Vancouver —
The major agreed to acquire 909,091 units priced at $1.10 each. A unit consists of one share and half a warrant, and a full warrant allows Teck to buy another share for $1.10 within one year. Along with the $1 million financing, the companies will jointly fund a $3-million exploration program on Diamonds North’s Blue Ice property. In return, Teck will have the right to earn an initial 30% interest in the project by exercising the warrants for a price of $500,000 and by spending $9.5 million over three years.
Teck can then elect to increase its interest to 50% by spending $5 million over one year, and to 65% by completing a bankable feasibility study within the next three years, and to 70% by arranging project financing.
Teck also has the right to purchase up to a 10% portion of any future equity financings of Diamonds North. However, if the major fails to participate in any financing to a level of at least 6%, Diamonds North has the right to terminate this part of the deal.
Situated 240 km west northwest of Cambridge Bay, the Blue Ice project comprises 450,000 acres in the central portion of Victoria Island. It is underlain by the Slave Craton, which hosts Canada’s two diamond mines. In 2002, the junior identified a 20-km trend of semi-continuous kimberlite, dubbed the Galaxy Structure. So far, nine kimberlites have been discovered, eight of which are diamondiferous.
The $3-million program will concentrate on collecting larger samples from the kimberlites through drilling. The partners expect to gather 2.5-3 tonnes of kimberlite, as well as drill-test geophysical targets along the Galaxy Structure. An aeromagnetic survey is also planned.
The initial diamond counts in several kimberlites along the Galaxy Structure have returned promising values, with five kimberlites ranging from 9 to 180 stones per 10 kg. Also encouraging has been the recovery of large macrodiamonds, with many stones exceeding 1 mm in three directions.
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