willP on GEM's Ataa + nickelPele Mountain's Attawapiskat play grows
Pele Mountain Resources Inc GEM
Shares issued 39,319,014 Nov 5 close $0.56
Thu 6 Nov 2003 Street Wire
by Will Purcell
Al Shefsky's Pele Mountain Resources has expanded its diamond hunt in the
Attawapiskat region of Northern Ontario, in the immediate vicinity of the
Victor pipe, where De Beers hopes to develop Ontario's first diamond mine.
There has been relatively little news about the finer details of Victor
from the tight lipped explorer, but the company continues to plug away on
the project, which is an encouraging sign for rival explorers such as Pele
Mountain. As well, the area has attracted speculative notice in recent
months due to a neighbouring play run by the equally secretive, and
somewhat more mysterious, Chuck Fipke. Some of that interest will splash
over onto Pele's play if Mr. Fipke and his partners can come up with a
diamondiferous pipe of their own.
The Attawapiskat region produced nearly 20 kimberlite discoveries in the
late 1980s and early 1990s, but progress has been painfully slow in the
area. Most of the finds were made by De Beers about 15 years ago, but the
company waited for about a decade before deciding to take a mini-bulk
sample form the most promising of its finds, and mulled matters over for a
few more years before proceeding with a larger bulk test. The pace is still
slow, but now it appears to be the government that is applying the brakes,
not De Beers.
Portions of Pele's property appear to be in a prime location. Most of the
Attawapiskat kimberlites occur along a trend line running roughly
northwestward for about 30 kilometres, and an extension of that line would
cut across the eastern part of Pele Mountain's West River ground, which is
one of five blocks that the company holds in the region.
The West River claims are just two kilometres to the northwest of the two
MacFadyen kimberlite pipes, which were discovered by Spider Resources and
KWG Resources in the early 1990s, at the northwestern end of the trend line
containing more than a dozen De Beers discoveries. Two of those De Beers
pipes are also just a few kilometres southeast of the West River property,
and Victor itself is just 10 kilometres to the southwest of what appears to
be Pele's most prospective property in the region.
The trend line appears to have been a consideration when Pele Mountain was
picking up its pieces of the Attawapiskat play. "I believe that is an
important structural feature, said Mr. Shefsky, adding that it appeared to
be related to the pipes in the area, even Victor, with most of them lining
up in or beside the feature.
Pele Mountain has two other small claim blocks that are in close proximity
to the trend line. The tiny Bulls Eye property is just metres from the two
MacFadyen kimberlites, as well as the Tango and Tango Extension bodies of
De Beers. The Central property, a second and slightly larger block, is
about four kilometres south of Victor and two kilometres west of Yankee,
with two more De Beers bodies, Whiskey and X-ray, lying three kilometres to
the northeast of Central.
The largest Pele Mountain block in the area is the East River property,
which is roughly 10 kilometres to the east of the trend line that contains
the bulk of the Attawapiskat kimberlites. The Victor pipe is nine
kilometres to the west of the property, and three other pipes along the
trend line are seven kilometres to the west of the western boundary of East
River.
Two of the De Beers kimberlites are well to the east of the main trend
line, and that could be good news for East River. The Delta kimberlite is
approximately 15 kilometres east of Victor and Yankee, and that places it
just two kilometres east and south of the Pele Mountain property. As well,
the Golf kimberlite is about 10 kilometres to the northeast of the two
MacFadyen bodies.
If Golf and Delta turn out to be just two of many kimberlites along a
parallel line to the east of the main Victor trend, it would be good news
for Pele, as the second line joining Golf and Delta traverses the company's
East River property, while the remaining block, Caribou, is just a few
kilometres to the east of the line and about 10 kilometres to the
east-southeast of Delta. Mr. Shefsky said that although the structure was
likely quite complicated, they were hoping that there was a second trend
line of kimberlite finds on its easternmost properties.
Pele Mountain has been taking things slowly on its Attawapiskat play, but
that is due to the cost of operating in the remote region. Mr. Shefsky said
that they were quite enthusiastic about the project, but they had to be
careful and manage their costs. The current budget calls for about $100,000
in ground geophysics, which is now under way, and Mr. Shefsky is hopeful
that the program will produce some drillable targets. He said that the
airborne geophysics had indicated some interesting things, and if Pele
Mountain were to get some joy on the ground, the company might be in a
position to drill as soon as this winter. In the meantime, Pele Mountain is
hoping that some of its rivals in the region will have some promotable
successes. "I am rooting for them," Mr. Shefsky said.
Although Victor is the most advanced project in the Attawapiskat region by
far, De Beers is unlikely to produce much to get Mr. Shefsky cheering in
the coming months. The company has no real exploration work planned in the
area this year, due to the inevitable series of environmental and
permitting delays that add considerably to the timelines of Canadian
projects. As a result of the delay, De Beers will not be using the winter
road, and that theoretically adds a year to the project. The company can
still work away on other aspects of the project, and completing the
feasibility study is one task that will be tackled however.
