South of Lupin gold mine — Diamond play gains momentum

An area greater than the size of Prince Edward Island has been set aside for diamond exploration in the Northwest Territories since BHP-Utah Mines and Dia Met Minerals (VSE) discovered a diamondiferous pipe 200 miles northeast of Yellowknife, N.W.T., last fall.

At presstime, 700 claims covering a total of 1.67 million acres, or 2,600 square miles around Exeter Lake, N.W.T., had been registered with chief mining recorder Mike Weirmeir. Having sold about 1,000 claim tags when the staking began, he is expecting more applications before the end of this month. Sources close to the action say Monopros, a unit of international diamond giant De Beers, has claimed most of the ground and is planning to test the area with a major airborne geophysical program.

Although she refused to comment on the size or exact location of the land package, a spokesman for Monopros confirmed that the company had recently acquired claims in the Northwest Territories.

“Yes, we are in the Northwest Territories,” she told The Northern Miner. “But we would not want anybody to be led to false expectations.”

At a cost of more than $1,000 per claim, Monopros is one of the few companies with enough cash to finance the large, helicopter-supported staking effort around the remote play. But a few fortunate juniors, including Argus Resources (ASE), Bre-X Minerals (ASE) and Tanqueray Resources (ASE), hold nearby gold claims secured long before the diamond discovery. In Vancouver, Aber Resources (TSE) has offered to purchase West Viking Exploration, a private company with 350,000 acres on the eastern boundary of Dia Met’s 700-square-mile property.

The share prices of these juniors have been volatile lately, with Aber recently trading as high as $1.45 compared with a 52-week low of 25 cents. Dia Met has soared to $8 from $1 since the discovery, which yielded 81 small diamonds –some of gem quality — from a 465-ft. core sample of kimberlite. Hugo Dummett, manager of worldwide exploration for BHP-Utah International, was secretive about the joint venture’s activities, although the word on the street is that the mining giant knows of at least six kimberlite pipes occurring on the Dia Met ground.

“I’m reluctant to talk about it because it really is a minor program for BHP,” he said. “We only have one drill hole.” BHP-Utah’s parent, Melbourne-based Broken Hill Propriety, employs 51,000 people and had an after-tax operating profit of A$1,423 million in 1991.

BHP-Utah can earn a 51% interest in the Dia Met property by spending $2 million per year on exploration, financing a feasibility study and arrange production financing of up to $500 million.

According to a press release issued by Dia Met at the time of the discovery, BHP plans to take a 200-ton bulk sample from the discovery pipe this winter. The purpose of the sample is to test for larger diamonds in the kimberlite, which has so far yielded stones less than two millimetres in diameter. Kimberlite, an igneous rock formed at depth, is a common host for diamond deposits worldwide. Often cylindrical in shape, kimberlite formations are referred to as pipes. The pipes tend to occur in clusters averaging about 35 miles in diameter.

Christopher Jennings, a former senior vice-president of exploration for International Corona (TSE), who has had years of diamond exploration experience both in Canada and abroad, calls the Dia Met-BHP find “very, very exciting.”

Now consulting for Aber, Jennings says the environment in which the diamonds were discovered is a “mirror image” of that which hosts the rich diamond deposits of Siberia. Both the age of the rocks and the mineral chemistry show striking similarities, he says.

Indicator minerals, including red garnet, illmenite and chrome diopside can be found up to 600 miles from Lac de Gras, N.W.T., the site of the discovery. “The mineral chemistry is excellent and that is usually a very good indicator of how diamondiferous the pipes will be,” says Jennings.

But although evidence that Monopros is in on the play is an encouraging sign, this is not the first time the cash-rich exploration arm has staked large areas of ground in search of Canada’s first diamond mine. As recently as 1991, the company tied up 2,700 square miles in the Peace River district of Northern Alberta.