Diamondex and Shore plan for winter
2007-10-24 13:55 ET - Street Wire
Also Street Wire (C-SGF) Shore Gold Inc
by Will Purcell
Diamondex Resources Ltd. and Shore Gold Inc. are saying little about their Buffalo Hills diamond project in Northern Alberta, but they are making winter plans. Although it is not yet set, the advanced stage of the project and an underlying option deal with Encana Corp. and Pure Diamonds Exploration Inc. suggest the program will be a busy one.
The next steps
Diamondex and Shore each bought a 22.5-per-cent interest in the play from Stornoway Diamond Corp. after it acquired the project through its takeover of Ashton Mining of Canada Inc. In the heat of the takeover battle last summer, Ashton signed a deal with two former Buffalo Hills partners that could increase its share of the play to 72.5 per cent. As a result, Diamondex and Shore can boost their respective shares to 36.25 per cent by spending $7.5-million by the spring of 2010.
Shore's vice-president of exploration, Pieter du Plessis, said the two partners were reviewing the data and would lay firm plans once that was complete. He said Diamondex would operate the project, but Shore would be providing guidance because of its experience in the Fort a la Corne district of Saskatchewan. Both companies believe the Buffalo Hills kimberlites have the same large tonnages and lower grades evident in the Fort a la Corne district, where Shore Gold is working on a prefeasibility study for one huge pipe and busy sampling a few others.
Mr. du Plessis said the Buffalo Hills plan would include geophysics and core drilling, and once the partners assessed those results, they would plan for mini-bulk and bulk sampling of the most prospective targets. Ashton completed several mini-bulk tests of pipes, including one test weighing several hundred tonnes, but Mr. du Plessis said there was just limited data covering the individual kimberlite phases within the bodies.
The encouragement
If the Fort a la Corne model is pertinent to the Buffalo Hills play, detailed assessments of each kimberlite phase will be key. Shore Gold's first big vertical drill hole into Star produced a grade of about 0.07 carat per tonne. Subsequent testing showed that the upper part of the pipe had a grade of about 0.02 carat per tonne, while the richer, deeper rock averages about 0.15 carat per tonne, enough to push the project to prefeasibility.
Ashton's tests of its best Buffalo Hills pipes yielded comparable grades. The most advanced pipe was K-14, where a series of tests weighing 524 tonnes netted over 60 carats of diamonds, indicating a grade of 0.13 carat per tonne. A 36-tonne test of the nearby K-91 pipe yielded a comparable grade, and tests of the K-6 and K-11 pipes produced intriguing results as well.
The best result came from the K-252 pipe, which is also close to K-14. Ashton processed about 24 tonnes of kimberlite from the body and obtained a grade of 0.55 carat per tonne, but the pipe was small, at less than two hectares. Still, it could add valuable carats to a mine plan based on other finds in the area.
Diamondex and Shore appear to have considerable tonnage potential in some of Ashton's old finds and the grades are arguably as good as the Fort a la Corne district is delivering. Further, the partners will not have the huge depths of overburden to deal with that Shore is facing in Saskatchewan. Although parts of the bodies lie below 70 metres of waste, some of the Buffalo Hills kimberlites outcrop.
The fate of the project will ultimately rest on the value of the diamonds in the Buffalo Hills pipes. The diamonds recovered so far appear smaller than what Shore is finding in its Star pipe, but the Alberta partners will need a large diamond parcel to settle the value question.
