Manitoba kimberlites prove elusive

Vancouver — A 1999 report by the Manitoba Geological Survey which showed that the province is geologically prospective for hosting diamond occurrences sparked a staking rush in the Superior craton. However, after more than three years of exploration work, the diamond-hosting kimberlite pipes remain as elusive as ever.

At the peak of exploration activities in 2000, major diamond players such as BHP Billiton (BHP-N), De Beers Canada Exploration and Kennecott Canada, a subsidiary of mining giant Rio Tinto (RTP-N), held 2,401, 8,495 and 2,958 sq. km of Manitoban ground, respectively.

The newest player to enter the province is search of diamonds is Dunsmuir Ventures (DVV-V), which recently signed a letter of intent with BHP Billiton Diamonds to co-explore selected areas in Canada, including a joint venture on the Moose property in Manitoba.

Under the deal, Dunsmuir will use data previously collected by BHP Billiton to select three target areas. The junior can earn 100% in any of the properties by spending $1.5 million during the first year of the alliance and $1 million in each subsequent year for a total of five years. In return for providing the geological data, BHP Billiton will retain certain back-in-rights, which are exercisable once Dunsmuir completes a mini-bulk sample (minimum 25 tonnes) on any discovered kimberlitic body found as a result of the use of the data. In return for the back-in rights, BHP Billiton will pay a discovery bonus of 300% of Dunsmuir’s exploration expenditures of that particular kimberlitic body.

The major also retains a 60% back-in-right for all non-diamond discoveries and can increase its stake to 70% by bringing the discovery into commercial production.

The first project has Dunsmuir earning a half-interest in the Moose property. Situated in east-central Manitoba, the project is underlain predominantly by Archean granitic rocks belonging to the Superior Province. The property hosts the largest kimberlite indicator mineral train outside of the diamond-producing Lac de Gras region in the Northwest Territories. BHP Billiton has spent $4.5 million looking for diamonds in the area since first staking claims in 1999. Work to date on the property includes till sampling, airborne and ground geophysical surveys, and diamond drilling.

The first two rounds of drilling tested more than seven magnetic anomalies but intersected no kimberlite. Based on the results, BHP Billiton’s junior partner, New Blue Ribbon Resources (NBL-V), elected to drop its option to earn an initial 30% interest in the 2,374-sq.-km land package.

Dunsmuir plans to collect more till samples, followed by ground geophysical surveys, leading to drilling later in the year.

In order to fund exploration, Dunsmuir is raising $1.75 million through two financings. The first is a private placement of 5 million units priced a 25 each. A unit consists of one share and half a warrant. A full warrant is exercisable into a share at 50 for two years. In the second financing, BHP Billiton will take 1.2 million units on the same terms, as well as a $200,000 non-interest-bearing debenture convertible into shares at 25.

Dunsmuir is being led by Art Ettlinger, a former mining analyst with Yorkton Securities, and Jennifer Pell, a former government geologist.

Valerie Gold Resources (VLG-V) continues to hunt for the kimberlite source in the area around Gillam, on the south side of Stephens Lake. Valerie Gold has the right to acquire the 165 sq.-km Crystal property, some 35 km east of the town. The property hosts 10 magnetic geophysical anomalies and borders ground held by BHP Billiton. The property is covered by a thick layer of glacial clay, till and boulders. The junior currently has the rig turning, testing nine of the geophysical anomalies.

Valerie can acquire the ground by paying $100,000 over three years and issuing 100,000 shares. The property is subject to a 1% net product royalty to the owner.

The junior also inked a deal to earn a 75% stake in Exploration Permit 229, about 50 km east of Gillam. The price tag for its stake in the 500-sq.-km concession is $105,000 in cash payments and 200,000 shares issued over three years.

Concession 229 lies immediately south of the Crystal property, at the head of a 150-km-long kimberlite indicator mineral train with G-10 garnets reported on the property. An airborne geophysical survey identifed five isolated magnetic anomalies, and Valerie Gold intends to run additional surveys to prepare these targets for drilling.

Earlier this year, field work prompted the Frank Lang-led junior to drop its option of CanAlaska Ventures‘ (CVV-V) Starlight project. The property lies 120 km south east of Gillam and borders ground held by Falconbridge (FL-T) and De Beers. Valerie Gold was earning a 60% interest in the property and had completed an airborne magnetic survey, successfully identifying 14 magnetic anomalies. However, follow-up work led Valerie Gold to concentrate on the area closer to Gillam.