De Beers Canada Signs Pure Gold Deal, Optioned Properties

De Beers Canada has signed an option agreement with Pure Gold Minerals Inc for De Beers' Colville Lake property in the Northwest Territories (NWT) and, separately, optioned properties on Southampton Island in Nunavut to Ditem Explorations Inc.

Under the agreement with Pure Gold, Pure Gold must spend CA$3.95 million ($3 million) on exploration of the property over three years to earn an 85 percent interest.

If a discovery is made and a feasibility study indicates the existence of a resource or reserve over a certain value, De Beers has the right to buy back a 70 percent interest for a pro rata amount two times that spent by Pure Gold on the project.

The property consists of 156 permits covering approximately 22,500 sq km and is located north of Norman Wells and immediately south of the Lena West property in the North West Territories.

Pure Gold has commenced a surface exploration program on the property that will include further stream sediment and till sampling. De Beers will process the samples through its Sudbury processing facility and the indicator selection and categorization will be completed at HDM Laboratories in Colorado.

This will enable the fast turnaround of kimberlite indicator mineral results and provide efficient guidance for the ongoing exploration program. In September and October, Pure Gold will conduct an airborne magnetic survey to identify possible drilling targets.

“De Beers recognizes the capabilities of its partners in advancing grassroots projects, such as this one at Colville Lake, through to kimberlite discovery,” said Richard Molyneux, President and CEO of De Beers Canada.

In a separate statement, De Beers said it optioned properties on Southampton Island in Nunavut to Ditem Explorations Inc. The Southampton properties comprise two blocks of permits covering 6,500 sq km and are valid for three years.

Ditem will spend not less than C$1 million ($762,000) in carrying out prospecting, exploration and development for all minerals over a period of three years to acquire a 100 percent interest in the properties.

At any time, De Beers may buy back part of Ditem's interest for a pro rata amount equal to three times Ditem's costs for an interest of up to 60 percent.

Of the De Beers Group global exploration budget of $92 million, 43 percent will be spent in Canada this year.