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Here's part of the filing that's informative.
The Smeaton-Fort a la Corne Saskatchewan Diamond Prospect
On October 20, 2005, the Company announced a series of property option (earn-in interest) agreements (the “Saskatchewan Property transactions”) with CMKM Diamonds Inc., United Carina Resources Corp. and 10104075 Saskatchewan Ltd. (a private company) (“1010”), whereby the Company assumed the earn-in rights to properties optioned to CMKM. One such property is termed the Smeaton/Forte a la Corne/Green Lake Diamond prospect (the “Smeaton Property”).
The Smeaton Property consisted of a 1.5 million acre parcel of claims (most recent claim status, from Saskatchewan Industry and Resources received June 28, 2007, is referenced as an appendix to this 20-F: Smeaton Claim 06-2007), Previous to the Entourage-CMKM agreements, CMKM and 1010 had flown an airborne geophysical survey of the Smeaton Properties. The Company’s geologist, James Turner, P. Geo., reviewed the results of the survey and reported to the Company that 20 priority diamond targets existed on the parcel, but in light of the $12 hectare maintenance fees payable, certain of the claims should be allowed to lapse for lack of potential. The present parcel remains at approximately 500 claims (200,000 hectares) but will eventually reduced to only those claims that contain mineralized potential. 10104075 Saskatchewan Ltd. is the operator of the Smeaton Property.
In December 2005, the Operator commenced drilling on a priority target on the property. The drilling encountered kimberlitic rock at approximately 530 feet and continued in kimberlite for over 300 feet eventually ending in dolomites at about 900 feet. An independent kimberlite expert, Harrison Cookenboo, (PhD, P. Geo.), a qualified person, reviewed initial samples and concluded:
“both pieces of core are in most respects closely similar to macrocrystic serpentine calcite kimberlite, but with some atypical features for kimberlite “sensu-stricto”, and suggests that the examined samples are best referred to as kimberlite or a closely related “kimberlitic” rock type with the potential for carrying diamonds”.
On January 10, 2006, the Operator informed the Company that the first drill target (Target: C-Gpp) on the Smeaton Property had been completed after encountering difficult drilling 1000 feet into the target. The hole finished in dolomites and the Operator decided to drill the second hole 30 meters to the northwest where geo-physical data implied that the center of the kimberlite may be situated.
The kimberlitic rock from the first drill hole was sent to Saskatchewan Research Council for caustic fusion and micro-diamond analysis. The kimberltic rock did not yield any micro-diamonds however chromites were found in the drill core. In 2006, the Company expended $32,481.40 on the Smeaton prospect bringing the total expenditures to $233,111.00 for years 2005 & 2006. The Smeaton project has 20 priority targets to be investigated and as of the date of this report has examined four of these targets.
There has been no additional work done on the Smeaton claims subsequent to the Company’s drilling of January 2006. The Company has requested of 1010, all information on the Smeaton claims so that a compliant NI 43-101 Technical Report could be commissioned for the Smeaton claims however 1010 has not responded to these requests. The Company considers these claims as non-operational until such a report can be completed.
Under the terms of the October 20, 2005 agreement (and subsequent amendments) the Company must, on or before November 15, 2010, expend a minimum of $2,500,000 in exploration expenditures, of which $2,267,000 remains to be spent, (or issue an equivalent amount of stock in the Company based on the 20 average price of the stock prior to the issuance) on the property to earn an 80% interest in the Property. There were no minimum annual expenditures or exploration requirements that are required to keep the option in good standing.
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In early 2006, the Company advised 1010, which acts as the Operator of the Property, that it would not participate in any exploration by 1010 unless the exploration was conducted in accordance with NI 43-101 and mining best practices. “1010” nevertheless proceeded to perform work on the Property and, on March 26, 2006, sent invoices to the Company totalling $280,122.53.
The Company believes that it is not liable, under the terms of the Agreement or in any other way, for these invoices and has so advised 1010, most recently in its letter to 1010 dated April 27, 2007. To date, no collections or other proceedings have been commenced by 1010.
There is, however, the risk that 1010 might commence collections or other proceedings. In that event, while the Company would vigorously defend its position that it is not liable in any way for funds claimed pursuant to the invoices, there is the risk that a proceeding by 1010 could be successful. The Company cannot assess the probability of that risk and accordingly, the likelihood of loss, if any, is presently not determinable.
The Company issued 33,888,888 shares of the Company stock as consideration for the purchase of the Smeaton claims. 30,000,000 (thirty million) of these shares are to be distributed to the CMKM shareholders but these shares have not been distributed at this time and there is no indication when, or if, these shares will be distributed.
