Shore wishes upon a Star

Long perceived as consisting of little more than low-grade, highly complex, geological oddities, the Fort la Corne kimberlite field in north-central Saskatchewan is now known to host one of the most extensive kimberlite fields in the world, comprising some 71 known kimberlite bodies. They are among the largest diamond-bearing kimberlites in the world in terms of sheer mass, ranging up to 2.5 sq. km.

While De Beers diligently explored these bodies through the Fort la Corne joint venture from 1992 through to September 2006 before packing it in, it was Shore Gold (SGF-T, SHGDF-O) that single-handedly changed the public’s perception of the potential of these misunderstood bodies when it discovered an eruptive centre while drilling the Star kimberlite in early 2001. Shore intercepted 539 metres of kimberlite — the longest intersection of continuous kimberlite from a vertical drill hole ever reported in North America — in hole 20 before shutting down at a depth of 627 metres, still in kimberlite.

The hole provided the first real evidence of an underlying root system to the Fort la Corne kimberlites. At the 600-metre level, the Star vent has a diameter of at least 80 metres.

The hole displayed uniform diatreme kimberlite lithologies from a depth of 279 metres downward, with abundant mantle-derived xenoliths, pyrope and eclogitic garnets. A 625-kg sample taken from the upper 312 metres of hole 20 held 171 microdiamonds. The two largest diamonds measured 1.49 by 1.41 by 1.29 mm and 1.52 by 1.25 by 1.15 mm.

The Star kimberlite is at the southeastern end of the main Fort la Corne trend. Shore owns 100% of the 98-sq.-km project, which ties on to the southern boundary of the Fort la Corne (FalC) joint-venture area now held by Shore and Newmont Mining (NMC-T, NEM-N).

George Read, Shore’s vice-president of exploration and development, described the accessibility of the project and nearby infrastructure during a BMO Nesbitt Burns presentation earlier this year.

“We are close to infrastructure and accessible by a forest road in a pickup truck 365 days of the year,” he said, noting the project is only a 2.5-hour drive north from Saskatoon, Sask. “A future mine would be connected to the Saskatchewan hydroelectric power grid, which is only twenty-one kilometres from the project — a very big upside for the economics of a future diamond mine.”

The 225-sq.-km landholdings of the FalC joint venture (JV) contain 63 kimberlite bodies. Shore initially acquired a 42.25% interest in the JV by merging with Kensington Resources a little more than a year ago. In September, Shore further consolidated its position and assumed operatorship of the joint venture by buying out the interests of De Beers, Cameco (CCO-T, CCJ-N) and UEM, and, in doing so, acquired the project outright for $246 million. Shore then turned around and sold a direct 40% participating interest in FalC to Newmont, which already owns a 9.7% equity stake in Shore, for $170 million.

“The role of Newmont Capital from day one was to basically find acorns, plant them and water them, and help management to grow them. If the acorn doesn’t fit our profile, we sell them and harvest that investment,” Newmont’s outgoing president Pierre Lassonde, explained during the company’s third-quarter conference call. “We are very high on the Shore JV. It’s a very early stage exploration program but it is certainly one that is very attractive for Newmont. We think that it is something very unique in Canada.”

A main cluster comprising 52 of the FalC kimberlites forms a 32-km-long, north-northwest-oriented trend, 65 km east of Prince Albert, Sask. The kimberlites are masked by roughly 100 metres of glacial cover. The other 11 kimberlites are grouped together in a satellite cluster another 60 km northeast, near Snowden, Sask. Each of the known bodies was tested by at least one drill hole, and on that basis, 49 of the original discoveries are diamond-bearing, and 34 have yielded microdiamonds larger than 1 mm in at least one dimension.

Project history

The Saskatchewan diamond play dates back to 1988, when Monopros, an exploration arm of De Beers, unearthed what was later confirmed to be large, rafted kimberlite blocks near Sturgeon Lake, 30 km northwest of Prince Albert. Sparked by rumours of kimberlite discoveries, a staking rush ensued and close to 8,000 sq. km was snapped up near Prince Albert. Using aeromagnetic maps published by the Geological Survey of Canada, Uranerz Exploration & Mining staked a large land position covering isolated contour highs in the Fort la Corne area. Airborne magnetic surveys later revealed 88 magnetic targets in the project area.

