Igloolik (Feb 10/03) - Three small Canadian mining firms have made the first confirmed diamond find in Nunavut's Melville Peninsula.

The Aviat Project Joint Venture partners last week announced the discovery of two diamond-bearing kimberlite occurrences about 850 kilometres northwest of Iqaluit.

The play: Aviat Joint Venture Project on Nunavut's Melville Peninsula. The find: 320 small diamonds from surface sampling of two kimberlite occurrences. The players: Include Eira Thomas, credited with finding the first diamonds on the Diavik property. The race: Aviat has secured rights to seven million acres. BHP has staked one million acres close by. De Beers has permitted eight million acres on Baffin Island. The Money: Stock in Thomas' company, Stornoway Ventures, went up 64 cents to $1.06 within hours.

The joint venture partners are Stornoway Ventures Ltd., Northern Empire Minerals Ltd., and privately held Hunter Exploration Group.

The Aviat announcement sent shares in the two TSE-traded companies soaring.

Within hours, Stornoway shares went up 64 cents to $1.06 on the TSE's Venture Exchange. Northern Empire shares went from 50 cents to $1.10.

Industry observers quickly predicted another diamond staking rush in the North, this time in Nunavut.

The players involved include Eira Thomas, chief executive officer of Stornoway. In the mid-'90s Thomas discovered the highest-grade cluster of kimberlite pipes in the world at Lac de Gras, now the site of the Diavik mine.

Thomas is a director of Aber Diamond Corporation, which owns 40 per cent of the Diavik mine.

Tests on the two kimberlite 'occurrences' returned 320 small diamonds from small surface samples.

The first, named AV-1, yielded 228 diamonds from 186 kilograms of sample material collected from the surface of a kimberlite outcrop.

The second, located two kilometres away, yielded 92 diamonds from a 56-kilogram sample gathered from angular boulders.

"These numbers, although very preliminary, rank up there with some of the better pipes that have been found in the NWT," said John Robins, a principal in both Hunter and Northern Empire.

Thomas said the samples "do not look dissimilar" to early sampling from the Diavik property.

"It is tremendously exciting. But it is early and the samples are very small. There is a lot left to be done."

Yellowknife geologist made find

The discoveries were made by Yellowknife geologist Adam Vary, part of a Hunter field team working out of Igloolik last summer.

The diamond hunt started with Robins' search for gold, platinum and copper in the area a year earlier.

That proved fruitless, but promising mineralization in a glacial till sample turned his interest to diamonds instead.

The Aviat partners kept the find a closely guarded secret while acquiring additional exploration rights in the Melville Peninsula.

The strategy paid off last week when the government of Nunavut awarded the group permitting rights to 5.5 million acres for five years.

The partners now hold exploration and staking rights on nearly seven million acres in the largely unexplored region. BHP has staked one million acres nearby.

De Beers has permitted eight million acres on nearby Baffin Island, the largest amount of land ever taken out in Canadian history at one time. Robins said the joint venture's field work to date provides "indicators that there may be an entire kimberlite field there. That is why we had to keep everything quiet while we amassed our land position."

Aviat's exploration activity this summer will include taking larger samples, air-borne geo-physics, and possibly drilling, Robins said.

Exploration funding won't be a problem.

"We have gone from a 30 cent stock with a real challenge finding funds to an 85 cent stock with our phones ringing off the hook with financing offers."