It could be a lot worse. They could be working out of a wind-blown tent near the Arctic Circle, in near perpetual darkness and bone-chilling cold, a thousand miles from the nearest road. But this is Alberta. And here, almost anywhere is accessible.
This crew has had a good night’s sleep. They’ve been nourished by a home-made breakfast. And they expect to get back to their motel rooms not too long after sunset. It’s not living high on the hog, but by most mining exploration standards it’s not roughing it either.
They’re here in the woods of northern Alberta to check out what they call a geophysical anomaly. A few weeks ago, at a cost of about $200,000, a specially outfitted, twin-engine Piper Navajo flew slow and low over the treetops surveying about 2,000 square kilometres of mining property. The flight identified this spot as one of several good prospects for more detailed groundwork.
They’ve driven in by road as close as they can get, this small team of geologists, and they come the rest of the way through the woods by all-terrain vehicle. And now they’re walking a carefully plotted grid, instruments called magnometers collecting data on the subterranean lay of the land.
If the results are favourable, they’ll come back again before the spring thaw, this time with a truck-mounted drill. And if the first core looks good, at a cost of $50,000 to $100,000 a hole, they might drill one or two more.
What are they looking for? Why, diamonds of course.
Experts suggest that the geology of Alberta is ripe for finding the precious gems, for one thing because there’s evidence in the province of volcanic activity 65 million to 99 million years ago, the kind that produces diamond-bearing formations called kimberlites.
Billions of years ago, diamonds formed from common carbon deep within the earth under unique conditions of high heat and pressure. Billions more years may have passed by until, in the relative blink of an eye, a burst of magma carried the gems up toward the surface, some making it all the way, bursting through into the ancient air. Then, yet another eternity passed before the stones came to adorn the crowned heads of royalty, to grace the fingers of betrothed lovers around the world, to fire the passions and imaginations of treasure hunters and geologists everywhere.
Aside from their relative rarity, it is the near primordial provenance, the inexorable bond they have with Mother Earth, and the unimaginable age of natural diamonds that explain their allure, power their symbolism, and command their value. Synthetics, which can now be grown in the lab in three days, will likely never match up and, though useful in industrial applications, will usually be given on bended knee only as the pretence of an unsuitable groom.
Unlike synthetics, though, a natural diamond must first be found, a daunting challenge. For one thing, landscapes erode. Traces of past events fade away and kimberlites are often buried deep under water or glacial till. Then, too, these vertical deposits are fairly small, often less a mile across at the top. And even worse, not every kimberlite contains diamonds. In fact, of the 6,000 or so kimberlites discovered worldwide, only about 1% are sufficiently diamondiferous to justify a mine, odds roughly the same as drawing a flush in a game of poker.
“Any discovery in the mining business requires a certain amount of luck,” acknowledges Mike Dufresne, president of Edmonton-based Apex Geosciences, which will be leading this winter’s hunt on behalf of its client, Grizzly Diamonds Ltd. No doubt. But luck can be managed and the odds improved with hard work and knowledge. Dufresne knows, for example, the story of Canada’s first diamond mine, Ekati – specifically how fellow geologists Chuck Fipke and Stew Blusson doggedly followed the signs and indicators for years before finally hitting pay dirt in late 1991. “Their claim to fame as far as I’m concerned,” says Dufresne, “is that they had belief, they had persistence, and they were smart. That actually led them to the right place to get lucky.”
The right place was Lac de Gras, a remote spot above the treeline in the barren lands about 300 kilometres northeast of Yellowknife. Ekati and Diavik, the country’s second and only other operating mine, both in the Northwest Territories, now produce well over a billion dollars worth of diamonds between them each year. By value, Canada is ranked as the world’s third largest diamond producer, and we’re not likely to be overtaken any time soon. Two more projects, Snap Lake south of Lac de Gras and Jericho in Nunavut, are expected to be up and running within the next two or three years, and advanced exploration projects are underway in Quebec, Ontario, and Saskatchewan.
In Alberta, Dufresne says that De Beers found a kimberlite in the Peace River area about two years before all the hullabaloo up north started. Since then a total of 48 kimberlite pipes have been found in three separate regions of the province’s north. Although none have yet been deemed mineable, more than half contain diamonds.
Roy Eccles, senior geologist with the Alberta Energy and Utilities Board’s Alberta Geological Survey, admits it’s hard to predict whether an economic deposit will be found any time soon. “However,” he says, “the potential is high that Alberta will yield a diamond mine given enough exploration expenditures, geological mapping, and time.” Along those lines, he notes that about 4.5 million acres were staked last summer by both junior and major diamond companies, driven in part by the steady rise in diamond prices as traditional African sources become depleted. “Another cycle of expenditure appears to be starting,” he says.
It won’t be the first wave Brian Testo, Grizzly’s president and CEO, has caught. Although he gave up hunting wild game almost 30 years ago when he shot and killed a grizzly bear, now at 53 he’s been prospecting the minerals of the earth, diamonds especially, for almost as long as he can remember.
His junior exploration company is not named in honour of his long ago unfortunate prey. It’s the nickname his friends gave him for his own burly size and spirited manner. “Everything I do is bears,” he says. “I’m a grizzly and I like being out in the bush. I’d sooner deal with animals than I would humans most of the time. But you gotta deal with humans, right?” He speaks, too, of flying economy on long corporate jaunts, content to walk the aisles rather than try to burrow into one of the thin seats if it means putting more investors’ money into the company or, as he says, into the ground.
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.