Recovery of large gem stones key to advancing Gahcho Kue

The latest bulk sample results from the Gahcho Kue joint-venture project in the Northwest Territories again confirm the presence of big-carat diamonds in the 5034 pipe.

De Beers recovered 1,215 carats of diamonds exceeding a bottom size cutoff of 1.5 mm, from 836 tonnes of kimberlite. The material was collected from six large-diameter holes into the central and west lobes of the 5034 pipe.

The bigger stones in the recovered parcel included 161 diamonds weighing between 0.5 and 1 carat apiece, 49 diamonds ranging between 1 and 2 carats, and 21 diamonds each greater than 2 carats in weight. The three largest stones, weighing 7, 6.6 and 5.9 carats, were recovered from the western lobe where three closely spaced holes returned a total of 843 carats from 437 tonnes of sample.

The implied grade of the three holes ranges from 1.7 to 2.19 carats per tonne, for an average of 1.93 carats, slightly higher than the 1999 modeled grade of 1.85 carats for the west lobe.

The 5034 pipe’s lower-grade centre lobe was also tested with three closely spaced holes, which recovered 372 carats from 400 tonnes of kimberlite, including a 4.6-carat diamond. The average grade of the three holes is 0.93 carat per tonne, falling short of De Beers’ modeled grade of 1.3 carats per tonne.

The Canadian exploration division of De Beers spent the winter of 2002 collecting additional bulk drill samples from 5034 and Hearne, two of the highest value pipes at the Gahcho Kue project (also known as Kennady Lake). The aim of this year’s $10-million program is to get a better handle on the distribution of the larger-carat, high-quality stones, like the 9.9-carat diamond (valued at US$60,000) recovered from the east lobe of the 5034 pipe in the 2001 bulk sampling program. De Beers and its joint-venture partners, Mountain Province Diamonds (MPV-T) and Camphor Ventures (CFV-V), believe that the recovery of such top-quality stones may be the key to enhancing the economic viability of the project.

“The macro 9.9-carat is a super stone; it is perfectly white and flawless,” says Jan Vandersande, Mountain Province’s president. “These bigger high-quality stones [are] where the value lies.”

Gahcho Kue comprises a portion of the AK property, 275 km east-northeast of Yellowknife and 150 km south-southeast of the Ekati diamond mine. The AK property is held 51% by De Beers, 44.1% by Mountain Province and 4.9% by Camphor. It forms a nearly rectangular block measuring 25 km north-south by 50 km east-west. De Beers can boost its interest to 60% by advancing the property to commercial production. The CJ properties, once part of the joint venture, have been allowed to lapse.

The Gahcho Kue project centres on the cluster of Kennady Lake pipes, including 5034, Hearne, Tuzo, Tesla and the much smaller Wallace and 5034-South kimberlites.

The 5034 pipe was discovered by Mountain Province, Glenmore Highlands and Camphor in 1995 at the head of a prominent kimberlite indicator mineral train in the Kennady Lake area near the southeast corner of the AK property. The new discovery was subsequently tested by more than 104 holes in 1996 and in the process, 6,027 kg of kimberlite material was analyzed for microdiamonds by the project’s then-consultant Canamera Geological. In total, 16,533 stones weighing 30.35 carats were recovered, including 5,458 macros exceeding 0.5 mm in one dimension. Canamera tested 5034’s potential for larger stones exceeding a 0.85-mm cutoff with a 104-tonne mini-bulk test sample taken from 42 holes. The recovery of 257 carats of diamonds with an implied grade of 2.48 carats per tonne gave an early indication of the pipe’s potential.

De Beers optioned the AK-CJ properties in early 1997 and immediately flew a detailed helicopter-borne magnetic and electromagnetic survey over the southern portion of the AK claims. During the 1997 exploration season, De Beers discovered three new kimberlite pipes, Tesla, Tuzo and Hearne – all in a 1-km radius of the 5034 and all significantly diamond-bearing. The discovery hole in Tesla returned 174 micros and 14 macros from 245 kg of tested core. A 278-kg sample from two holes in Tuzo yielded 642 micros and 55 macros, whereas the discovery holes in the Hearne pipe recovered 680 micros and 88 macros in 300 kg of sampled core.

To better assess the grade and diamond quality in each of the pipes, De Beers carried out delineation drilling and preliminary mini-bulk sampling on the three new discoveries as well as the 5034 pipe. A 62-tonne sample of Hearne produced 205 carats of diamonds using a 1-mm-square lower cutoff, equal to 3.28 carats per tonne. A 60-tonne sample from the Tesla pipe contained 25.9 carats implying a grade of 0.43 carat per tonne. The Tuzo pipe returned 108 carats from 48 tonnes grading 2.24 carats per tonne, while 5034 produced 101 carats from 56 tonnes for an overall grade of 1.81 carats per tonne.

Encouraged by the positive results of a preliminary valuation and modeling exercise, De Beers undertook a major drilling program to bulk-sample the four pipes in the winter of 1999. In total, 1,666 tonnes of kimberlite was extracted from 43 large-diameter vertical holes drilled to depths as great as 300 metres.

The 5034 pipe has an irregular shape with surface dimensions roughly 120 by 180 metres, and an overall near-surface area of 2.1 hectares. A dyke-like body about 35 metres wide extends some 300 metres to the north-northeast from the pipe. The majority of the pipe consists of hypabyssal macrocrystic kimberlite hosting abundant xenoliths or inclusions of the surrounding granitic rock.