Uranerz partnered with Cameco in 1989 to create the FalC joint venture. A first pass of shallow exploratory rotary drilling hit kimberlite in each of the seven targets drilled that year. An undisclosed number of microdiamonds were recovered from five of the seven kimberlites in drill-chip samples collectively weighing less than 100 kg. The stones were small, but generally appeared to have gem-quality characteristics. Seven larger diamonds exceeded 1 mm in at least one direction.

Drilling in 1989 sampled only the upper few tens of metres of the seven bodies. More intensive drilling beginning in 1990 revealed that many of the kimberlites, although limited to a thickness of 100 metres, were laterally extensive and contained lensoidal or pancake-shaped horizons of well-preserved, crater facies pyroclastic kimberlite.

De Beers joined the joint venture in 1992 under a 3-year earn-in agreement. The joint venture was again amended in 1995 to include Kensington, which earned an initial 25% participating interest by spending $3.4 million over three years. De Beers assumed operatorship at the end of 1998.

Star

Shore acquired the Star property in late 1995 by staking. After completing an airborne geophysical survey in spring 1996 and follow-up ground magnetics, Shore encountered multiple kimberlite horizons while drilling three widely spaced holes into the higher magnetic portions of the large, complex magnetic Star feature, which measured 2 by 1.7 km. Shore eventually drilled 36 widely spaced core holes on the anomaly.

In fall 2001, Shore drilled a single, large-diameter (24-inch) reverse-circulation (RC) hole, 50 metres southeast of hole 20, to test the potential for commercial-sized stones. On the neighbouring FalC joint venture, a 3.3-carat gem-quality stone had been recovered from a 2001 large-diameter hole on the 140/141 kimberlite, some 3 km north-northwest of Star. A 10.2-carat diamond was later recovered from the 140/141 kimberlite during bulk-sample drilling in 2002.

Shore’s RC hole intersected 192 metres of kimberlite to a depth of 296 metres, before stopping due to mechanical failure. From the 82.7 tonnes of extracted kimberlite chips, 183 diamonds larger than the 1.1-mm-sq. mesh sieve were recovered; their total weight was 8.52 carats. The two largest diamonds were fragments weighing 0.64 and 0.4 carat.

The mini-bulk sample was marred by a recovery of only 59%, based on hole-diameter and expected rock-chip returns. Studies on the chips concluded that there had been over-grinding of the kimberlite, resulting in chips that were smaller than anticipated. The kimberlite in the top 200-metre portion of the hole was found to be much less competent than that below this level, generating a much finer rock-chip sample. All material smaller than 1.2 mm was lost in the fines. Using the theoretical 140 tonnes that should have been recovered, the mini-bulk drill sample showed a diamond grade of 6.1 carats per 100 tonnes.

Overall, the results of the mini-bulk sample showed a fairly even distribution of larger diamonds throughout the hole. An increase in stone density with depth was thought to be a condition of rock competency and sample recovery. Two zones in the hole, at 175-190 metres and 285-295 metres, showed significantly higher stone counts in more competent kimberlite units.

“The Fort la Corne kimberlites ar
e big and they have a unique morphology,” Read stressed.

The kimberlite field erupted during the Cretaceous period (100 million years ago) on the edge of the Western Interior Sea; the same seaway where the oil and gas deposits of Western Canada were formed. While the inland sea was expanding, these kimberlites were erupting and eventually they were covered by seawater. The final phase of eruption was buried by marine mudstone, fully preserving the crater facies overlying the pipe. Normally, these kimberlite craters don’t survive the weathering process — only the underlying feeder pipes remain.

“However, in the case of Fort la Corne, we have this enormous potential ore reserve that is a tabular body, like the cap of a mushroom above the pipes, that is the focus of our exploration,” Read said.

After hiring engineering firm AMEC to examine the diamond distribution across the Star kimberlite, based on drill results, Shore elected to go underground to recover at least 3,000 carats for evaluation purposes and grade modelling. It involved sinking a 4.5-metre-diameter shaft down the throat of the Star eruptive centre to a targeted depth of 250 metres below surface to collect a bulk sample of about 25,000 tonnes. The vertical shaft was collared less than 100 metres east of the FalC property boundary in 2003. A portion of Star (Shore geologists currently estimate about 30%) extends across the property boundary onto the neighbouring FalC joint-venture area.

