Kahuna Project

  • Advanced stage diamond project and new gold discovery on the same property
  • Located in close proximity to Rankin Inlet, Nunavut, Canada with good infrastructure
  • High-grade near-surface inferred diamond resource, remains open along strike and at depth
  • Outstanding diamond indicator minerals in till sampling have generated multiple new exploration targets
  • Significant gold in till anomalies discovered  with interpreted source areas having  similar geology to adjacent Meliadine gold mine (Agnico Eagle)
  • Exploration work including drill programs planned to test diamond and gold targets

Project Background

Kahuna is an advanced stage high grade diamond project discovered in 2001. It is located 25km from Rankin Inlet, Nunavut. Three main diamondiferous kimberlite dikes have been discovered, the Kahuna, PST and Notch.

Bulk sampling and drilling on the three main kimberlites has returned very high macrodiamond counts including diamonds over one carat in size. The largest diamond recovered was a 5.43 carat stone from the Kahuna dike that had been broken during the sample preparation process and was reconstructed as having an original size of 13.42 carats. The majority of diamonds are reported as clear and colourless to white, with a significant population of octahedral stones, however coloured stones have also been reported.

The dikes occur within an extensive network of largely untested geophysical targets, which are overlain by dense diamond indicator mineral trains. The Kahuna project comprises over 120,000ha of mineral claims that cover the three main dikes, plus flanking ground that covers the prospective source regions of the main indicator mineral trains and several interpreted folded greenstone belts.

 

Maiden Inferred Resource Estimation

In January 2015 Dunnedin released a maiden Inferred Resource estimate from the Kahuna Diamond Project (the “Project”), located in Nunavut, Canada. The estimate was prepared by APEX Geoscience Ltd. on the Kahuna and Notch kimberlites based on data from the 2006 – 2008 bulk sampling and drill programs completed by the past operator.

Highlights include:

  • A combined Inferred Mineral Resource of 4,018,000 carats of macrodiamonds at a 0.85 mm (+1 DTC sieve size) lower diamond cut-off, with an average grade of 1.01 carats per tonne (cpt), or 101 carats per hundred tonnes (cpht) derived from 3,987,000 tonnes of kimberlite resource.
  • The kimberlites in the resource are exposed at surface and remain open to extension along strike and at depth. The average drill intercept at the Kahuna kimberlite was only 80 vertical metres, however kimberlite has been intersected at vertical depths of greater than 120 m and continuity at depth is supported by the available data.
  • Indicator mineral trains and geophysics suggest the Kahuna and Notch have the potential to extend along strike into areas of thin sediment cover. Kimberlite has been intercepted in drilling along these potential extensions; however drill spacing was insufficient for inclusion in the resource. These areas will be a focus of future drilling.
  • Only 2 of 8 confirmed significantly diamondiferous kimberlites (Kahuna and Notch) have sufficient drilling, bulk sampling and density definition work to be included in the inferred mineral resource at this time. Other drilled, mapped and sampled diamondiferous kimberlites include the PST, Killiq, and 4 additional kimberlite dikes located between the Notch and PST kimberlites (KD-13, 14, 16 and 18).

 

Drilling, surface bulk sampling, and micro- and macrodiamond data indicate the Kahuna and Notch are both single phase, macrocrystic hypabyssal kimberlite dikes having similar visual and petrographic characteristics throughout. Given their relatively simple internal geology, Kahuna and Notch were modeled as separate bodies and the Mineral Resource Estimate was established by applying average grades from surface mini-bulk samples within each geological model. Sensitivity analyses of the grades at both 0.85 and 1.18 mm cut-offs are presented in Table 1.

Classification Kimberlite Density (t/m3) Volume (m3) Tonnes Average Grade cpt (+0.85 mm cut-off) Average Grade cpt (+1.18 mm cut-off) Total Carats (+0.85 mm cut-off) Total Carats (+1.18 mm cut-off)
Inferred Kahuna 1.99 1 ,541,000 3,066,000 1.04 0.80 3,189,000 2,453,000
Notch 2.12 434,000 921,000 0.90 0.83 829,000 765,000
Total 2.02 1,975,000 3,987,000 1.01 0.81 4,018,000 3,217,000

Table 1: Inferred Mineral Resource Estimate for the Kahuna and Notch Kimberlites

Note: The reader is cautioned that Mineral Resources are not Mineral Reserves and do not have demonstrated economic viability, and might never be converted into Reserves. Figures may not sum due to rounding. Decimal figures do not indicate added level of precision. cpt = (carats-per-tonne)

The potential diamond valuation or mining characteristics of the Kahuna and Notch kimberlites have not yet been determined. However, a 2008 evaluation of Kahuna diamond characteristics by Mineral Services Canada (MSC) describes the Kahuna diamond population as having encouraging value characteristics, with a high abundance of colourless and near colourless varieties with octahedral shapes being the dominant morphology. The Notch kimberlite displays similar diamond characteristics to Kahuna and other significantly diamondiferous kimberlites within the Kahuna Project including the PST and Killiq kimberlites.

