Lithoquest Diamonds heads to Australia

Any new diamond exploration venture that gets off the ground these days is a notable one.

Indeed, Bruce Counts, the CEO of Lithoquest Diamonds (TSXV: LDI), was involved with private company Proxima Diamonds, an explorer focused on the Slave Craton in the Northwest Territories that was planning to launch publicly in 2014.

“Unfortunately, the timing wasn’t great,” Counts says, and the public listing didn’t happen.

Although he’s not sure the timing is any better now, Counts notes that Lithoquest was able to go public through a reverse takeover in November 2017, based on promising results from its North Kimberley project, in Western Australia.

Counts, who ran junior explorer Indicator Minerals from 2004 to 2010, was also part of team that made the Ekati discovery, working for BHP Billiton (NYSE: BHP; LSE: BLT) as a project geophysicist and later, for Dia Met Minerals.

Counts became interested in Lithoquest’s North Kimberley project in 2015, when his friend and president of Apex Geophysics, Mike Dufresne, showed him results of a rock sample he’d taken on the property in 2007, shortly before the market crash.

“As explorers, we chase chemistry, and the mineral chemistry of the kimberlite indicator minerals that were recovered from rocks on this property are amongst the best I’ve seen in twenty-five years,” he said.

The rock was chosen to be sampled because it looked kimberlitic, Counts said.

“This part of Australia, you haven’t had glaciation for several hundred million years, so the rocks are deeply weathered. So it was really more textural than anything else,” he explains.

“The fact that Mike had been prospecting and found these indicator minerals, to me, was very compelling. I thought that you can’t be too far from the sources given that they’re rocks.”

Following up on those results, the company took four samples from two locations that also turned up indicator minerals.

Since going public and raising $5 million for its first exploration program, Lithoquest has collected rock samples, loam samples and stream sediment samples, as well as completing a 1,200-metre drill program to test five targets.

In April, Lithoquest announced that three microdiamonds (two yellow and one grey) had been recovered from a 10.06-kg sample collected from a weathered outcrop at North Kimberley.

The company’s first drill hole was targeted to drill directly underneath that outcrop, but only hit basalt — “a bit of a headscratcher,” Counts says.

One drill hole at Kimberley North did hit kimberlite. In September Lithoquest reported that one of two holes drilled at target 1804 hit kimberlite breccia from 100.5 metres depth to 124.3 metres, in between intervals of clay-altered and then carbonatized and fresh basalt. The core has been sent to Canada for a detailed review and then diamond testing at the Saskatchewan Research Council. Results are expected before year-end.

“It’s very early and we have not done all the required work to be definitive on this, but it appears to be volcanoclastic in nature, so it means you’re looking at something that’s more like a pipe than a dyke, which is always good. The mineral chemistry is very compelling and the rocks look very good.”

For next year, Lithoquest will focus on developing new targets and refining its exploration program in the hopes of finding more diamond-bearing kimberlite.

“Now that we’ve drilled a kimberlite, we’ve got an indication of the geophysical properties that show up on geophysics, so we can use that as a sort of a fingerprint to look for other targets in the area.” Counts says.

The company may also fly new surveys to update and tighten up the line spacing on the airborne data it has for North Kimberley, given the last EM and gravity surveys were conducted in the early 2000s, and magnetic and radiometric in 2008. It currently has a treasury of $2 million.

The 1,500-sq.-km project is located on tidewater in northwestern Australia, and accessible by a seasonal road for eight months of the year (excluding the rainy season).

Western Australia also hosts the Argyle and Ellendale diamond mines, although they are located several hundred kilometres from North Kimberley and are lamproite deposits rather than kimberlite.

While most Canadian diamond explorers prefer to explore nearby, Counts sees several advantages to going so far from home.

“Diamond exploration in Australia has been very quiet for ten years,” Counts says. “One of the great things is we’re blending the Australian expertise with the Canadian expertise, and I think that’s really gone a long way to giving us success.”

— This article was first published in the November 2018 issue of Diamonds in Canada.