Shear readies a new drill program
2004-08-19 13:58 ET - Street Wire
Also Street Wire (C-SAZ) International Samuel Exploration Corp
Also Street Wire (C-SWY) Stornoway Diamond Corp
by Will Purcell
Pamela Strand's Shear Minerals Ltd. has high hopes for a new drill program on its Churchill diamond projects to the north and west of Rankin Inlet in Nunavut. The company had uncommon success with its drilling efforts last year, coming up with 16 kimberlites in about 20 tries on the main Churchill property, along with another two discoveries in three attempts on the Churchill West property. Diamond success did not follow the company's kimberlite luck, but Ms. Strand and Shear believe that the new crop of drill targets will have a far greater chance of yielding a significantly diamondiferous deposit.
Shear and its Churchill partners have budgeted about $10-million for exploration on the two Churchill plays this year, ranking the play among the most active Canadian gem exploration programs this year. The core part of the project has now been covered with magnetic and electromagnetic surveys at a 75-metre spacing, and Shear believes that the electromagnetic data will be a big help in the development of suitable drill targets.
Shear owns 51 per cent of the projects, with Stornoway Diamond Corp. holding a 35-per-cent share and BHP Billiton Ltd. owning a 14-per-cent slice in the two Churchill projects. As well, International Samuel Exploration Corp. has an option to earn a 65-per-cent stake in the 210,000-hectare Churchill West property, by spending $1-million over two years. That spending requirement should handily be exceeded this year, as the property has a $1.75-million budget this year.
Shear and its partners plan to spend $8.5-million on the 3.4-million-hectare Churchill property this year. Some of the money has gone to the geophysical survey and more is being directed at another round of surface sampling, but a substantial portion of the expenditure is slated for a busy drill program and processing of any kimberlite samples for diamonds.
Coming up with drill targets for this year has been a slow process, and Ms. Strand said that the partners were currently in the process of selecting the sites to be tested. As expected, the new drill program will be placing a major emphasis on the results of the surface sampling that Shear has completed over the past few years. The company can now overlay all of its geochemical and geophysical data, and that will hopefully result in a high frequency of kimberlite finds with much more diamond promise than those found last year.
Shear is believed to have identified five areas with promising mineral counts, and Ms. Strand said that her company was now focused on three separate corridors on the Churchill play. Those areas include one mineral swath in the south and another in the north, but Ms. Strand described the Josephine River corridor as "the real gutsy one."
Over the past few years, Shear has come up with a promotable array of diamond indicator minerals, including a toutable proportion of G-10 garnets. That mineral promise attracted the likes of BHP to the play, and it has maintained the market's interest through the disappointing diamond results of last fall. In 2001 and again the following year, Shear's G-10 haul accounted for as much as 40 per cent of its pyrope garnet collection, providing encouragement that diamonds would be found in kimberlites in the region.
Ms. Strand said that Shear was collecting another 3,800 samples, and most of them already have been gathered, with about 800 of them currently going through the lab. "We already have pick results back from some of them," Ms. Strand said, adding that the partners were striving to be near the head of the line at the lab this year. The final data from the 2003 program were not available until just a few months ago, but Ms. Strand hopes that some of the results from the current effort will aid in the selection of some of its subsequent drill targets.
Just how many targets will be tested this year is hard to say, although Ms. Strand said the partners were anticipating that something around 20 would be drilled in the current program. "Drilling will go as long as we want it to go," she said, adding that the Churchill partners had well over a year's worth of drilling in the works. As a result, the program will likely terminate with the arrival of winter, and resume again in the spring, as soon as daylight permits.
Ms. Strand said that Shear had come up with quite a number of eligible targets that were under lakes. That is a typical spot for kimberlites to lurk in Canada's lake-dotted North, as the softer rock was easily eroded by glacial action.
Nevertheless, the targets to be tested this fall will be land-based features, or anomalies under small lakes that can be reached with angled holes from land, while the other lake-based targets will be left until next spring, when they can be drilled from the ice. Ms. Strand estimated each hole would cost about $50,000 to complete, and the size of the budget should allow an abundance of targets to be tested.
The new information from the 2003 sampling program and the increased reliance on geochemical data should increase the chances of coming up with some promotable diamond counts, and those odds could be even better next year, once all of the results of the current sampling program are in.
Ms. Strand said that the chemistry from this year would help Shear continually narrow down its main indicator mineral swaths. She stated that it was not yet clear if the Churchill partners had found discrete mineral trains, or plumes of indicators that were thrown off from a big cluster of pipes. She said that the partners could be looking for the one big deposit within that group, adding that Shear had plans to drill everything at the heads of its suspected trains, which would improve its odds.
The geophysical work also provided "a ton of targets outside of these trains," Ms. Strand said, and some of them appear to be excellent kimberlite targets. Nevertheless, the Churchill partners will refrain from testing any of the targets that do not yet have any geochemical support. "We just said no," she added.
Ms. Strand said that although Shear continued to generate encouraging chemistry, she realized that it would likely take some promising diamond counts to trigger a surge of new interest in the project. The Churchill play has produced enough mineral promise to sustain investor interest over the past few years, but speculators can be notoriously impatient, and that adds to the importance of coming up with better diamond counts this time out.
With the market perhaps tiring of the indicator mineral part of the Churchill story, Ms. Strand has added a new twist that could intrigue investors in the coming weeks. She said that some of the new drill targets had produced some beautiful electromagnetic signatures, which Shear hopes will translate into different kinds of kimberlites, potentially with significant quantities of diamonds.
Significant quantities of diamonds were in poor supply last year at Churchill and Churchill West. Although 10 of the 18 finds proved to be diamondiferous, the diamond counts were modest. The best tally came from the first find on the Churchill West play, where just less than 130 kilograms of kimberlite produced a dozen diamonds. That was not particularly encouraging, and with none of the stones large enough to be retained by a 0.30-millimetre mesh, the size distribution of the tiny parcel offered no promotional value.
The first find on the main Churchill property delivered the largest diamonds, but not enough to attract any notice. About 160 kilograms of kimberlite from the Qaumallak-1 pipe had offered up eight diamonds, including three that were retained by a 0.30-millimetre sieve and one that was large enough to cling to a 0.425-millimetre mesh. The proportion of larger diamonds might have sparked a bit of interest, had the rock produced a much larger haul of stones.
In all, about 1.2 tonnes of kimberlite from the 10 diamondiferous pipes had coughed up only 36 diamonds, and just three of them were large enough to be retained by a 0.30-millimetre sieve. Shear did not reveal the weight of the barren samples, but that rock could have boosted the total weight of the Churchill samples to something close to two tonnes.
Still, there was a faint bit of sparkle in the meagre diamond haul, as the results did prove that the area was favourable for finding diamonds, and if the new targets live up to their geochemical billing, Shear should have little trouble in handily topping its first set of counts.
Shear's shares took off last year, peaking at $1.70 just after the company began turning up a steady stream of kimberlite pipes with its first drill program on the property. The wheels fell of the bandwagon a few months later, when the diamond counts form the new finds failed to live up to the market's expectations, and a Shear share cost just 50 cents at one point.
Ms. Strand has proved to be an effective promoter however, and Shear's stock poked above the $1 mark in mid-February, as investors bought into the notion that better results lay ahead, based upon the company's move toward a greater reliance on geochemistry. The stock has slipped back since then in the absence of any hard news from the play, but a busy drill program could change things in a hurry if Shear can duplicate its success rate of last year. Still, Shear and its partners will have to deliver on its geochemical promise to sustain a significant degree of interest in the play.
Shear dropped a penny on Wednesday, closing at 70 cents.