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SOMBA K'E/YELLOWKNIFE - When you're a junior exploration company looking for diamonds, you have to start somewhere.

Even though Vancouver-based ATW Resources Ltd. has not yet found any diamonds at its site on the northeast end of Mackay Lake, between 200 to 300 km from Yellowknife, the company is not giving up.

Vancouver-based ATW Resources Ltd. completed a drilling program at Mackay Lake, between 200 and 300 km northeast of Yellowknife, but said it still has promise in the site despite weakened demand for diamonds in the wake of the global economic crisis. - NNSL file photo

"We did not find any kimberlite this year," said Marc Blythe, president of ATW, a subsidiary of Almaden Minerals Ltd, of this year's winter drilling program. "But that doesn't mean there isn't any value to be gained from the information we collected.

"From that, you can predict if the environment is conducive to the development of diamonds and we believe it is," he added. "That's why we're persevering."

The winter drilling program, which cost around $500,000, provided work for Inuit-owned Nuna Logistics, which set up the camp for ATW, and employed one man from the Deninu K'ue First Nation (Fort Resolution).

Since the project is located primarily on a lake, drilling campaigns are pretty much limited to winter, when the lake is frozen over, providing a safe staging point for drilling, said Blythe.

"This particular property has a train of indicator minerals which has been traced to something like 20 km on land and then subsequently underneath the lake," he explained. "So basically all activities are on the lake and there's not really any point doing any further work (on the land)."

The company drilled relatively shallow holes averaging 10 metres, but the work begins before that.

"Diamonds occur with things like garnets," said Blythe, which are deep red gems. "These indicator minerals are spread by the glaciers that were over the land years ago. There's been a lot of work done to figure out where the glaciers went and the direction of glaciation. If you know the direction of glaciation, you can trace back along that path to where the minerals came from."

Blythe said it's too early to discuss ATW's plan for next winter, but insisted the company will return, despite softening demand for diamonds in the wake of the troubled world economy and planned drops in productivity among two of the three Yellowknife diamond mines.

He said operators behind exploration projects have to maintain perspective.

"The demand is suffering because of the world economy. But from our perspective, it takes a long, long time to develop a mine. Even if we hit a kimberlite, it's still probably 10 years away from a mine being built.

By then, added Blythe, "We'd imagine that world economy will have improved, hopefully."

Lou Covello, president of the NWT & Nunavut Chamber of Mines, agreed with Bythe's outlook.

"You have to take these things to their natural conclusion," he said. "Only one in 1,000 projects ever make it, but exploration is inherently about taking a leap of faith."