De Beers subdivided 5034 on the basis of internal geology into four lobes – a west, centre and east lobe, plus a north lobe that extends partly under land. The 1999 bulk sampling program partially tested the east, west and centre lobes of the pipe, recovering 1,044 carats larger than a 1.5-mm bottom cutoff from 609 tonnes of kimberlite. A number of good-quality larger diamonds were recovered. Forty-two stones weighed more than 1 carat apiece, including 10 diamonds in excess of 2 carats. The three largest diamonds, weighing 10, 4.9 and 4.85 carats each, illustrated the potential for larger stones. The 10-carat diamond came from the east lobe, but is a lower-value, lower-quality stone, says Vandersande.

Vandersande is encouraged that other portions or lobes of 5034 are returning large size stones. “The diamonds all look the same, it’s just that there are different size frequency distributions in different lobes,” explained Vandersande. He believes the different lobes may represent different emplacement events within the pipe.

Using the bulk sampling results, together with previous mini-bulk sampling and microdiamond results, De Beers modeled the kimberlite resource for the 5034 pipe at 12.5 million tonnes grading 1.64 carats per tonne to a depth of 300 metres. The 5034 diamonds were determined to be worth an adjusted US$69.30 per carat.

Down to 300 metres depth, the west, central and eastern lobes contain an estimated indicated kimberlite resource of 2.5, 2.9 and 2.7 million tonnes, respectively. The north lobe, which was not part of the 1999 bulk sampling, hosts an inferred resource of 4.4 million tonnes.

For the Hearne pipe, a total of 856 carats were recovered from 469 tonnes of kimberlite. The two largest diamonds recovered weighed 3.37 and 3.16 carats, and in total there were 40 stones greater than 1 carat each. Hearne was modeled to contain 6.9 million tonnes grading 1.71 carats per tonne, at an adjusted value of US$71.50 per carat. The Hearne pipe consists of a northern and southern lobe, which have been further subdivided into several low- and high-grade phases.

The Tuzo pipe delivered 533 carats from 523 tonnes of kimberlite. Twenty diamonds weighed in excess of 1 carat apiece, the largest being 3.38 carats. Tuzo is divided into four zones based on the internal geology. The pipe contains a 10.2-million-tonne resource averaging 1.22 carats per tonne at US$43 per carat. The top 80 metres of the pipe are modeled to contain a higher-gra
de 1 million tonnes grading 2.7 carats per tonne at US$47 per carat. Due to a lack of data, an additional 4.7 million tonnes of kimberlite on the western side of the pipe (from 200 to 360 metres depth) and in deeper parts of the pipe (from 300 to 360 metres) has not been included in the revenue and grade modeling.

De Beers attempted to tie in this resource during the recent winter 2002 program by drilling seven holes, which recovered 8-10 tonnes of kimberlite for microdiamond analysis.

Tesla is the smallest of the four pipes De Beers bulk-sampled, recovering 64 carats of diamonds from the processing of 184 tonnes, for a sampled grade of 0.35 carat per tonne. The largest diamond recovered was 2.7 carats. With an estimated resource size of 4.6 million carats, Tesla was considered too low-grade to be incorporated into the proposed mine plan.

In the fall of 2000, De Beers tabled a scoping level study of Gahcho Kue that fell short of a critical rate of return required to proceed to feasibility. The desktop study proposed open-pit mining for the 5034 and Hearne pipes, along with the high-grade zone in the upper part of the Tuzo pipe. The results of the study showed that a 15% increase in diamond revenues would get the project over the minimum threshold.

De Beers believed the best way to enhance project’s economics was to recover a larger number of diamonds from the 5034 and Hearne pipes to increase the confidence level of its desktop study. In the winter of 2001, De Beers recovered a further 914 carats in 635 tonnes taken from the east lobe of 5034, including the 9.9-carat stone valued at US$60,000. In addition, 751 carats of diamonds larger than 1.5 mm were recovered from a 334-tonne sample of the higher-grade northern portion of Hearne. With a diamond parcel nearly twice the size of the 1999 parcel, the revised modeled carat values (based on August 2001 diamond prices) were down 5% for 5034 at US$65.50 and down 11% for Hearne at US$63.30. Despite the lower values, which were consistent with the drop in the rough diamond market, De Beers elected to proceed with another bulk sampling program during the winter 2002 to recover a further 2,000 carats.

Based on observations by De Beers subsidiary Diamond Trading Company (DTC) — that a sub-population of high-quality diamonds exists amongst the diamonds recovered to date from the Hearne and 5034 pipes — De Beers budgeted another $10 million to increase the confidence level of the predicted size frequency distribution of the larger, top quality gem stones.

While diamond recovery results remain pending for some 684 tonnes of kimberlite recovered this year from the Hearne pipe, the 1,215-carat parcel recovered from 5034 will be sent to DTC in London for valuation.

During this year’s winter program at Gahcho Kue, De Beers drilled another 10 holes into the MZ kimberlite sill-73, 20 km northwest of Kennady Lake. The sill appears to extend at least 1 km. Drilling cut numerous narrow intervals of kimberlite ranging from 7 cm to 2.19 metres in thickness, with the largest combined section in one hole totalling 3.49 metres, between 14.7 and 19.2 metres. Samples have been sent to South Africa for microdiamond analysis. Previous drilling in the MZ Lake area uncovered a series of diamond-bearing kimberlite dykes or sills. The best hole to date in Sill 73 yielded 28 micros in 5 kg, with the largest diamond being 1 mm.


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