Hunt for diamonds heats up in territory

East of the hub of Canadian production in Northwestern Territories, diamond exploration intensified this year in far-flung corners of neighboring Nunavut. Ongoing work at the Chidliak Project to the east and the Jericho Mine to the west dominated activity in the sector, but explorers conducted modest programs at other projects in northeast and northwest Nunavut. Here's an early look at the progress of the 2011 campaigns and what lies ahead for them in 2012.

Ready to build a mine

At Chidliak, a 51/49 joint venture between BHP Billiton and Peregrine Diamonds Ltd., mounted a C$17.7 million exploration program operator Peregrine wrapped up in September. 2011 marks the seventh year that BHP and Peregrine have searched the 8,580-square-kilometer (3,312 square miles) property for diamonds. Going where no explorer has previously ventured, Peregrine discovered the first kimberlite on the Baffin Island property in July 2008, some 700 kilometers (434 miles) from the nearest known kimberlite occurrence which is in Greenland.

Today, the junior's prospecting permits in the region cover more than 35,000 square kilometers (13,514 square miles) across four properties: Chidliak, Qilaq, Cumberland and Kimmirut.

Peregrine Oct. 6 reported microdiamond results from samples collected at two kimberlites, CH-52 and CH-58, discovered earlier this year on the Chidliak Project on Baffin Island in Nunavut.

A 208.4-kilogram sample from CH-52 yielded 252 diamonds larger than the 0.106-millimeter sieve size, including four diamonds larger than the 0.850-millimeter sieve size that weigh a total of 0.045 carats, while a 194.9-kilogram sample from CH-58 yielded 428 diamonds larger than the 0.106-millimeter sieve size, including one diamond larger than the 0.850-millimeter sieve size.

CH-52, with a surface area estimated at 0.2 hectares (0.49 acre), is located about 200 meters south of the junior exploration camp and is 5 kilometers (3 miles) to the east of the Southern Focus Area, an area with an 8-kilometer radius that hosts six of the seven kimberlites that Peregrine has identified to date at Chidliak with economic diamond mining potential.

CH-58 is located about 20 kilometers (12.4 miles) north of the CH-6 kimberlite and 300 meters south of the CH-55 kimberlite.

With the presence of commercial-size diamonds in small samples collected from CH-52, CH-55 and CH-58, Peregrine said more work will be scheduled on these kimberlites to determine their economic potential.

The Vancouver, B.C.-based junior Oct. 25 also reported results from a 32.54 metric ton mini-bulk sample of surface material collected from the CH-28 kimberlite - first discovered in 2010 - that returned 8.94 carats of commercial-size (+0.85 millimeter sieve size) diamonds, averaging 0.27 carats per metric ton. CH-28, with an estimated surface expression of 2 hectares (5 acres), is located about 50 kilometers (31 miles) north of the Southern Focus Area. Earlier surface and core samples also yielded significant quantities of microdiamonds, including 0.33 carats of commercial-size stones.

The nine kimberlites discovered at Chidliak in 2011 bring to 59 the total pipes found so far on the property.

Peregrine Oct. 27 reported that a 169.2-kilogram sample of kimberlite collected at surface near CH-59 yielded 174 diamonds microdiamonds, including four larger than the 0.85-millimeter sieve size that together weigh 0.047 carats.

The junior also said it expects diamond additional results for more kimberlites - CH-6, CH-7, CH-28, CH-31, CH-33, CH-44, CH-45, CH-52, CH-58 and CH-59 by March 31, 2012.

Detailed drilling of more than 5,500 meters on six high-potential kimberlites and extensive logistical planning set the stage for bulk sampling of select kimberlites (CH-6, CH-7, CH-31, CH-44 and CH-45) in 2012.

Cooper Drilling LLC was awarded a contract for drilling services, and Nuna Logistics has been selected to provide heavy equipment and logistical support for the 2012 program.

In addition, Peregrine shipped substantial equipment, supplies and fuel to Iqaluit by sealift in September.

"The 2012 bulk sampling program is an important step along the development path at Chidliak, and it will allow Peregrine to continue to unlock the value at this exciting diamond project," said Peregrine CEO Eric Friedland. "Our goal is to deliver the first diamond mine on Baffin Island. We will work to achieve this goal by rapidly advancing the known kimberlites with economic potential as well as continuing to explore for additional diamondiferous pipes. Unresolved indicator mineral trains and the presence of kimberlite float at multiple localities not currently linked to sources give us confidence that more kimberlites will be discovered next season."

Discovery at Qilaq

At the nearby 437,000-hectare (1,687 square miles) Qilaq Project northeast of Iqaluit, the capital of Nunavut, Peregrine in August reported the discovery of a third kimberlite, Q3, by testing with RC drilling a magnetic low anomaly with a 2.5-hectare (6.2 acres) surface expression. The anomaly was one of 10 selected from a 3,700 line-kilometer airborne electromagnetic/magnetic survey completed in June over which ground magnetic geophysical surveys were conducted in June and July. Peregrine said it will choose more anomalies identified by the ground surveys for evaluation in 2012 with the aid of additional data from 122 till samples collected during the season.

Peregrine planned to spend about C$1 million on exploration at Qilaq in 2011, in which it has a 100 percent interest, except for a 1-kilometer area that borders Chidliak in which it shares ownership with BHP Billiton.

At the 5,270-square kilometer (2,035 square miles) Cumberland Project about 100 kilometers (62 miles) north of Chidliak on the Cumberland Peninsula of Nunavut, Peregrine planned a C$300,000 program of sampling, mapping and prospecting for 2011. The junior owns a 100 percent interest in the Cumberland property.

