Rankin Inlet (July 07/03) - Shear Minerals of Edmonton is riding the kind of play in Nunavut that junior mining companies dream about.

The company owns a controlling interest in the Churchill diamond joint venture near Rankin Inlet.

Ex-NWT geologist Pamela Strand at Shear Minerals drill site near Rankin Inlet last month. - photo courtesy Shear Minerals

Eye-catching drilling results through June and two new high profile partners -- including BHP Billiton -- has the firm's stock in orbit.

Shear Minerals was trading on the TSX at 60 cents in early June and $1.70 just two weeks later.

It closed late last week at $1.38.

The Churchill project totals more than 1.5 million staked acres near Rankin Inlet.

Shear Minerals owns 51 per cent, Northern Empire Minerals has an option on 35 per cent, and BHP owns 14 per cent.

The joint venture is spending $2.5 million on the property this season.

Drilling began in early June on 15 of 217 targets identified through till sampling and geophysics during 2001 and 2002.

Drilling began just 30 kilometres from Rankin Inlet.

By last week, Shear had reported kimberlite finds in seven of the 10 holes drilled to date.

"We hit the first kimberlite at a depth of 35 feet after just 12 hours of drilling," said Pamela Strand, president and CEO.

"It was a pretty exciting start and it stayed that way all month as we moved along."

Target sites for the shallow-hole drill program are as much as 20 kilometres apart.

The objective is to prove the existence of a new kimberlite cluster.

"In a sense, we are using the drill as a prospecting tool."

Test holes range from 65 metres to 106 metres.

Lab testing of sample material from each kimberlite (100 to 150 kilograms) should be completed by this fall.

Strand lived and worked in Yellowknife as a geologist before moving to Edmonton in the mid-1990s.

Shear Minerals has been involved with the Churchill project since 2001.

BHP purchased its 14 per cent interest from the Hunter Exploration Group for $3 million in early May.

It is unusual for a major mining company to take a minority position in a junior exploration play, Strand noted.

The deal includes a 'stand-still' provision that bars BHP from buying out its smaller partners for four years.

The company has also agreed to underwrite the cost of collecting and processing the first 200 tonnes of kimberlite bulk samples.

"That could cost up to $15 million, so it is significant," said Strand.

Northern Minerals, which is also involved in the high-profile Arviat joint venture on the Melville Peninsula, will earn its 35 per cent share by taking on $750,000 in exploration expenses.

About 30 per cent of the $2.5 million 2003 exploration budget is being spent in Rankin Inlet on supplies, accommodation and personnel.

The close proximity of the community has spared the company many of the logistics headaches common to Northern projects, said Strand.

"Certainly it has helped make our program this year more cost-efficient."

Rankin Inlet SAO Ron Roach said the project has "definitely raised interest" in the community.

"Local stores are seeing a benefit but it is preliminary drilling so there hasn't been many jobs yet," said Roach.

"The Meliadine gold project is up in the air so the hope is that Shear will be hiring more people here next year. Everybody is waiting now on the drilling results."