Kensington drills for larger carat crop
2004-11-24 14:10 ET - Street Wire
by Will Purcell
Kensington Resources Ltd. and its Fort a la Corne partners continue to hunt higher grade zones on their diamond project in central Saskatchewan. The partners completed five large diameter holes into the No. 140/141 kimberlite complex and drilled 32 core holes into several top prospects on the play. The 10-hole large diameter drilling will provide a better sign of the grade in the richer regions of the two top pipes, while the core holes will hopefully reveal similar zones in the other promising pipes.
A nearby rival, Shore Gold Inc., is getting most of the attention of late with its 25,000-tonne bulk sample. Nevertheless, Kensington and its partners are also spending a large amount of cash to advance their play. Kensington's method is less promotable than that of its rival, but it could ultimately pay off.
The Fort a la Corne game plans
Shore Gold has just one kimberlite, but the company thinks it can make a large and profitable diamond mine out of the mammoth Star pipe. The body could hold as much as 500 million tonnes of kimberlite, although at least 20 per cent of the material is lower-grade kimberlite in the top of the body.
Still, speculators believe there will be about 300 million tonnes of rock with an average diamond content of about 0.15 carat per tonne. If so, Shore would have about 45 million carats of diamonds in the richer part of Star, with perhaps another five million carats in the lower-grade upper reaches of the pipe. At last report, Shore was hoping for a diamond value of at least $125 (U.S.) per carat, and there are several signs suggesting that target could be conservative.
Things are markedly different just to the north. The Fort a la Corne play of Kensington and De Beers produced over 70 kimberlites over the past 15 years and most of those discoveries proved to be diamondiferous. None of the finds produced a promotable average grade, but there are regions within some of the pipes that could have grades comparable with what Shore is finding at Star.
Most of De Beers and Kensington's attention went to the No. 140/141 kimberlite over the past few years, but the additional bodies and the supposedly smaller extent of the higher-grade regions prompted a change of plan. The partners now propose to identify up to 100 million carats of diamonds, but spread over several kimberlite pipes, unlike the approach of Shore Gold, which is putting all of its carat wishes on its Star pipe.
As a result, De Beers and Kensington are using core holes to help delineate richer regions within their huge pipes. The partners then drill a series of reverse circulation holes into those better areas. The work provides modest parcels of carats and enough size distribution data to start the grade and value modelling work.
The method of extraction allows for the recovery of diamonds across many different zones within several different pipes, but it would be expensive and time consuming to collect a large parcel in that manner. Meanwhile, Shore will have a good idea of the grade and value of its Star sample, but the underground method of mining limits its knowledge to a small section of the mammoth pipe.
Shore will have to complete a major drill program in other parts of Star to translate its bulk sample results to other zones of the pipe. Meanwhile, Kensington and De Beers may have to produce larger carat parcels to produce a satisfactory degree of confidence in their modelled estimates. Although the approach taken by Kensington and De Beers lacks the promotional oomph of a big bulk sample, it is the best method to test several pipes quickly.
The reverse circulation program
Kensington and its partners completed five reverse circulation holes into the breccia beds of the No. 140/141 kimberlite complex. That test should produce a promotable array of diamonds, based on a smaller sample and the results of De Beers's modelling.
Earlier this year, De Beers and Kensington came up with an estimate indicating there were about 29 million tonnes of kimberlite in the south breccia beds at No. 140/141. That rock has a grade of about 0.16 carat per tonne, according to the latest calculation of De Beers.
The grade expectation resulted from about 74 tonnes of breccia processed in earlier tests. The rock produced about 13.7 carats of diamonds larger than a 0.15-millimetre cut-off. That suggests a grade of just less than 0.19 carat per tonne, one of the few instances that a De Beers forecast fell short of the sampled value.
As a result, the much larger test this year will be a key part of the $7.6-million program. The five holes into the breccia beds extracted nearly 850 tonnes of kimberlite. Although it seems likely that a significant portion of that material came from other rock units, the sample will provide a much better idea of the grade within the breccia.