At the 2,360-square-kilometer (911 square miles) Nanuq Project 300 kilometers (186 miles) north-northeast of Rankin Inlet, a summer exploration program of drilling, sampling and ground geophysics was underway in June with anticipated 2011 spending of about C$2.0 million. At the adjacent 330-square-kilometer (127.4 square miles) Nanuq North Project, a limited drill program was scheduled for 2011 with anticipated exploration expenditures of C$250,000 of which Peregrine's share is C$125,000.

New prospects at Jericho

Shear Diamonds Ltd., meanwhile, is wasting little time chasing the potentially lucrative exploration and development opportunities represented by the defunct Jericho Diamond Mine Complex.

In July Shear reported completing five of six angled delineation drill holes planned for 2011 into the Jericho Kimberlite Complex to help resolve the kimberlite contacts as well as aid in understanding the geological domains as Shear revises the geological model for Jericho. Four of the five drill holes intersected kimberlite outside the current geological model, which the explorer said suggests upside tonnage potential.

"The goal for 2011 is to refine and augment the existing geological model for the Jericho Kimberlite Complex as well as discover new kimberlites nearby," said Shear President Pamela Strand, P.Geol. "The results from our first hole are extremely encouraging. Obtaining this new information from the delineation program will increase Shear's confidence in the ongoing evaluation work on the Jericho Kimberlite Complex."

Once the delineation drilling is completed and a final water license is issued, Shear said it would move the drill to the surrounding claims, known as the Carat Property, to test priority exploration targets suggestive of kimberlite based on ground magnetic and horizontal loop electromagnetic surveys currently underway. As of July, a total of 296 line-kilometers of magnetic surveys had been completed over 27 targets, along with 60 line-kilometers of HLEM surveys over 11 targets. Drill target selection was ongoing, with lake-based targets a priority for the remainder of the spring 2011 season.

Shear also engaged Mineral Services Canada to develop a new geological model using historical drill core for petrographic analysis. Twelve kimberlite types and 13 domains were defined. Shear believes this model better reflects the kimberlite emplacement processes at work within the Jericho Kimberlite Complex.

In early October, the company also reported recovery of 200.85 carats of diamonds from 22.1 wet metric tons of recovery reject and coarse-processed kimberlite from trial tests performed in a recently restarted recovery portion of the Jericho mine. Fourteen stones larger than 0.5 carats were recovered, and Shear completed a new geological interpretation and three-dimensional model for the Jericho Kimberlite Complex.

"The recoveries are an important part of proving Jericho's real potential, and speaks to the lost grade from past operations. We are excited to see that the diamond recoveries from the recovery rejects tailings pile are in line with audits done by both Tahera and Shear," said Shear Chairwoman and CEO Julie Lassonde. "Diamond recoveries continue during our plant trial, which has seen periodic stoppages to address the inevitable issues which arise in re-commissioning a circuit that has been dormant for the past three years. Shear's ultimate goal is to generate cash flow from diamond sales in the coming months and continuing through all of 2012."

More work at Hammer

In early October, Stornoway Diamond Corp. said it completed 21 short delineation holes with its 25 percent partner North Arrow Minerals Inc. in 2011 at the Hammer Project for a total of 1,800 meters of core drilling and 930 meters of kimberlite for logging and diamond recovery.

The Hammer Project located about 500 kilometers (310 miles) north of Yellowknife, Northwest Territories within the Coronation Gulf/North Slave Diamond District of Nunavut, covers 1,014 hectares (2,506 acres).

The Hammer kimberlite, discovered by surface pitting in 2009, appears to have an elongated surface expression of about 0.4 hectares (1 acre), a confirmed depth extent of at least 200 meters, and to be composed of olivine-rich variably bedded volcaniclastic kimberlite.

A single micro-diamond was recovered from a 6-kilogram hand sample recovered from the surface pits.

Past surficial sampling work has suggested the presence of other kimberlite bodies adjacent to Hammer that have yet to be discovered.

Stornoway also collected additional till samples in these areas and discovered kimberlite float boulders during ground prospecting. About 200 kilograms of core sample has been submitted for microdiamond recovery, and an additional 3.4 metric tons of core will be processed for macro-diamond recovery.

Stornoway holds variable interests in a half-dozen other Nunavut diamond project, but it focused most of its C$5.6 million exploration budget in 2011 on growing resources at its advanced Renard Project in northern Quebec. However, the company Oct. 25 said it is advancing its exploration portfolio towards multiple drill programs in 2012.

Exploring EM targets

In August Diamonds North Resources Ltd. began a 2011 exploration program at its flagship Amaruk Property in the Pelly Bay Diamond District of northeastern Nunavut, where in recent years it has discovered 29 kimberlites, of which 90 percent contain diamonds.

The company said the work involved detailed till sampling in close proximity to high-priority targets identified from electromagnetic data it recently received for the eastern side of the Amaruk property.

The explorer believes that EM data is extremely important for identifying kimberlite targets in Canada and has played a lead role in discovering economic kimberlites at the Ekati and Diavik diamond mines as well as high-value kimberlites at the Gahcho Kué Diamond Project. Until recently the only effective geophysical kimberlite targeting tool available in the area has been magnetic data. 
"For the first time we are able to extract kimberlite targets using EM which could provide a major breakthrough," said Diamonds North President and CEO Mark Kolebaba.