Ashton resumes Buffalo hunt
2004-01-29 14:28 ET by Will Purcell
Ashton Mining of Canada plans to poke away at its Buffalo Hills diamond play in Alberta yet again. The project has delivered just enough promise to keep the company coming back for a new look each year, although the market's expectation continues to dwindle in proportion with the steadily shrinking exploration budgets. The program planned by Ashton and its partners is their smallest yet, but hope springs eternal that a diamond mine is lurking in the Buffalo Hills, and if Ashton can come up with some toutable results again this year, the play could experience another of its trademark promotional updrafts.
Ashton and its partners have agreed on a $650,000 program for this year, although agreed might not be the best word to describe the decision by Pure Gold Minerals not to pay its 9.7-per-cent share, choosing instead to have its interest diluted by a token amount. Ashton and EnCana Corporation to split the cost between them and the two main partners will continue to split the remaining 90-per-cent portion of the Buffalo Hills project on an equal basis.
The bulk of the budget will be directed at another round of ground geophysics, designed to check out some new anomalies discovered during an airborne geophysical survey that was flown a few months ago. The most promising targets will then be drilled during the summer.
Ashton has been busy in the area since 1996, and although the exploration expenses and kimberlite finds have been tapering off, there is still a basis for optimism. The recent airborne program covered just over 10,000 line-kilometres, which nearly matched the combined programs of the past six years, and the new survey will continue the focus upon electromagnetic anomalies, which have given the play a new lease on life.
Although the Buffalo Hills budget is a small fraction of what had been spent in the glory days of the play, the chances seem good that Ashton will be able to come up with a new kimberlite or two this year, based on its regional success rate.
So far, Ashton has drilled about 80 targets in Alberta, including 61 in the Buffalo Hills region, and that work has produced 38 kimberlite discoveries, of which 33 were found on the core property. The Buffalo Hills success rate has averaged nearly 55 per cent over the years, but its best record occurred in 1997, when 14 kimberlites were found from drilling 17 targets, a success rate of better than 80 per cent for that first year.
Things quickly tailed off after that. In 1998, Ashton went nine for 14, or a hit rate of about 65 per cent, and the company managed just four finds in 1999, although it drilled another 19 targets, for a kimberlite rate of just 21 per cent. Ashton cut back its program in a big way in 2000, testing just six anomalies and finding three kimberlites.
At that point, the Buffalo Hills play seemed to be winding down, as all of the promising magnetic anomalies had been tested, but the prospects for new kimberlite finds improved dramatically a few years ago, when Ashton fine-tuned its geophysical approach.
Ashton's drilling programs have continued to taper off, but its success rate has improved over the past few years, after the company placed a greater importance on electromagnetic data. A total of five new targets have been drilled over the last three years and the three new kimberlite finds indicate a hit rate of 60 per cent. That tally includes two discoveries last year, from a three-target program.
Ashton's rate of finding kimberlites suggests an uncommon success, and an encouragingly high proportion of the Buffalo Hills kimberlites have been diamondiferous. At one point, there had been hopes that the new geophysical approach would deliver better diamond contents, after the first real electromagnetic target had produced a particularly promotable sample grade, but it now seems likely that there is little if any correlation between geophysics and diamonds.
Nevertheless, there have been several Buffalo Hills kimberlites that have delivered significant diamond grades, and a few of them have reached promotable levels. As a result, there is reason to hope that a new find in the region will finally deliver an economic diamond content.
That seemed to be the case a few years ago, when Ashton discovered its K-252 kimberlite. The company recovered 263 diamonds from 227 kilograms of kimberlite, but the real promise was found in the numbers of larger diamonds in the sample. Ten of the stones were longer than 0.5 millimetre in two dimensions and half of those were longer than one millimetre, with two diamonds measuring in excess of two millimetres in length.
That provided optimism that the body would be among the best of the Buffalo Hills finds, but the subsequent mini-bulk tests were still a bit of a pleasant surprise. A first tiny test produced a grade of about two-thirds of a carat per tonne, and a subsequent, larger sample came close to that mark. In all, Ashton processed about 24 tonnes and recovered 13.4 carats, for a sample grade of about 0.56 carat per tonne.