The shaft cut through 90 metres of glacial cover and reached the sediment-kimberlite interface at 107 metres. A little more than 7,600 tonnes of kimberlite were extracted during the sinking of the shaft. The remainder was mined from drifting on the 235-metre level in what is defined as the Early Joli Fou equivalent kimberlite.

The shaft cut through three distinct eruptive phases of kimberlite that are named after their equivalent stratigraphically defined horizons in the Saskatchewan sedimentary basin, namely the Early, Mid and Late Joli Fou formations of the Lower Colorado Group. The upper part of the shaft, from 107 to 171 metres, is in the Late-to-Mid Joli Fou stratigraphic-equivalent phase. The lower part of the shaft, from 190 to 250 metres, is in the equivalent of the Early Joli Fou. There is a distinct grade difference between the Early and Mid-to-Late Joli Fou kimberlite horizons, with better grades coming from the deeper Early Joli Fou.

Shore consistently recovered large commercial-sized diamonds of up to 19.67 carats during the batch-by-batch processing of the first 27,837 tonnes of kimberlite. Individual sample batches generally ranged from 250 to 350 tonnes in size. A winterized on-site processing plant, prepared by Bateman Engineering, consists of a 30-tonne-per-hour crushing circuit and a 10-tonne-per-hour dense media separation (DMS) plant, including a 250-mm separating cyclone and diamond recovery circuit that uses an X-ray diamond sorting machine and a grease table. Plant concentrates are transported to SGS Lakefield Research for final diamond recovery.

Diamond valuations done in Antwerp, Belgium, on the first 3,050 carats recovered averaged an impressive US$110 per carat. In addition, an average modelled value of US$135 per carat (within a range of US$110 to a high of US$162 per carat) was derived based on the extrapolations that a number of larger-size gemstones would be recovered in a commercial-scale mining operation.

High value

Diamond recoveries totalled 4,049 carats of rough diamonds exceeding a 0.85-mm cutoff from the processing of 25,253 tonnes of kimberlite, for an overall run-of-mine grade of 16.03 carats per 100 tonnes.

Batch samples from the deeper Early Joli Fou alone delivered 3,792 carats of diamonds from the treatment of 20,649 tonnes, for an implied grade of 18.36 carats per 100 tonnes. By comparison, the overlying Mid Joli Fou phase shows a diamond grade of just 6.27 carats per 100 tonnes based on the recovery of 231 carats from the processing of 3,685 tonnes of kimberlite extracted during shaft-sinking. A further 919 tonnes of kimberlite material classified as Late Joli Fou-equivalent held only 25.9 carats, for a grade of 2.82 carats per 100 tonnes.

During the initial bulk-sampling phase, Shore completed 1 km of underground development in an extensive network of lateral drifts and crosscuts on the 235-metre level. The company drifted laterally out into the kimberlite away from the FalC property boundary in to the northeast and southeast, guided by the results of surface and underground drilling. The phase-1 drifting was confined to an area measuring 175 metres north-south by 150 metres east-west.

Shore has since completed over 3 km of tunnels on the 235-metre level during the second and third phase of underground sampling. The phase-2 bulk sampling expanded the workings over a distance of 300 metres north to south.

The bulk-sample results from the 235-metre level indicate that there are variations of grade ranging from under 10 to more than 30 carats per 100 tonnes within the Early Joli Fou phase that appear to be broadly associated with different kimberlite units. Many of the lowest grades are explained by heavy internal dilution due to sedimentary xenoliths and reefs.

At least five distinct macrocrystic kimberlite types have been identified, including Early, Mid and Late Joli Fou, Cantuar and Pense. In addition, there are kimberlite debris flows, which represent marine reworked material mostly derived from the Late Joli Fou.

At the 235-metre level there are distinct intervals of dominantly pyroclastic and volcaniclastic kimberlite breccias forming discrete, alternating units throughout the Early Joli Fou. The pyroclastic kimberlite (PK) is estimated to comprise 70-80% of the Early Joli Fou, while the kimberlite breccia (KB) forms the remainder.

The highest grades are associated with the KB sub-unit, typically delivering grades of better than 20 carats per 100 tonnes.

The end result is a high degree of variability in the grade and diamond content of the kimberlite bodies, making them a challenge to evaluate.

