Sparring partners approve FalC budget (May 01, 2006)

Despite ongoing legal wrangling, the Fort la Corne (FalC) joint-venture partners have unanimously approved a whopping $43.2-million exploration budget for their 225-sq.-km diamond project, about 60 km east of Prince Albert, Sask.

The tab will be picked up by Shore Gold (SGF-T, SHGDF-O) and De Beers Canada, each of which will chip in $20.3 million, with the balance covered by Cameco (CCO-T, CCJ-N). The remaining partner in the project, UEM, has a 10% carried interest.

The budget approval comes after The Court of Queen’s Bench for Saskatchewan dismissed De Beers’ petition to have a voting agreement between the other partners voided. De Beers had also sought a restraining order preventing the joint venture’s management committee — now effectively controlled by Shore — from approving the 2006 exploration program and budget.

Shore says that the outcome of De Beers’ pending appeal of that ruling will have no affect on the 2006 exploration plan. The appeal hearing is slated for May 18.

De Beers is at odds with Shore Gold’s exploration approach, which relies heavily on underground bulk sampling. The diamond monolith favours drilling, but has at least agreed to investigate the cost benefits of building an on-site, 50-tonne-per-hour dense media separation (DMS) plant to process the mini-bulk samples and future, large- tonnage underground bulk samples. The plant will be able to recover diamonds weighing up to 100 carats, as sampling on the neighbouring Star kimberlite and limited work on the Orion cluster of kimberlites suggest very coarse size frequency distributions for the diamonds.

Still, work at FalC during 2006 will focus on drilling the Orion Cluster, a group of 8 diamondiferous kimberlites — Orion South (kimberlites nos. 140/141 and 133), Orion Centre (nos. 145 and 219) and Orion North (nos. 120, 147, 148 and 220). Geophysical data suggests the kimberlites (estimated to exceed 50 metres in thickness) may coalesce on the paleosurface to form a 7-km-long belt.

The cluster will first be tested with 50,000 metres worth of drilling in 220 PQ (7.5-cm diameter) core holes on a staggered, 200-metre spaced grid. Geological and geotechnical logging, whole rock geochemistry, down-hole geophysics, microdiamond analysis (2,200 kg) and geohydrological studies will follow.

Thereafter, some 3,750 tonnes of material will be collected via 3,000 metres worth of large-diameter (1.2 metres) drilling in 12 holes on any resulting units of interest. Microdiamond analysis will target stones exceeding 1 mm.

The budget provides for up to another 8,000 metres in 40 PQ-sized holes on priority targets. The program is designed to provide data sufficient for conceptual level studies of the cluster by year-end.

Meanwhile, another 40 PQ holes totalling 5,000 metres will aim to recover 1,400 kg of material from kimberlites 118, 152, 123 for microdiamond analysis.

Star kimberlite

The program includes an ongoing 18-hole, 4,000-metre drill campaign on the Star West portion of Shore’s Star kimberlite. Around 22% of Star is estimated to lie within the joint-venture boundaries. Seven holes have already been completed, and underground delineation drilling is gearing up. Plans call for limited underground bulk sampling of the Cantuar kimberlite phase of the Star kimberlite.

The Star kimberlite comprises five principal phases: Cantuar, Pense, Early Joli Fou, Mid Joli Fou and Late Joli Fou. The Early Joli Fou (EJF) is the dominant phase.

Shore recently provided a more detailed picture of Star, splitting out grades for the various phases. Some 32,181 tonnes of material from the EJF has yielded 43,278 diamonds totalling 5,969 carats, for an average grade of 18.5 carats per hundred tonne (cpht) and an average stone size of 0.138 carat.

The more voluminous pyroclastic portion of the EJF yielded 2,999 carats from 19,132 tonnes to give an average grade of 0.157 cpht and average stone size of 0.11 carat. Some 9,338 tonnes of EJF breccia contained 12,034 stones totalling 1,993 carats, for a grade of 21.3 cpht and average stone size of 0.17 carat.

Smaller samples from the Mid Joli Fou and Late Joli Fou phases yielded grades of 5.92 and 2.9 cpht. The average stone sizes ring in at 0.098 carat and 0.072 carat, respectively.

Meanwhile, a 2,796-tonne sample of Cantuar kimberlite surrendered 572 carats, for an average grade of 20.5 cpht. The average stone size is 0.13 carat. Preparations for ramp development eastwards toward Pense have begun. Shore plans to collect bulk samples from Cantuar, Pense and MJF. The company expects to reach Pense by May.

Shore came by its 42.245% stake in the FalC diamond project via its merger with Kensington Resources in October 2005. Cameco holds a 5.51% stake in the project, with UEM at 10%; De Beers Canada owns the remaining 42.245%. UEM is jointly owned by Cameco and Cogema, a subsidiary of French energy giant Areva (ARVCF-O).