IME Indicator and Dunsmuir duel for claims
2004-10-15 14:42 ET - Street Wire
by Will Purcell
Bruce Counts's Indicator Minerals Inc. thinks it has scooped Art Ettlinger's Dunsmuir Ventures Ltd. for some promising ground. Indicator staked nearly 14,000 hectares on the northern border of Dunsmuir's Nanuq property on the first day the area became available for exploration. Dr. Ettlinger said that Dunsmuir was also busy staking on that first day. As a result, it will be up to the mining recorder to decide precisely who got what portion of the desirable new property.
The staking frenzy
Indicator spokesman, Bernie Kennedy, said that Hunter Exploration Group staked the ground on Oct. 1 and the private company filed the claims with the mining recorder a week later. He added the ground would fall under the agreement between Hunter and Indicator. The terms of that arrangement give Indicator an exclusive right to earn an 80-per-cent interest in the property.
Mr. Kennedy was hopeful that Indicator and Hunter would be awarded the new ground, although he acknowledged there may have been some competition. Mr. Kennedy said the Hunter crews did see at least one other helicopter in the area. Nevertheless, "they are quite confident that they were the first ones on those particular claims," Mr. Kennedy added.
Mr. Kennedy's particular claims are the parts of the new property near the head of an existing train of indicator minerals on the Nanuq property. Dunsmuir traced those grains back to near the northern border of its Nanuq property, on the western part of its play. "With a little bit of luck, maybe we have got something there," said Mr. Kennedy.
Mr. Kennedy said the potential acquisition was the result of Hunter being on the ball. Indicator's investor relations manager said the Hunter crew knew the chemistry of the area and when the ground was coming free. "They play by the rules and they get there first," he added.
Dr. Ettlinger was also hopeful that his company had picked up a substantial portion of the most desirable claims. "Basically, we were up there staking at the same time they were," he said, adding the ultimate ownership would come down to the time of the staking, as well as the geometry of how the ground was staked. "Undoubtedly, they will have some land and we will have some land," he stated.
Dr. Ettlinger and Dunsmuir may have had air superiority in the battle for the ground north of Nanuq. "I think we had one more helicopter than they did," said Dr. Ettlinger, adding that Dunsmuir had tried to line up extra aircraft for the staking frenzy. Meanwhile, it is possible there could have been more competition for the claims.
As a result, investors will have to wait until the mining recorder decides the matter. Stakers have 30 days to file their paperwork, so the recorder will not be able to start the process until the beginning of November. With the possibility that both Dunsmuir and Indicator will end up with pieces of the play, Dr. Ettlinger seemed willing to consider a deal. "We are happy that it is a group we respect and can work with," he stated.
The Nanuq inspiration
BHP Billiton Ltd. first worked the Nanuq property and came up with indicator mineral promise on the play. The company subsequently dealt the project off to Dunsmuir, as part of a larger agreement between the two companies. The Nanuq project quickly became Dunsmuir's priority project, fuelled by continued indicator mineral promise.
Till sampling by BHP and Dunsmuir identified two promising areas. The main indicator mineral train on Nanuq is in the northern part of the property. The mineral swath is several kilometres wide and extends northwestward for about 35 kilometres, toward a source that could be on the new claims. Earlier, Dunsmuir's geologists said that they believed there would be a cluster of kimberlites in the source region and some of the finds could well be north of the Nanuq property.
Dunsmuir came up with some promotable till samples in the suspected source region of that mineral train, on the Nanuq side of the line. The company produced significant tallies of pyrope garnets from some of those samples, and there were signs the grains were not far from their source.
The company plotted a busy drill program on Nanuq for this spring, planning to poke holes into several targets in the suspected source area. Dunsmuir unfortunately ran into a series of problems and delays. The company did test five targets, but none of them proved to be kimberlites. That left Dr. Ettlinger and Dunsmuir to plot their next moves.
With the till sampling density and geophysical data falling short of the desired coverage, Dunsmuir was busy again this summer. The company collected another 500 till samples, many of them designed to fill in the area near the suspected source of the main train, near the new claims. As well, Dunsmuir has completed a Falcon gravity survey over the property.
