In May 2006 Burnstone Ventures (formerly Pure Diamonds) completed an agreement with De Beers covering over 10 million hectares of properties in the Eastern Arctic. The properties within the High Arctic Portfolio include Baffin Island, Eden Point, Muskox Hill, Chartrand Lake, Byron Bay and Mount Pelly. Burnstone Ventures (formerly Pure Diamonds) can earn an 85% interest in the properties by spending $15 million over three years and issuing De Beers 17.5 million shares as per 7.5 million upon signing and 5 million on the first and second anniversaries if Burnstone Ventures (formerly Pure Diamonds) elects to continue with the option. In November 2006 Burnstone Ventures (formerly Pure Diamonds) notified De Beers of its election to continue with the second year of the option agreement having met the first year obligations.
The Baffin Island Project is the most advanced within the High Arctic Joint Venture and had been the focus of exploration for De Beers in the High Arctic. Exploration in 2006, which was a continuation of this program, included airborne magnetic and electromagnetic surveys, prospecting and geological mapping, ground geophysics and diamond drilling. This program focused on the core area of the Baffin Island Project where De Beers had delineated a kimberlite boulder train, over a length of 50 kilometres with very prospective mineral chemistry and microdiamond recoveries.
The most significant results from the 2006 exploration program was the discovery of a new kimberlite dyke named Aliguja and further encouraging microdiamond results from additional boulders discovered during the 2006 exploration program. The Aliguja discovery was again made as the result of diamond drilling at the head of a well defined boulder train; one of many specific boulder trains that had been defined within the larger boulder train as a result of detailed prospecting and geological mapping. The Aliguja discovery is over two kilometres east of the Amon kimberlite occurrence that was discovered in late 2005 and on trend. It is clear that both of these discoveries are the source of the boulder train that led to their discovery. As shown on the attached microdiamond chart the boulders that have been sampled have returned excellent microdiamond counts, which further enhance the potential of this kimberlite dyke system.
Microdiamond analysis has now been completed on three sets of boulder samples from the Baffin Island boulder train. In total 969.1 kilograms of samples were tested by caustic fusion for microdiamond content. Over 2,700 microdiamonds were recovered. These results continue to confirm that the kimberlite sources of the boulder trains are diamondiferous and, while at an early stage of analysis, the quantity and distribution of recovered diamonds indicate that the source kimberlites have the potential for excellent diamond content. Exploration in 2007 on the Baffin Island Project will largely consist of diamond drilling to test selected geophysical targets, new targets based on the extensive boulder train and expand upon the Amon/Aligula kimberlite system.
The Muskox Hill property which, covers all of Prince of Wales Island, and the Eden Point property, which covers all of the open area of Devon Island, were acquired by De Beers based on historic kimberlite indicator mineral results from stream sediment samples collected more than twenty years ago during very broad regional stream sediment sampling programs. Positive kimberlite indicator mineral results were identified by De Beers on all of these properties and form the basis of the 2006 programs. Programs in 2006 on the Muskox Hill and the Eden Point permit blocks consisted of follow-up detailed stream sediment sampling for kimberlite indicator minerals.
The results from the Eden Point Project have returned two significant areas of kimberlite indicator minerals outlining new potential kimberlite provinces. One is located on Cornwallis Island and the other on Devon Island. The garnets with associated plots attached clearly indicate that the source kimberlite should be diamondiferous, further enhancing this discovery and potential of this project. These results are very encouraging and will be aggressively followed up in 2007. Exploration will include airborne magnetic surveys, further collection of material fork Kimberlite indicator mineral samples and surface geological mapping and prospecting for kimberlite.
Burnstone Ventures (formerly Pure Diamonds) and De Beers are pleased to have completed this agreement covering such a broad and diverse portfolio of properties in a strategic area of diamond potential in northern Canada. The 2006 program was completed successfully and on budget with encouraging results from several of the projects. The companies are looking forward to continuing with the High Arctic Project in 2007 and to further success and new kimberlite discoveries. This area is also actively being explored by Stornoway Diamonds, Diamondex/Kennecott Exploration, Twin Mining, Patrician Diamonds and BHP Billiton. It will be one of the focus areas of diamond exploration in Canada in 2007 and beyond. Burnstone Ventures (formerly Pure Diamonds), through this agreement with De Beers, will now be a major participant in the exploration of this region.
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