The Company cautions that the inferred resource cannot be used to construct an economic model of the project prior to assembling a package of diamonds for valuation.

Dunnedin’s Field Programs

In collaboration with its technical adviser Dr. Charles Fipke and director Chad Ulansky, the company completed a glacial till sampling program in summer 2015, comprising 118 samples. Glacial till sampling recovers kimberlite indicator minerals (KIMs) that were eroded from kimberlites by glaciers and deposited down ice. This creates a train of positive till samples that can be tracked back to their original source. It is used extensively in the Canadian Arctic as a primary exploration tool leading to most major diamond discoveries, one of the most famous examples of which is Ekati.

Dunnedin’s test program utilized the same sampling and mineral ranking techniques as applied at Ekati, which can predict the potential of kimberlites to host diamonds with a high degree of confidence. The ranking employs proprietary mineral chemistry filters developed at CF Mineral Research Ltd. (CFM) under the direction of Dr. Fipke. Information on the sampling and ranking protocols is provided on Dunnedin’s website.

Historically, 18 kimberlite pipes were drill confirmed at the Kahuna project, along with a large number of kimberlite dikes. During 2015, Dunnedin ranked historical KIM data through the CFM filters, identifying 29 new target areas, of which 10 were tested with new sampling. All returned KIMs in tills down-ice from the targets, supporting the presence of kimberlite, while eight of the 10 target areas contain diamond indicator minerals (DIMs). DIMs have specific chemistry that is observed in mineral inclusions inside of diamonds, and their presence in tills is strongly diagnostic of the diamond-bearing potential of the source kimberlite and is therefore prioritized by the CFM filters.

Results of the 2015 field program include:

  • High DIM counts were confirmed in tills immediately down-ice from all tested diamond-bearing dikes, confirming that diamond-bearing kimberlites are readily detectable using Dunnedin’s till sampling protocols.
  • Potential diamond-bearing kimberlite pipes were identified in three new locations where DIMs in tills are directly down-ice from geophysical targets defined by circular coincident magnetic responses and resistivity lows. This geophysical signature is consistent with pipes that were historically drilled elsewhere on the property; however the new targets are apparent DIMs sources while the historically drilled pipes were not. Dunnedin will analyze all historical data to determine the actual number of potential pipes, and which of these should also be tested downice for DIMs.
  • Identification of apparent strike-length extensions to drilled diamond-bearing dikes, including Kahuna, Notch, PST and 07KD-24. Notably, 07KD-24 historically yielded an unprecedented 305 diamonds including seven commercial-sized diamonds (over 0.85 millimetre) from a drill core sample of 2.2 kilograms. Very high DIM counts are present over 600 m of strike perpendicular to ice transport direction in the vicinity of 07KD-24, suggesting significant possible strike extent for this kimberlite.
  • Many areas of the project have yielded significant DIM counts where historic till sampling produced nil results. These positive results are believed to be due to the more effective sampling protocols introduced to Dunnedin by Dr. Fipke.
  • All 118 of the company’s till samples contained KIMs, with 78 containing diamond indicator minerals. Dunnedin’s initial assessment based on geophysics, satellite imagery and past drilling that a dense kimberlite-intruded structural network is present on the project with over 180 kilometres of aggregate strike is also supported by the widespread KIM and DIM results (see Dunnedin news release of June 29, 2015).

 

The 2015 till samples were also tested for gold with the following results:

  • Gold results in tills, bedrock and historical drill core define multiple targets across the property.
  • Gold was found through neutron activation analysis of heavy mineral concentrates in 84 of 129 (65%) till samples collected by Dunnedin in 2015.
  • Mineral concentrates that returned gold values were confirmed to contain coarse gold grains. Grains were evaluated for transport characteristics, and have fragile textures suggesting local bedrock sources.
  • Metasediment belts including that hosting gold at Meliadine have been repeated through regional folding and on-strike extensions at Kahuna, where they also host gold.
  • 97 mineralized historical grab samples returning between 0.05 g/t and 2.52 g/t gold were collected across four metasediment and structural zones.
  • Historical drilling targeting kimberlite encountered visible gold returning 7.24 g/t gold over 0.68 m along the strike extension of Agnico’s Aklak and Aquik Gold Zones of the adjacent Meliadine property; host rock was mineralized banded iron formation of similar type to that observed at Meliadine.
  • One area of strong gold-in-till concentration occurs at the 10 km2 hinge domain of a previously un-tested folded metasediment belt where a number of diamond-bearing kimberlites including PST, Notch and 07KD-24 are also located, suggesting proximal bedrock sources of gold and diamonds.

 

Given the success of the pilot-scale till sampling program a property-scale program has being undertaken in 2016 under the guidance of the company’s adviser Dr. Fipke, the results of which are expected in Q4 2016.

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