That is roughly comparable with the company's cumulative sample grades from the Otish Mountains region of Quebec, but Ashton decided against taking a larger test of K-252, as two key factors made the pipe appear uneconomic, for now at least.
Although the anomaly measured about 150 metres in diameter, the drill program indicated an irregular kimberlite that was significantly smaller than hoped. That, combined with the deep layer of overburden covering the kimberlite, made K-252 unlikely to be profitable on its own. Nevertheless, it could figure in a larger mine, should Ashton come up with some new finds.
The company seemed well on its way last year after two quick finds using the new geophysical focus, but the diamond counts did not support any further work on either the K-300 or K-296 discoveries. Ashton recovered just 54 diamonds from about 170 kilograms of K-300 rock, and nearly all of the stones were tiny microdiamonds.
The diamond counts were marginally better with the K-296 samples, but there was little promise provided by the size distribution of the stones. There were 125 diamonds recovered from about 275 kilograms of kimberlite, but only a few were larger than 0.5 millimetre in two dimensions.
The two results were especially disappointing, as both kimberlites appeared much larger than little K-252. The drill programs at the two new finds suggested the bodies were complex and irregular, but they seemed encouragingly large. The anomaly that led to the discovery of the K-300 pipe was about 300 metres in diameter, and the K-296 feature was roughly 400 metres in diameter.
Despite the diamond setback last year, Ashton would seem to have a reasonable shot at coming up with a better result this year. Two-thirds of the Buffalo Hills kimberlites have delivered at least one diamond, and one-sixth of the kimberlite finds had enough diamonds to warrant at least a mini-bulk test and attract some market attention.
K-14 was the most extensively tested of the Buffalo Hills kimberlites, and like K-252, at least a part of it could ultimately find is way into a future mine plan if Ashton manages to justify a mine based upon some new finds. A 45-tonne test of the pipe delivered a grade of 0.17 carat per tonne, based on stones remaining on a 0.85-millimetre sieve, and a subsequent sample weighing 480 tonnes managed a grade of nearly 0.12 carat per tonne, using a 1.2-millimetre screen.
The result from K-91 was nearly as good. Ashton recovered over 4.5 carats from a 36-tonne batch of kimberlite, which indicated a grade of nearly 0.13 carat per tonne, using the 0.85-millimetre mesh. Ashton also tested the K-11 pipe, producing a grade of 0.04 carat per tonne from about 22 tonnes of kimberlite.
Ashton took two cracks at its K-6 kimberlite, taking one small test in 1997, followed by a second batch in 2002, after a new look at the geophysics of the complex body. The net result was a sample grade of about 0.07 carat per tonne from approximately 20 tonnes of material. The company also processed about 7.5 tonnes of kimberlite from K-5, but the result was far from spectacular, with an indicated grade of just 0.004 carat per tonne.
As well, Ashton processed a one-tonne batch of rock from BH-225, recovering enough diamonds to obtain a sample grade of 0.035 carat per tonne. Counting that tiny test, Ashton has so far found seven kimberlites worthy of mini-bulk testing from 61 geophysical drill targets, a statistic with significant promotional value heading into the latest exploration program.
Although Ashton continues to soldier on in the region, it is doing so with a much smaller budget and speculators have largely abandoned hope for the Alberta play as a result. Ashton's spending this year will be just over $300,000 according to the current plan, and that is barely half the $600,000 that the company spent through the first three quarters of 2003.
Ashton spent about $850,000 in 2002 and another $706,000 in 2001, but those expenditures pale in comparison with what the company shelled out during the glory years of the project. Ashton spent $5.2-million in 1997, although the company was paying nearly all of the costs, under the terms of its option deal with EnCana.
The peak period for the play came the following year, when Ashton shelled out $4.2-million for just its share of the expenses. Ashton put close to $3-million into the Alberta play in 1999, and another $1.35-million the following year. In all, the partners have probably spent something close to $30-million on the diamond hunt through the years.
Ashton's shares have traded near the $1.50 mark for much of the past year, although some toutable news from Quebec briefly carried the stock above the $3 mark. Although the Otish hunt is now Ashton's key play, it was the Alberta hunt that was its promotional highlight, with an $8 crest in the spring of 1997.
Ashton moved down two cents on Wednesday, closing at $1.62.
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