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December 21, 2007

Sanatana Diamonds Hits the Jackpot

By Rob Davies

Diamond exploration is a numbers game. It is about finding cratons, finding kimberlites within them, testing to see if those kimberlites are diamondiferous and then assess whether they are economic. Sanatana Diamonds has scored on two of the four with its first drill hole into the Dharma kimberlite in the Greenhorn province of Canada. President and chief executive Peter Miles says the hot debate in the Canadian stock market now is deciding if this indeed is a new craton. That will take some time to determine. But if it is, Sanatana has already got six million acres of it tied up. No wonder the stock has gone from 20p to 125p taking its market capitalisation to £50million.

The most recent news from the company on December 20th was that a half carat diamond had been recovered from the first batch that was analysed by caustic fusion. This comes hot on the heels of the news on December 7th that the pipe was diamondiferous and only three months after the news on October 2nd that the first drill hole had intersected kimberlite. Such a series of results is extremely unusual in diamond exploration where the norm is large exploration programmes to find kimberlites then lots of drilling to determine if they are diamond bearing.

In this case Sanatana seems to have hit the jackpot with its first hole and first kimberlite. To be fair it has spent three years already on the Mackenzie diamond project in the Northwest Territories without much success until now. The discovery was made using classic Canadian exploration techniques combining airborne geophysical work that revealed a magnetic high with ground geochemical studies following indicator minerals in glacial till “tails” up ice to give two indications of a target. Such a thorough process is to be expected of a programme run by Buddy Doyle, vice president of exploration, who led the team that discovered the Diavik mine. A further three holes were drilled into the newly found kimberlite to gain an idea of its size and to take bulk samples for testing. At this stage all Peter can say is that it appears to be at least 50 metres wide but they do not know its full extent.

The first batch of samples weighed 339 kgs and yielded 180 diamonds larger than 0.106 mm which equates to 531 stones per tonne. These stones were described as being 60 per cent white in colour and 23 per cent have octahedral crystal habits. After the whole one tonne sample had been tested Sanatana reported that 536 diamonds greater than 0.106 mm had been recovered with five stones above 0.85 sieve. These five weighed 0.76 carats in aggregate. Kimberlites never occur on their own and typically occur in clusters of about 30. Peter says the company a further 12 high priority targets in the Greenhorn area with another five identified to be investigated after that.

No more drilling can be done now until the spring but the geologists will be busy interpreting this data over the winter. The drilling and sampling revealed that the Dharma kimberlite contains multiple kimberlitic phases and the caustic fusion testing showed that some phases have two or three times the diamond count of other phases. All of this will be of particularly interest to Rio Tinto which has a stake in the company, direct 15 per cent participation in the Mackenzie diamond project as well as the right to increase its stake in individual projects by funding feasibility studies. As Rio Tinto is being chased by BHP Billiton it might be reasonable to assume that Rio Tinto would be keen to publicise this success story. Which Sanatana won’t mind one bit.

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The article was copied from Minesite.com