EXPLORATION 1997 — Drills turn at prospect in James Bay Lowlands

A $1.7-million drill program will test two kimberlites discovered last year by partners Spider Resources (SPQ-A) and KWG Resources (KWG-T) in the James Bay Lowlands of Ontario.

The program will evaluate further the Kyle 4 and 5 kimberlites. Limited drilling tested both pipes in 1996, and core samples from that program are currently undergoing recovery testing at Lakefield Research.

Partial results for Kyle 4 are in hand. Of 45 samples submitted, 26 have been completed using caustic dissolution analysis, yielding 11 microdiamonds and one macro. Results are pending for Kyle 5.

The winter drill program also will test several geophysical targets in the immediate area of the Kyle Lake kimberlites. So far, 26 kimberlites have been confirmed in the region, seven of these by Spider and KWG.

The current program is being financed by Spider, which is earning a 50% interest in the project. Once this is achieved, the junior will become operator.

Spider and KWG also are exploring for diamonds in Brazil. Spider is earning a 50% interest in these properties from KWG by funding and completing a US$1.8-million program.

The partners recently reported the discovery of a large (131-ha) structure in the Alto Paranaiba area of Brazil, which is now believed to represent a yellow kimberlite breccia. Until recently, local miners had been producing diamonds from a small, surface operation some 40 metres east of the outcropping kimberlite breccia.

The discovery area, referred to as the Contendas structure, is spatially related to an airborne magnetic anomaly coincident with a satellite imagery anomaly.

In the summer of 1994, KWG operated an alluvial diamond operation within a few kilometres of the new discovery and produced 190 stones weighing 301.5 carats. The operation, which was just breaking even, was terminated in 1995.

In January 1995, KWG applied for concessions comprising more than 2,000 sq.

km, surrounding this alluvial operation. Since then, 52 anomalies were identified. Spider will continue exploration work, including geophysics and a bulk-sampling program.