In May 2005, Shore began a $60-million prefeasibility program on Star that including the extraction of an additional 18,000 tonnes of kimberlite from the 235-metre level in a phase-2 bulk-sampling campaign, as well as a comprehensive core and large-diameter surface drilling program, the definition of a mineral resource and engineering studies. The prefeasibility work is scheduled for completion by the end of 2007.

The aim of the phase-2 bulk sampling was to increase the size of the diamond parcel to 6,000 carats for improved valuation and size frequency modelling. An additional 3,016-carat parcel of rough diamonds exceeding 0.85 mm was recovered from the processing of 18,272 tonnes of kimberlite extracted during phase 2, giving a run-of-mine grade of 16.51 carats per 100 tonnes. The largest diamond recovered weighed 19.25 carats (see Table 1, on page 14, for more results.)

Combining the bulk sample results of phase 1 and 2, the Early Joli Fou kimberlite horizon shows a grade of 17.73 carats per 100 tonnes, based on the recovery of 6,668 carats from 37,611 tonnes of processed samples.

In February 2006, when the second phase of the underground bulk sampling campaign was well advanced and enough diamonds had been recovered, a 5,950-carat parcel was re-evaluated and estimated to be worth US$102 per carat on the open market.

“There is an abundance of high-quality goods and among the gem-quality diamonds, there is a good assortment of very well-shaped octahedron and very high-quality whites,” Read said. “The diamond size statistics are very positive. There is a very low proportion of boart and brown; very rare coated and some occasional fancy yellows, which have extremely high value.”

Modelling work by WWW International Diamond Consultants suggests the Star diamonds could be worth as much as US$135 per carat (within a range of US$114-US$167 per carat) based on the perceived notion that the top end (plus 5 carats) of the
diamond size frequency distribution is being under-sampled.

Read concedes that the bulk sampling has touched on only a small portion of the Star kimberlite, which extends almost 2 km across. Shore has embarked on an aggressive delineation core drill program, of which more than 200 holes totalling more than 50,000 metres have been completed. The surface drilling is being done with petroleum rigs modified to drill kimberlite.

Mine building

The objective of this drilling is to define the shape and size of Star and to delineate the internal geology. No microdiamond analysis is being done on this core. The drilling is being carried out on a 100-metre-grid spacing over the central, thick part of the body and on a 200-metre grid around the thinner periphery.

“The very detailed logging includes geotechnical work, whole-rock geochemistry and ore dressing samples,” Read explained. “We are collecting the information that we need to build a mine.”

A recently constructed geological model, compiled from a total of 311 surface and underground holes, indicates Star and Star West (the portion that extends onto the FalC joint venture) contain 276 million tonnes of kimberlite to a depth of 350 metres below surface.

“As we go through the prefeasibility study these numbers will first be defined as a resource and then as a reserve,” Read said.

Early Joli Fou is the dominant kimberlite type, accounting for 162.5 million tonnes, or 59% of the geological model. The balance is held 7.4% in kimberlite debris flows, 11% in Late Joli Fou, 5% in Mid Joli Fou, 9.3% in Pense and 8.3% by Cantuar.

The prefeasibility drilling has resulted in the discovery of a feeder vent for the Cantuar kimberlite type on the southern end of Star. Read also suspects they have found the feeder vent for the Pense kimberlite-equivalent while drilling in a ravine in the central part of the body.

“Pense is an earlier kimberlite phase that could have a very significant contribution to the economics of the deposit,” Read commented.

A phase-3 underground bulk-sampling campaign is currently under way and targeting both the Pense and Cantuar kimberlite phases, with the objective of recovering at least 1,000 carats from each kimberlite type. By the end of October, about 10,000 tonnes of bulk sample had been processed on-site. So far, the majority of the tonnes have come from drifting done in the Early Joli Fou in order to access the Pense and Cantuar kimberlite types, although at month’s end, the first two batches of Pense kimberlite had been processed and the concentrates shipped to SGS Lakefield.

To date, diamond recoveries from phase 3 of the underground bulk sample total 994.8 carats from 25 kimberlite batches representing 6,038 tonnes of treated kimberlite, giving an implied grade of 16.5 carats per 100 tonnes. The four largest diamonds are described as: 15.85 (grey coloured), 14.86 (grey), 10.26 (white) and 8.68 (brown) carats, respectively.

