Inco, De Beers ink arctic pact

Odd couple Inco (N-T) and De Beers Canada Exploration have inked a two-year deal to share their geophysical and geochemical databases covering land and mineral claims on north Baffin Island.

Under the agreement, each company will be entitled to any discoveries "of its own core commodity,’ while any other discoveries will be equally shared.

“De Beers Canada is pleased to have concluded this deal with Inco and we are hopeful that through efficiencies and synergies such as this we will assist one another in our exploration efforts,” said De Beers Canada’s CEO Richard Molyneux.

De Beers originally explored on Baffin Island in the mid-1970s, but has been more active since 2000. In 2004, the world’s biggest diamond producer spent $46.1 million, or 35% of its global exploration budget, in Canada. For its efforts, the company has defined more than 200 kimberlites, and has 10 active joint ventures.

De Beers owns the Snap Lake diamond project in the Northwest Territories and the Victor project in the James Bay Lowlands of northern Ontario.

The company’s other advanced Canadian projects include its 51%-owned Gahcho Ku joint venture with Mountain Province Diamonds (MPV-T), with a 44.1% carried interest, and Camphor Ventures (CFV-V), which holds the remaining 4.9%. De Beers can boost its stake to 60% by advancing the project to commercial production.

De Beers is focussing on the three most promising kimberlite pipes of the Kennady Lake cluster, including Hearne, 5034 and Tuzo, 300 km northeast of Yellowknife.

At the Fort la Corne project in Saskatchewan, De Beers, and Kensington Resources (KRT-V) each hold 42.25% interests, and Cameco (CCO-T) has 15.5%. The project is home to more than 71 diamondiferous bodies making it one of the world’s biggest diamondiferous kimberlite clusters.

By the end of the decade, De Beers anticipates its Canadian operations will be churning out some US$500 million of rough diamonds each year.

In Ontario, Inco has joined forces with U.K.-based platinum miner Lonmin in the hunt for low-sulphide platinum-group-element deposits occurring away from the typical high-grade base metals deposits on six of Inco’s properties in the Sudbury Basin.

The agreement covers the McKim, Denison, Levack North, Capre, Trillabelle and Wisner properties, and includes the former Frood, Little Stobie, Crean Hill and Vermilion mines. Inco will chip in the rights to explore and exploit the deposits, and will allow the use of certain infrastructure and underground access in the Sudbury area.

Inco retains a 3% net smelter return royalty on all product sourced from any deposits; it also retains the rights to any non-low-sulphide-PGE deposits on the properties.

For its part, Lonmin has committed to fund at least US$10 million worth of exploration over three years. Thereafter, the world’s third largest primary platinum producer has the annual option of spending at least US$3 million, until total expenditures of US$32 million, at which point Inco and Lonmin would equally fund the joint venture.

Plans also call for the construction, if warranted, of a dedicated PGE mill and concentrator; the facility could also potentially process third-party ore. Inco has indemnified Lonmin of any environmental liabilities currently existing on the properties.


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