Victor is a large kimberlite complex that appears to contain two separate
pipes, with several phases of kimberlite, each with a distinct grade. The
body is thought to contain as much as 40 million tonnes of kimberlite, but
the amount thought to be worth mining is around 25 million tonnes. Most
estimates have pegged the value of that rock at about $60 (U.S.) per tonne,
and De Beers spokesperson Linda Dorrington indicated the company was still
using a rock value of about $100 per tonne, despite the recent surge in the
Canadian dollar.
With estimates of the grade at Victor running somewhere between one-quarter
and one-third of a carat per tonne, the numbers suggest a large low-grade
body that contains some valuable diamonds, and if the feasibility study
reveals some of those key details, it would aid Pele Mountain's promotion
as well. The company also expressed hope for the Tango Extension, Delta and
India kimberlites, with mini-bulk tests proposed. There has been no word
since then, but the mere possibility of more economic kimberlites adds to
the interest in the region.
Meanwhile, Mr. Fipke's exploration and promotional efforts in the region
have caught the eye of the market over the past year, and investors are
showing no signs of abandoning the story, despite Mr. Fipke's usual paucity
of particulars about his work. Speculators were quick to buy into the
intrigue surrounding the Metalex Ventures program earlier this year,
sending the company's shares to a spring peak of $5.60, up from 65 cents a
year ago.
The bits of actual news from Metalex did little to help the promotion. The
company did manage a spring drill program and hit kimberlite, but the
material did not prove to be diamondiferous, and Metalex's shares dipped
below the $2 mark last month. Things have been better of late however, as
Mr. Fipke had come up with a new kimberlite, apparently with a more
toutable array of indicator minerals this time, and he has high hopes of
being hot on the trail of a second find. As a result, Metalex's shares have
climbed above the $3 level recently, although the market is still waiting
for word of diamonds.
That latest find has Mr. Shefsky in a cheering mood, although like most
everyone else, he was left wondering precisely where Mr. Fipke had turned
up his new kimberlite. The ground being explored by Mr. Fipke and Metalex
is scattered across the entire area, and although parts of Mr. Fipke's
claims border on Pele's ground, many other claims do not.
Mystery aside, Mr. Shefsky said he was delighted to see the efforts being
made by Mr. Fipke and his group. "If he is right, perhaps this play is not
as mature as people thought it was," added Mr. Shefsky. The Attawapiskat
diamond hunt has become a prominent play because of De Beers, but the
presence of Mr. Fipke in the region has brought the district a unique brand
of promotability, if not credibility. "He is a living legend," said Mr.
Shefsky.
Nevertheless, there appears to be a limit to Mr. Shefsky's faith in Mr.
Fipke's approach, or at least his ability to spend the time and cash that
it would take. The Pele Mountain president believes that chasing the
indicator minerals is a very complicated, indirect and potentially endless
process in the Attawapiskat region, especially with the large number of
kimberlites in the area, and the variations in the ice movement during the
Ice Age. That complexity apparently rules out Mr. Fipke's approach as an
effective technique for little Pele Mountain to pursue.
For now, Mr. Shefsky and Pele will be content to hunt a few drillable
targets on its West River ground, near the northwestern end of the main
Attawapiskat trend, while hoping for some good news from Mr. Fipke and
other rival plays in the region that could make the play more saleable to
speculators.
Pele Mountain has been attracting increasing notice from investors of late.
The company's shares have jumped from just 17 cents in the spring, to a
60-cent peak early this fall, largely due to the arrival of De Beers as a
partner on its Festival diamond property, just north of Wawa. The diamond
giant can earn a majority interest in the play by spending $25-million and
completing a feasibility study, and that lessens the burden on Pele's
coffers.
The company is now completing a private placement, and cash is not a big
concern at the moment for Pele Mountain. Mr. Shefsky said that the company
had about $2-million in cash and no debts, and with the removal of the need
to spend increasing amounts of cash on Wawa now lifted, there should be
additional amounts of money available for Pele's existing properties. As
well, Pele Mountain has been casting about for some new mineral plays, that
Mr. Shefsky hopes will "generate some new excitement for shareholders."
That is no real shock, but the acquisition of a Timmins nickel prospect is
a bit of a surprise, given the company's previous focus on gold and
diamonds. Mr. Shefsky described the new property, 35 kilometres south of
Timmins, as too good to refuse, adding that Pele was interested in picking
up an exposure to nickel because of the strength of the metal of late. The
price of the metal has more than doubled over the past two years, and is
now approaching the far more toutable value of $12,000 (U.S.) per tonne.
Like any number of metal prospects, the property comes complete with some
hopeful aspects that should help the company stoke its promotional fires.
The property is just south of the Texmont nickel mine and Mr. Shefsky said
that the stratigraphy that they were mining in showed definite signs of
carrying onto the Pele ground, adding that there were some compelling
targets that were ready to go.
Nevertheless, it has been the Wawa and Attawapiskat diamond plays that have
been generating most of the excitement for Mr. Shefsky's shareholders in
recent months. Pele closed up a penny on Wednesday, at 56 cents.
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