Three of the early sample batches, representing possible Cantuar kimberlite, yielded 62.4 carats from 439.8 kg of kimberlite, for a grade of 14.2 carats per 100 tonnes. Among the bigger stones is a 3.12-carat diamond.

In order to determine the grade variation across the kimberlite away from the shaft and underground workings, Shore is using large- diameter drilling (LDD). Two Bauer BG36 rigs operated by Luna Logistics are drilling 1.2-metre-diameter RC holes down as deep as 360 metres. The company expects to recover 10,000-12,000 tonnes of kimberlite from the 60 holes that are planned, of which 43 have been completed.

The first set of diamond results for the first 15 LDD holes were released in August (see Table 2) and those results confirm lateral continuity of grade and stone size in the Early Joli Fou kimberlite. The 15 holes, each of which were collared within 3 metres of an existing core hole on the same grid as the prefeasibility core drilling, inter- cepted Early Joli Fou kimberlite over intervals ranging up to 93 metres thick. A total of 266.3 carats were recovered from 2,249 tonnes of drill samples, for an overall grade of 11.84 carats per 100 tonnes. The grade in each hole varies from 2.78 carats per 100 tonnes in LDD-3, which was collared 650 metres away from the shaft, to 20.73 carats per 100 tonnes in LDD-11, drilled 400 metres out to the south.

The four largest stones are a 10.05-carat white recovered from LDD-11, a 6.2-carat off-white from LDD-8, a 4.82-carat white from LDD-5, and a 2.99-carat off-white from LDD-6.

The farthest hole out, LDD-3, intercepted only 20 metres of Early Joli Fou, indicating the kimberlite horizon thins away from the eruptive centre.

The two large-diameter rigs were temporarily moved off of Star in October and onto the neighbouring FalC joint-venture, where once the first phase of large-diameter drilling has been completed sometime in early 2007, the drills will return to finish the remaining holes on Star.

FalC joint venture

“The Fort la Corne joint venture is an enormous area of opportunity — there is a huge amount of kimberlite, probably billions of tonnes of kimberlite of potential ore and we anticipate replicas of Star to be found within the kimberlites,” Read said. “We want to translate the technology that we have learned and developed on Star onto (FalC).”

The target of exploration at FalC is the Orion cluster, which Read described as “a belt of Stars.”

The FalC holdings cover some 20 larger kimberlite bodies in a 5-km radius on the southern portion of the claims. Four of these bodies (140/141, 122, 148 and 150) were extensively explored from 2000 to 2004; three more (120, 147 and 121/122) were drilled in 2004.

Kimberlite 140/141 alone was shown to have an estimated footprint of 250 hectares and a mass exceeding 500 million tonnes in that part of the body having a thickness of greater than 50 metres.

The higher-grade sections of the 140/141, 148 and 122 FalC kimberlite bodies were modelled by De Beers to contain anywhere from 29 to 156 million tonnes of kimberlite at predicted grades ranging from 7 to 16 carats per 100 tonnes. Together, these units of interest contained an estimated 369 million tonnes at an average modelled grade of 10 carats per 100 tonnes, equivalent of 35 million carats using a bottom stone cutoff of 1.5 mm. The 2004 evaluation drilling on kimberlite 140/141 yielded the recovery of the largest diamond to date from FalC, a large, clear 10.53-carat stone.

The 2005 program consisted of over 140 new core holes into 18 of the kimberlite bodies, which ranged from the western extension of Star along the southeastern property boundary to Kimberlite 158, 15 km northwest. Sampling of the core resulted in over 12 tonnes of kimberlite being analyzed for microdiamonds using caustic fusion methods. Kimberlites 123, 133, 145, 147, 219, 223 and the western extension of Star all showed elevated microdiamond counts. Larger-size stones exceeding a 0.85-mm cutoff were recovered from Kimberlites 124, 147 and the western extension of Star, or Star West as it is better known.

This year’s program, which has been re-budgeted at $45 million since Shore took over as operator, is concentrating on the Orion cluster, a group of nine large kimberlites comprising 140/141, 133, 145, 120, 147, 148, 219 and 220 that have coalesced to form some 7 km of continuous kimberlite. Star West is also being further tested.