The players
Dr. Ettlinger and Mr. Counts have been around diamonds for several years, starting their own exploration companies over the past few years. Mr. Counts got his diamond start with BHP in 1992. The company hired the geophysicist to assist Hugo Dummett and Ray Ashley, who were handling the geophysical work for Chuck Fipke's Dia Met Minerals Ltd., which mainly dealt with the geochemical exploration.
Mr. Counts continued to work on the Ekati play until 1997. During that time, BHP and Dia Met tallied several major discoveries and began building a mine based on five key kimberlite pipes. Mr. Counts struck out on his own as a consulting geologist in 1997.
Mr. Counts dabbled with diamonds in Alberta for a time, but it still was Dia Met that kept him busy. The company had active gem hunts in Finland, Mauritania and Greenland, and Mr. Counts popped up on those projects. That abruptly changed in 2000, when Dia Met put itself on the auction block and promptly found a willing suitor in BHP.
The Australia-based mining giant had no use for Dia Met's supplementary diamond projects. It quickly dropped the plays and that left Mr. Counts with a much smaller income. Nevertheless, he still kept active with diamonds on a few plays in the North.
One of those was with Shear Minerals Ltd. Therefore it was no surprise that Mr. Counts selected one of that company's minor plays, when he transformed Dev Investments Inc. from a cash shell into a gem hunter early this year.
John Williamson created Dev in 2001, and he offered the shell to Mr. Counts last year. Not surprisingly, Mr. Williamson and Mr. Counts have managed to do a diamond deal together. Mr. Williamson's Committee Bay Resources Ltd. has a metals project in Nunavut, and the company granted Indicator an option on the diamond potential of the play.
Mr. Counts could use some promotable news. Indicator's shares crested at 85 cents in early March, just after the transformation from Dev, but the stock slid from there, dipping below a quarter in early September.
Dr. Ettlinger could also do with some toutable developments on Dunsmuir's diamond projects. The company's shares traded as high as 58 cents in mid-2002 and reached 49 cents early this year, but the stock dipped to a 14-cent low early this summer, after its Nanuq drill program struck out.
The company's fortunes improved somewhat after it agreed to a merger deal with Eric Friedland's Peregrine Diamonds Inc. That arrangement initially valued Dunsmuir's shares at 40 cents, but a 32-cent peak was the best that Dunsmuir could muster, and the agreement was rejigged to a value just less than 30 cents.
Dr. Ettlinger grew up in New York, but worked his way westward across the northern tier of states during his university days. He wound up in Washington in the early 1980s, where he earned his doctorate in geology. Dr. Ettlinger migrated northward after that, with a one-year apprenticeship with the B.C. Geological Survey, followed by a few years at the University of British Columbia.
Dr. Ettlinger's university work had dealt primarily with gold, and he spent a few years working with some companies on gold plays scattered around the world. In the mid-1990s, his career brought him back to Canada, through a job as a mining analyst. He started in Vancouver, with Wolverton Securities Ltd., but moved to Calgary with Yorkton Securities Inc. the following year.
Dr. Ettlinger continued his gold specialization, but the slumping price of the metal brought tough times to most gold promotions. In the late 1990s, he began following diamond companies, spurred by the interest that Winspear Resources Ltd. stirred up with its Snap Lake project.
Like Mr. Counts, Dr. Ettlinger decided to try his hand at running his own diamond junior. Dunsmuir had been in the stable of Endeavour Financial Corp., and Dough Leishman, a former Yorkton analyst then with Endeavour, suggested that Dr. Ettlinger take over the struggling shell.
Dr. Ettlinger made the move early in 2002, through a deal with BHP for a Manitoba gem play. Nothing came of that Moose project, but the arrangement also gave Dunsmuir the right to select some other BHP plays, and Dunsmuir quickly selected the Nanuq play from BHP.
Nanuq has indicator promise, but speculators have become impatient with the hunt for kimberlites and diamonds. The new ground to the north should breathe new life into the struggling project, but it will be some weeks before investors know how the ownership of the claims will fall out.
Indicator gained one-half cent Thursday, closing at 31.5 cents, while Dunsmuir added two, closing at 20 cents.
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