August 21, 2002

Kettle River Resources Ltd - Street Wire

Kettle River Resources Ltd KRR
Shares issued 4,853,611 Aug 20 2002 close $ 0.13
Wednesday August 21 2002 Street Wire
Street Wire  by Will Purcell
Stu Blusson's Archon Minerals Ltd. has finally found a kimberlite on one of the properties it has been exploring in the north, thanks to a discovery on ground owned by the DHK group of companies and their partners. Archon has been trying for several years to come up with new finds on properties owned by other explorers, without much luck. Since the mid-1990s, Archon has been poking around on ground scattered across Canada's North and in Quebec, using some new geophysical techniques developed by the academic and charitable Mr. Blusson. There were numerous targets identified on some of the properties, and a number of them were subsequently drilled, but without success.
That changed this week with word of the discovery this week, on the WO claim block, which is immediately south of the Diavik property and southeast of Lac de Gras. The property, now owned by Dentonia Resources Ltd., Horseshoe Gold Mining Inc., Kettle River Resources Ltd., Aber Diamond Corp., Archon Minerals Ltd. and SouthernEra Resources Ltd., played a key role in the early days of the Lac de Gras diamond play. In its heyday in the 1990s, eight kimberlites were discovered on the WO property, and most of them are believed to be diamondiferous.
That could offer a bit of encouragement for Archon and its partners, as based on the location of the new find, near a cluster of kimberlites that contains the Tli Kwi Cho pipe, the chances seem good that the new kimberlite will prove to be at least marginally diamondiferous. Whether it contains a significant number of larger diamonds is another matter entirely however. Most of the WO pipes were just marginally diamondiferous, but a few finds in the area did produce encouraging results.
Archon's new find is about two kilometres to the southwest of DO-27, or the main lobe of the Tli Kwi Cho kimberlite, and that places the new find near the centre of the WO kimberlite cluster. There is no indication of the size of the new kimberlite, but the drill encountered kimberlite at a vertical depth of 34 metres and it was still in kimberlite when the hole was terminated at a vertical depth of about 62 metres.
The new kimberlite is located about 200 metres to the north of the DO-29N kimberlite, which in turn is about 100 metres to the north of DO-29. That might suggest that Archon's discovery is closely related to the DO-29 pipes, but the early guess suggests the kimberlite is different in texture than DO-29N. That would seem to be welcome news, as DO-29N and its southern sister were just marginally diamondiferous. A 1998 sample from DO-29N, weighing 82.7 kilograms, produced 12 diamonds, including one macro-sized stone. As well, another batch that weighed about 92 kilograms is believed to have been processed, but it apparently was barren. In all, about 175 kilograms of DO-29N rock produced just a dozen tiny diamonds, but even so, that was better than the haul from the main DO-29 pipe. About 150 kilograms of hypabyssal kimberlite was processed in 1993, and it produced just one stone, believed to be a small macrodiamond.
Nevertheless, there are signs that the new find might have more promise than its poorer relations just to the south. The DO-29 kimberlite was described as poor in indicator minerals, while the new find apparently contains an array of indicator minerals, although it is unknown just how prospective those minerals are. As well, at least some of the kimberlite phases present in DO-29N are believed to have been indicator poor as well. The pipe contained hypabyssal, pyroclastic and heterolithic kimberlite breccia, but hypabyssal rock may have dominated the samples. The fact that most of the rock in sampled from the DO-29 twins was hypabyssal kimberlite would seem to be another potentially encouraging sign. The new discovery was described as crater facies kimberlite, which produced significantly better diamond counts in the best of the WO pipes.
There were several kimberlites discovered on the WO property, just to the northwest of the new pipe, but none of them produced diamond counts any better than what had come from the DO-29 twins. The small DO-41 pipe, about 12 kilometres northwest of the latest discovery, produced just one microdiamond from 122 kilograms of kimberlite in 1993, and a small four kilogram sample from the neighbouring DO-40 pipe was barren. The small DO-32 kimberlite pipe is just a few kilometres to the northwest of the Archon discovery. It was also diamondiferous, but only barely so. In 1994, rock weighing 86.6 kilograms was processed, and it produced just one microdiamond. Like most of the other finds, the DO-32 kimberlite was largely hypabyssal as well.
The best of the WO kimberlites were the two lobes of Tli Kwi Cho, and although the results of a 1994 bulk sample provided the biggest disappointment in the Canadian diamond hunt, the results of earlier work were sufficiently encouraging that some believe that a portion of the southern lobe of Tli Kwi Cho still has a bit of potential. In all, at least 2,581 kilograms of DO-27 kimberlite were analyzed by caustic fusion, and the rock produced 2,100 diamonds, including 466 macro-sized stones.
Taken as a whole, the Tli Kwi Cho counts were nothing special, but had the details of the diamond recovery been released, speculators might have realized that Tli Kwi Cho was a complex pipe with significantly different diamond grades within several different phases of kimberlite. The presence of a potentially richer kimberlite facies within Tli Kwi Cho might offer a bit of encouragement that the new find might have a chance as well, as the best grades were obtained from the pyroclastic, or crater facies, kimberlite.
