by Nancy Gardiner
Northern News Services

NNSL (Feb 03/97) - Lytton Minerals Ltd. and New Indigo Resources Inc. have entered into a joint-venture agreement with Kennecott Canada Exploration Inc.

Under the agreement, Kennecott has the right to earn a 50-per-cent interest in certain Lytton and New Indigo diamond exploration claims in the Northwest Territories.

Desmond Alexander, president of Lytton Minerals, says his company is currently directing its energy at the Jericho project directly north of the Lupin mine.

His company is processing 15,000 tonnes of kimberlite pipe to determine its diamond content.

"It's a large-scale sample of kimberlite pipe extracted north of Lupin," Alexander says. "We already have three pipes in the area," he added.

Lytton is putting together a budget for exploration of 400,000 hectares in the Northwest Territories.

Lytton Minerals Ltd. has more than 3 million acres of exploration property in the NWT (shared in a joint partnership). It has another 400,000 hectares at its Jericho diamond project area north of Lupin, which it will be exploring itself.

"There's a possibility that Canada could be producing 20 per cent of the world's gem-quality diamond output," says Alexander. "It looks as if Canada is going to become a very important gem-diamond producer on a world scale."

"But since no company is actually producing at this point, it's difficult to predict what volume of diamonds could be produced," he added.

"This industry is ideally suited to the N.W.T.," says Alexander. "You don't have to cart out heavy materials, it's not damaging to the environment and they're comparatively small mines."

If the current testing of kimberlite pipe is successful, the company would then look at a feasibility study.

"The company has been working very hard since 1992, and staked a very large area in the NWT for pipes and pipe clusters. The year before last, we discovered the Jericho pipes."

"It's our hope that by 1999, we could be modestly in production. It wouldn't be a large-scale producer but it could be a profitable business," he says.