Diamonds in the Backyard
Geologists are combing the north woods this winter in search of a form of carbon more precious than oil and gas: diamonds. But what will it take to develop Alberta’s first diamond mine?
by Jorry Johnston
About 10 years ago, Dufresne met Testo at a prospector’s conference and the two have been friends and colleagues ever since. Testo, whose mother found herself fishing unloosed pocket rocks from the bottom of the washing machine when the budding rock-hound was just four, had long since retired the hunting rifle and was prospecting and staking mining land across Alberta, portions of which he’d option to sometimes flighty and footloose mining companies.
Dufresne eventually encouraged him to start up his own outfit and Grizzly Diamonds Ltd. was born soon after. It completed an initial public offering in December, 2004, after raising $2 million at 30 cents a share. This past September, a no-frills trip to Europe and the Middle East also netted a listing on the Frankfurt exchange. Investors in the Old World tend to be keener on mining plays than North Americans, enamoured as we are of oil and gas. Searching for diamonds thus requires a lot of foreign travel.
Headquartered in Edmonton, Grizzly also operates a field office from Peers, a village just off the Yellowhead Highway, where Testo lives. Long before Ekati, he recalls panning the nearby MacLeod River and finding diamond indicator garnets, which helped ignite the fire and fuel the treasure hunting addiction. Grizzly holds mineral permits on almost four million acres of land, including the Buffalo Head Hills and Birch Mountain areas of Alberta. It also hunts silver and gold in British Columbia.
In the Birch Mountains west of Fort McMurray, Grizzly owns 60% of nine kimberlites that have so far returned only a couple of micro diamonds. Still, it’s encouraging. “It’s not unusual to have a kimberlite cluster where you can have 50 pipes, and 49 are uneconomic or have very few diamonds, and then all of a sudden you’ve got one that’s a diamond mine,” says Dufresne.
The Buffalo Head Hills property is about 85 kilometres northeast of Peace River. It’s considered a high-priority package of land, again partly on the principle that kimberlites grow thick like carrots in a patch. None have yet been discovered on Grizzly land, parcels of which Testo has affectionately tagged Smokey the Bear and White Bear. But a sizeable crop of 38 kimberlites has been found on adjacent Aston Mining of Canada Inc. land. And over half of those, 26, have yielded diamonds.
Although each find must be assessed on its own merits, according to a federal government report: “A diamond concentration that would allow an economic development of a mine would be around 0.5 carat per ton; a very good one would be in the range of two to four carats per ton.” AGS’s Eccles says that at least seven of the kimberlites in the Buffalo Head Hills contain estimated grades of between 3.5 and 55 carats per hundred tonnes. He also thinks that diamond grades in one of the Buffalo Head Hills pipes would have been good enough for a mine, if not for a particularly thick layer of overburden.
About the Grizzly properties, Dufresne says, “We do have geophysical anomalies that could be indicative of kimberlites.” The fall program of aerial and ground-based geophysical surveys has identified additional targets, around 10 in total. A two- or three-month program of drilling is now set to begin in January. “The drill cores will first be examined on site,” Dufresne says. “You can get an idea of whether you’ve got kimberlite or not, and then they go to a lab, or to a warehouse. We’d take half the core and then send the other half away for indicator mineral analysis.”
Before they got to that stage (and, in their case, struck it rich), Fipke’s team followed the trail for a decade and then toiled for months in a subarctic climate, going slightly mad in a bespoke bunkhouse, flipping float planes, shooting outhouses to smithereens. For his part, Testo says, “I’d sleep out on a rock at 40 below if I figured it was going to help find a diamond mine.” But no such mind-altering extremes were needed for Grizzly this time out.
It took billions of dollars to set up the NWT mines. And they incur hundreds of millions more in operating expenditures every year shipping goods, services and people in and out, and building huge and complex dikes to keep the icy waters of surrounding lakes at bay. That they can sustain it at all speaks to the overwhelming richness of the diamond resource. But it also suggests that the feasibility threshold for an Alberta mine could be a far sight lower. Just as exploration is a more comfortable proposition south of the 60th parallel, “It would be way cheaper to put the mine in Alberta than the territories,” says Testo.
Dorothy Atkinson, a mining specialist with Bolder Investments in B.C., agrees. “Obviously, the infrastructure issues in Alberta are a fraction of what they’d be up north,” she says. Then again, that may not matter. She doesn’t see a diamond mine coming on stream in Alberta any time soon, partly because most exploration money will continue to head farther north, partly because Alberta’s geology has not proven viable so far. “You know you’ve got so much oil, you don’t deserve the diamonds as well,” she jokes.
Dufresne wouldn’t take issue with the financial side of that argument. “There’s been over $2 billion spent on diamond exploration,” he says. “We’re lucky if we see $50 million in Alberta.” He readily acknowledges, too, that it’s a high-risk venture and that the number of kimberlites found are a function of the dollars spent looking for them. But he remains optimistic that a viable kimberlite will yet be found. “There’s got to be one that’s mineable sooner or later.”
And it’s not just personal fortunes that are at stake. Diamonds account for fully a fifth of the Northwest Territories’ economy and have provided jobs for thousands of people, many of them aboriginal. While the impact, delayed eight to 10 years before a mine would actually be set up, would not be as great here, Eccles says the benefits would be significant nevertheless. “Discovery of an economic diamond deposit in Alberta would produce considerable wealth for the province in terms of jobs, royalties, mining investment, and economic spin-offs for companies supplying the mining industry.” It’s already happening. Alberta contractors and suppliers continue to service both the Ekati and Diavik mines, and De Beers operates a world-class sample treatment facility in Grande Prairie.
According to Atkinson, “Diamond exploration is for believers, for people who have a long-term perspective and who make high-risk investments.” Testo, who says he lives by his high-school motto that there is no failure but in ceasing to try, is a fervent believer: “Diamonds in Alberta? Yeah, that’s me. It started out as a hobby that got way out of hand that’s going to turn into something really good. We’re going to find diamonds.”
Not a guarantee, of course. But bank on the fact that, this time, he won’t give up the hunt until he does.
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