RE Metalex plans Greenland drillingMetalex plans Greenland drilling
2007-04-13 19:11 ET - Street Wire
by Will Purcell
Chuck Fipke's Metalex Ventures Ltd. says it will drill kimberlite targets on its Greenland diamond property from the ice this spring. The company has been quiet about its play on the western coast of the huge Arctic island, which lies in the same area as the Hudson Resources Inc. Garnet Lake discovery. Hudson plans a major drilling and mini-bulk sampling program on its play at a cost of $7-million this year. Metalex's plans are modest by comparison, but it will have to increase its spending significantly for the next few years if it plans to keep its Greenland property.
The plan
Metalex is zeroing in on an area around a lake that is five kilometres long and averages several hundred metres wide. The region surrounding Sturgeon Lake piqued Mr. Fipke's interest in 2005, after sampling programs began turning up good numbers of kimberlite indicators minerals with promising chemistry in tests leading away from the lake.
A second look appeared to constrain the likely source of the mineral grains to within the lake itself. Metalex completed the usual array of ground geophysics over the lake and produced more than a dozen targets, including a few coincident gravity and magnetic anomalies. Those targets are slated for drilling in the current program.
Despite the seemingly promotable results, Metalex has been dragging its exploration feet on the Greenland play. From May 1, 2006 to the end of January, 2007, the company spent just $456,648 on exploration across the property, which originally spanned over 250,000 hectares. During the 2005-06 fiscal year that ended April 30, Metalex spent $1.21-million on exploration. A year earlier, the company shelled out $1.54-million exploring the property, bringing its total Greenland expenditure to just over $3.2-million.
Meanwhile, Greenland regulations were requiring Metalex to step up its hunt, or to drop at least some of its ground. To keep the original property in good standing, Metalex had to spend $1.6-million on exploration during 2006, and $3.5-million in each of 2007 and 2008.
Instead, the company elected to drop a large portion of its property recently, leaving it with a bit less than 100,000 hectares to explore. Most of the dropped ground lay under the big Sukkertoppen glacier, which dominates the area south of Hudson's Garnet Lake discovery.
Metalex will face a lower exploration requirement on its smaller property, but the company will still have to spend just over $1.4-million on the property this year and a similar amount in 2008. As a result, Metalex will have to step up the pace considerably, or drop some more ground this year.
The encouragement
Metalex took up the Greenland hunt in 2004 and is still looking for its first significant diamond find to back up the promotable mineral chemistry found near Sturgeon Lake. The company used drills to collect mineral samples from the lake ice and some of the shallow holes did hit a kimberlite sill, but the rock was not the source of the promising mineral grains found in the till samples.
The slow pace has given Hudson the exploration lead in Greenland. The company found encouraging quantities of diamonds in kimberlite float near Garnet Lake in 2004 and it began drilling the following year, hitting a dike that yielded comparable quantities and sizes of diamonds.
In 2006, Hudson completed a 47-tonne mini-bulk test of the Garnet Lake dike, coming up with a grade of 0.25 carat per tonne, supported by a 2.7-carat gem that briefly wowed the market. The company hopes that result is just the tip of its Greenland iceberg and it plans a 600-tonne test this year that should keep the hunt in the market's eye.
Metalex closed down two cents to 42 cents Thursday on 150,000 shares.