SOMBA K'E/YELLOWKNIFE - A junior exploration company on the hunt for diamonds east of the Diavik Diamond Mine hopes to return to its deposit next year to confirm whether the project has legs.

A worker with Shear Minerals conducts a ground gravity survey at the company's Afridi diamond project, located approximately 320 km northeast of Yellowknife. - photo courtesy of Shear Minerals

Alberta-based Shear Minerals is trying to raise approximately $1.3 million for a drilling program next year at its Afridi diamond project, located 320 km northeast of Yellowknife, after sitting out 2009.

While the lack of activity this year is partly due to the financial climate, Shear is also still in the process of acquiring a new land use permit with the Mackenzie Valley Land and Water Board to allow further work to proceed, said president Pamela Strand.

"The general financial markets are not very conducive," said Strand, echoing the comments of nearly every other junior operator in the industry over the past year.

But she added, "We're in the process of securing our land use permits, so we're currently doing consultations with everyone up there to try and get a new land use permit for that program."

Previous operators have discovered seven low-diamond kimberlites at Afridi, but after drilling 12 holes itself in 2008, Shear found nothing. More drilling is needed, which can't happen until Shear receives a new permit, said Strand.

"At the northwest tip of the project, it joins the Diavik Diamond Mine. To the west of us is Peregrine's DO-27 project. So we're in the right hunting territory, so to speak," said Strand.

"Being a public company ... before I can raise the money for it, I need to know that I can do the work."

The 2008 campaign employed between eight and 10 people and a similarly-priced program next year will probably create the same amount of work, she said.

First the company has to raise the money, a process that, while still difficult has become somewhat easier in the last month. But it still has a ways to go, said Strand.

"It's still taking time for those high-risk dollars to come back into the junior diamonds because they're really busy now with the gold, obviously," she said.

Gold prices topped US $1,012 per ounce last week.

But nobody's about to forget diamonds, she added.

"The thing about discovering a diamond property is they're very high-profit generally. The upsides can be huge for investors if we have a discovery. People can't stay away from that for too long."

By the time the company finishes the next phase of drilling, it should have a good idea of whether the project requires further exploration or should be shut down.

"I would say by the end of the next phase of drilling we will have probably covered most of the property," said Strand.