To the end of October, 218 core holes totalling 50,100 metres had been drilled as part of a systematic delineation campaign that began in June. The Orion cluster is subdivided into three main groups of kimberlite: Orion North (Kimberlites 147, 148, 120 and 122), Orion Centre (Kimberlites 145 and 219) and Orion South (Kimberlites 133, 140 and 141).

“On the Orion cluster, what we are finding is that the kimberlites are larger than originally thought, particularly on Orion North and South, and six new feeder vents were discovered during the 2006 program, which all bodes well,” said Lassonde.

Detailed core logging shows the Orion cluster contains kim
berlite horizons that are stratigraphically equivalent to the major kimberlite phases defined in the Star kimberlite.

The drilling of 152 holes on Orion North suggests that Kimberlites 147, 148 and 220 form a large contiguous body called Orion North-SE with a potential kimberlite mass of 555-600 million tonnes down to a depth of 350 metres below surface. The adjacent Kimberlite 120 or Orion North-NW as it is now known appears to be geologically distinct with a high proportion of eclogite xenoliths. It’s estimated to be 245 to 270 million tonnes in size.

“This tonnage estimate for Orion North is not a mineral resource or reserve estimate, but is an important milestone in the continued exploration of these very large diamondiferous kimberlites within the Fort la Corne joint venture,” Read stressed.

A first phase of large-diameter drilling is under way on Orion North, with 15 to 20 holes planned. The objective is to recover enough commercial-sized diamonds for early stage grade and valuation modelling. Data from core and large- diameter drilling will be used to determine the best location to sink a shaft and go underground in the second half of 2008 for a bulk sample. The FalC budget for 2007 has already been approved by Shore and Newmont at $46 million.

Read said Newmont’s bulk-mining expertise would aid in developing the FalC kimberlites, and that the companies had come up with an “aggressive and ambitious” exploration program for the joint-venture project.

“The successful exploration methods developed on the Star diamond project (pattern core drilling, mini-bulk sampling using LD drills and underground bulk sampling) can now be confidently applied to these large, prospective kimberlites of the Orion kimberlite cluster,” he said.

Table 1: Star Kimberlite Underground Bulk Sampling Results

	Tonnes Processed	Carats Recovered	Grade
			(carats per 100 tonnes)
Phase 1
Early Joli Fou	20,649.47	3,791.72	18.36
Mid Joli Fou	3,684.62	231.20	6.27
Late Joli Fou	918.80	25.89	2.82
Total	25,252.89	4,1048.81	16.03
Phase 2
Early Joli Fou	16,961.79	2,876.18	16.96
Mid Joli Fou	452.34	29.21	6.46
Drift Clean-up	857.51	111.09	12.95
Total	18,271.64	3,016.48	16.51
Phase 3
Early Joli Fou	5,521.79	928.02	16.81
Mid Joli Fou	76.30	4.38	5.74
Cantuar	439.80	62.44	14.19
Total	6,037.89	994.84	16.48

Table 2: Initial Large-Diameter Drill Results from Early Joli Fou Kimberlite

LDD Hole#	Distance	Intercept(m)	Width (m)	Tonnes	Total Carats	Grade
	from Shaft (m)			Recovered		(Carats per 100 tonnes)
2	390	156.41-176.41	20.0	50.03	4.83	9.65
3	650	126.50-146.52	20.0	60.72	1.69	2.78
4	350	133.75-180.50	46.7	123.32	16.71	13.55
5	350	138.67-230.81	92.1	247.33	23.96	9.69
6	250	122.75-216.06	93.3	193.48	25.72	13.29
7	280	142.50-186.62	44.1	113.43	7.75	6.83
8	230	126.32-207.95	81.6	203.17	27.83	13.70
9	300	143.73-186.64	42.9	97.71	18.14	18.57
11	400	147.44-184.20	36.8	91.89	19.05	20.73
13	200	144.00-234.70	90.7	218.95	32.47	14.83
14	320	148.52-230.30	81.8	183.17	26.23	14.32
15	320	149.42-218.30	68.9	180.24	18.61	10.33
16	400	147.50-212.60	65.1	126.97	16.54	13.03
17	400	146.66-223.05	76.4	185.39	17.42	9.40
18	350	150.58-224.30	73.7	173.23	9.38	5.41
Total				2,249.03	266.33	11.84