Pipe dreams
Numbers in for Hearne

Doug Ashbury
Northern News Services

Yellowknife (Feb 02/00) - Glenmore Highlands, which has a stake in the Kennady Lake property, reports very encouraging numbers from a recent bulk sampling of the Hearne diamond-bearing kimberlite pipe.

Hearne's estimated per carat value is $65 US. That is up substantially from the previous estimate of $44 US per carat which resulted from an earlier, smaller bulk sample.

"This is good news from our perspective," Glenmore president and chief financial officer David Whittle said Monday.

As for the per tonne value of the kimberlite, that figure is also up. Hearne's estimated 6.86 million tonnes of kimberlite is estimated to be worth $111 US per tonne.

"It is very encouraging to see that high per tonne value," Whittle said.

Some 856 carats were recovered from a bulk sample of 469 tonnes of kimberlite taken from the Hearne pipe.

The main reason behind the increased value numbers is the fact that a bigger sample often yields more valuable diamonds. Not surprisingly, bigger diamonds are rarer and often worth more per carat than smaller ones.

The Hearne results follow similarly encouraging numbers released last December on the property's 5034 kimberlite pipe.

Pipe 5034 has an estimated 20-million tonnes of kimberlite with a grade of 1.64 carats per tonne worth $63 US per carat. Pipe 5034 has a per tonne value of $103.5 US.

Together, the Hearne and 5034 pipes could be worth $2.8 billion. A third pipe, Tuzo, will add to this number.

By comparison, the Diavik diamond project, a richer deposit that BHP's Ekati, is worth an estimated $8.5 billion.

"One of the benefits of being part of De Beers is they have a large proprietary database," Whittle said.

That means when De Beers wants to model a resource, the company can refer to information it alone holds on its diamond-bearing kimberlite deposits around the world.

The Hearne pipe is part of a cluster of diamond-bearing bodies on the AK claim 275 northeast of Yellowknife. Other pipes on the property undergoing sampling include 5034, Tuzo and Tesla.

Bulk-sample numbers from the Tuzo pipe are expected later this month.

Tesla is the least rich of the four ore bodies.

De Beers' subsidiary Monopros is operator at the Kennady Lake site and can earn a 60 per cent stake in the property. Mountain Province also has a stake in the property. Monopros is funding the project to production.

De Beers will combine revenue values and grades of Hearne, 5043 (its numbers were detailed Dec. 14), with pending numbers from Tuzo and Tesla to develop a conceptual mine model.

Since 1994, about $55 million has been spent on the property.

Asked when there could be an operating mine at the site, Whittle said 2003, possibly 2002 though the latter would be a bit more aggressive estimate.

"There are certain benchmarks for a mine in the NWT. We're coming down on the positive side," he said.

What is not so positive is the circumstances faced by Diavik Diamond Mines, he said. Diavik Diamonds Mines, a subsidiary of Rio Tinto, is managing the Diavik diamond property at Lac De Gras.

Whittle said the concern is, "When does the permitting process advance to a degree of predictability?"

Whittle said hurdles are not considered problems as long as they are well-defined.

"We're prepared to meet and exceed the hurdles," he said.

But uncertainty, like what is being faced by Diavik, makes it difficult to manage the process, he concluded.