The diamond counts from the diatreme and black fragmental phases at Tli Kwi Cho were clearly nothing to get excited about. Just over one tonne of kimberlite from those two phases produced just 378 diamonds, and only 52 of those were macro-sized stones. On the other hand, 1,307 kilograms of pyroclastic kimberlite produced 1,385 diamonds, including 352 macros. Of those, 20 were at least one millimetre in length. The total weight of the diamonds in the pyroclastic material was more than 2.8 carats, which suggested a total diamond grade of just over two carats per tonne, and the one-millimetre diamonds alone were enough to produce a grade in excess of one carat per tonne. By comparison, the total diamond grade of the diatreme material was just 0.3 carat per tonne and the black fragmental material produced a total diamond grade of just 0.17 carat per tonne. All of that would have suggested that the diatreme material had a low grade, while the hope for Tli Kwi Cho rested with the pyroclastic material. As a result, the Tli Kwi Cho disappointment was not that a bulk sample of diatreme kimberlite was nearly barren, but that the pyroclastic phase produced a grade of just 0.36 carat per tonne.
Since 1994, Dentonia's Adolf Petancic, who must wish he had stuck with lawyering, has tirelessly tried to convince the market that Tli Kwi Cho deserves a second shot, without much success. Nevertheless, the bulk of the promising caustic fusion results were taken from cores removed from the region tested in the 1994 bulk sample, which would lend credence to Mr. Petancic's argument that the best portion of the pipe was not bulk tested. In any case, the presence of a higher-grade region within Tli Kwi Cho would be a good sign that the pipes in the area had the opportunity to sample the diamond stability field, and that is also supported by geochemical work, which suggests the diamonds were transported to the surface along a cool cratonic geotherm that would be favourable for diamond preservation.
Also offering a bit of encouragement are the diamond counts from two pipes on the Commonwealth portion of the Diavik property, just 10 kilometres to the north of the new discovery. The complex C-13 pipe was discovered in 1993, and the initial diamond counts and the indicator mineral chemistry were sufficiently encouraging that additional holes were poked into the pipe over the next several years. In all, 1,381 kilograms of kimberlite yielded 368 diamonds, including 108 macros; a haul that paled in comparison with the economic Diavik pipes about 20 kilometres to the west, but certainly still of interest. The C-12 pipe also produced some interesting diamond counts, at least according to SouthernEra. The company noted that some larger diamonds had been obtained from the pipe during a 1997 drill program. As well, many other pipes were found by Diavik in the region to the east and west of C-13, but few of them seemed to be of much interest.
Although the new find may well prove to be yet another WO property dud, the discovery is the first bit of good news for Archon's own exploration program. Archon began its hunt for kimberlites on WO in 1998, and deals covering two separate properties owned by Dentonia and its partners followed in 2000. When the deals were signed, the Archon exploration program was touted to be a unique approach, based on high-resolution magnetometer surveys, to detect kimberlites that would ordinarily not be detectable by the usual methods. Since then, the kimberlites have proven elusive to Archon as well. Prior to the discovery, the company identified had drilled three targets earlier this year, but all of them proved to be duds. Even that was better than last year, when 16 targets were identified on the two properties to the west of the WO ground, DHK and WI. Archon drilled 14 of the targets, but all of them proved to be something other than kimberlites. Although the latest find may provide Archon with a bit of vindication, the drill success seems to have resulted from a proprietary system other than its own, as the discovery is credited to data from BHP Billiton's Falcon gravity gradiometer system, as well as an interpretation of topographical features.
Archon has been doing similar deals with junior explorers for several years now. In 1995, Archon agreed to use Mr. Blusson's geophysical technique to explore the Fishback claims belonging to Gerle Gold Ltd. and the Slave Diamond Syndicate. Archon was to earn a one-quarter stake in any find, but the deal expired the following year without any discoveries being made. In 1997, the company made several additional agreements to explore prospective ground in the North. Again, it was Mr. Blusson's technique that was touted to be at the centre of the deals, but nothing was found as the result of any of those arrangements.
Undaunted, Archon has continued using its technique on properties owned by juniors, unfortunately without much success. Last year, Archon took its hunt to the North Slave district, agreeing to explore ground owned by Cantech Ventures Inc., Dasher Energy Corp. and International Samuel Exploration Corp. The deal expired just six months later, with no discoveries having been made. Earlier this year, Archon moved a bit further afield, agreeing to explore ground held by Masuparia Gold Corp. in the Wemindji region of Northern Quebec, but so far, there has been no news from that program.
The news of the discovery at WO by Archon sparked a bit of hope for the DHK juniors. Dentonia's shares jumped two cents following the news, closing at nine cents Monday and holding the gain on Tuesday. Horseshoe Gold also added two cents, closing Tuesday at eight cents, while Kettle River added four cents Monday but lost them Tuesday, closing at 13 cents. Archon's shares were unaffected by the news. The stock closed at $1.85 last week, and has not traded since the discovery.
Permission to publish this document received compliments of Canjex Publishing Ltd. www.stockwatch.com

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