De Beers and Kensington also have an estimated 105 million tonnes of kimberlite within the coarse megagraded beds at No. 140/141. That rock has a grade pegged at roughly 0.09 carat per tonne and the latest test should provide more clues about that region as well.
The partners will also drill some reverse circulation holes into No. 122, which they last tested with three holes in a 2000 exploration program. That work produced 17.3 carats from about 330 tonnes of kimberlite, suggesting a grade of a bit better than 0.05 carat per tonne.
The partners seemed to lose interest in No. 122 after that, but another round of core drilling has sparked new hope for the pipe. De Beers now thinks there are about 80 million tonnes of kimberlite within the main southern pyroclastic unit. That rock has a predicted grade of about 0.13 carat per tonne. There are some encouraging signs from the microdiamond results that could bode well for the current test of No. 122.
The core drilling promise
It is no surprise that many of the 32 core holes targeted the No. 140/141 and No. 122 pipes, as the partners tried to zero in on the more promising spots to drill the larger holes. As well, De Beers and Kensington poked several holes into at least three other bodies this fall. That suggests the partners have high hopes for new promise from those old finds.
De Beers drilled eight holes into the No. 147 kimberlite, which lies about three kilometres north-northwest of the No. 140/141 complex and about five kilometres east of the No. 122 pipe. As well, No. 147 is just northeast of the No. 148 pipe, which had several core holes poked into it last year and is also a prospective pipe. De Beers thinks there are more than 150 million tonnes of kimberlite in a richer part of No. 148, with a modelled grade of 0.07 carat per tonne.
Like the other intriguing pipes, No. 147 is huge, covering an area of about 135 hectares at the surface and containing nearly 500 million tonnes of kimberlite. The partners processed about 207 kilograms of rock for microdiamonds, coming up with 658 stones that weighed 0.121 carat. That prompted some brief mini-bulk tests, which resulted in a grade of about 0.07 carat from about 75 tonnes of kimberlite.
That was one of the better sample grades, but the average diamond size was well down the list. Still, De Beers selected No. 147 as one of the six top pipes during a detailed examination of the play in 2000, based on a forecast grade that was as high as 0.15 carat per tonne. Nevertheless, the partners viewed No. 147 and No. 148 to be lower priorities than the other bodies, until now.
De Beers and Kensington are drilling core holes into a few pipes that did not make the 2000 priority list. Eight holes targeted the No. 120 pipe, which is immediately to the northwest of No. 148 and just west of No. 148. The body seems comparable in size to No. 148, covering about 135 hectares at the surface.
The Fort a la Corne explorers extracted over 200 tonnes of kimberlite from the body over the years, producing a grade of about 0.03 carat per tonne. That modest value is a tough tout, but the partners processed nearly 900 kilograms of core for microdiamonds. Large variations in the results may account for the new enthusiasm for No. 120. That seems reasonable, as the 655 micros recovered from the pipe weighed nearly 0.10 carat.
Five new core holes tested the No. 121 pipe, which is about one kilometre east of No. 147 and No. 148. The body is small by comparison, covering just 35 hectares at the surface, but that is still huge when compared with most Canadian pipes. The partners processed over 60 tonnes of rock in their earlier efforts, coming up with a modest grade of about 0.04 carat per tonne.
Once again the new encouragement may stem from the microdiamond recoveries. About 777 kilograms of kimberlite produced 357 stones that weighed over 0.09 carat. As a result, it would not be a shock if there were signs of richer regions within the pipe.
Kensington and De Beers apparently tested the No. 221 pipe with at least one new hole. The body covers about seven hectares on the northwest side of No. 121 and earlier work delivered better results than its sister. A mini-bulk test examined just 5.5 tonnes of material, coming up with a grade of 0.062 carat per tonne. Microdiamond recoveries were also promising. The partners processed 265 kilograms of core and recovered 73 micros. Those stones weighed nearly 0.08 carat.
Interest in Kensington's play carried the company's shares above the $1.40 mark this spring and again in the fall, although it dipped as low as 75 cents during the summer blahs and now trades near the $1 mark.
Kensington lost a penny on Tuesday, closing at 94 cents.
