plutons and exposed for more than 500 km. The rocks on the land package contain banded iron formation and pods of serpentinized ultramafic rocks similar to those found within Manitoba’s Thompson nickel belt in terms of age, structure, geochemistry and petrography.

The initial discovery at Ammassalik was the result of a chip-sampling program on the deeply weathered surface of a mineralized outcrop. The sampling yielded average grades of 1% nickel and 0.3% copper as well as significant quantities of platinum group metals, gold and silver.

Geophysical surveying subsequently has identified a trail of ultramafic pods over a distance of 2.5 km between two mineralized outcrops. Field observations also confirmed a second, thin layer of ultramafic pods at a higher level within the stratigraphy and initial field work traced nickel-bearing massive sulphide boulders in scree for over 9 km along strike.

Meanwhile, in the boardroom, DFI has appointed Darren McDonald to replace outgoing chief financial officer, Kenneth Hecker, who is resigning at the end of the year. Hecker also leaves his post as chief operating officer and secretary.

Earlier in December, DFI’s Cape Town-based director of operations, Roger Daniel, replaced Gregg Sedun as president and chief executive. Sedun stepped down from the dual roles to pursue other endeavours.

The management changes are part of DFI’s decision to move its head office to Cape Town, South Africa, from Vancouver in order to cut overhead costs.

Shares in DFI were half a penny better at 17.5 in late afternoon trading in Toronto following the news on Dec. 28; Inco was off 52 at $50.76.