A diamond mine will be operating in Alberta within a decade, predicts a Tory MLA who is heading a committee recommending tax incentives for the industry.

In fact, adds George VanderBurg, MLA for Whitecourt-Ste Anne where much of the diamond exploration activity is occurring, “I think it will be sooner in the decade rather than later.”

Pamela Strand, president of Shear Minerals Ltd., and Larry Kryska, president and CEO of Blue Diamond Mining Corp., both of whom are exploring in Alberta and sit on the committee, agree with VanderBurg’s assessment.

“It’s very possible that Alberta could have a diamond mine within the next 10 years and maybe even sooner,” says Strand.

Jack Dagley, for Business Edge
Geologist Pamela Strand, holding imitation diamonds, favours exploration incentives.

“It’s a numbers game. The first kimberlites – glacial formations that may contain diamonds – found in Lac le Gras in the Northwest Territories never ended up in a diamond mine. At Ekati, there are over 100 kimberlites and five are in the mine. At DiaMet, there are over 100 kimberlites and three are in the mine.

“In Alberta, we haven’t yet drilled 100 kimberlites, so those three or five are out there somewhere.”

Graeme Currie, a mining analyst with Canaccord Capital in Vancouver, is more cautious.

Diamond-bearing kimberlites have been found in the province, but nothing economic.

“Alberta’s very tough to do exploration in because of the extent of glacial overburden that exists on top of bedrock, tens of metres thick.”

Robert Boyd, president of Vancouver-based Ashton Mining Corp. – which has just announced it has found its 38th kimberlite – sounds an equally cautious note, even though Ashton has found the most kimberlites in Alberta.

The latest discovery is the second kimberlite it has found on its Buffalo Hills property in north-central Alberta. One of its kimberlites, the best discovery so far in Alberta, contains a commercial quantity of diamonds, but the deep glacial overburden makes the costs of mining the diamonds uneconomic.

“We are keen on exploring in Alberta, but we’re not at the point that we’ve got a project that’s likely to be economic in the future,” says Boyd. “That could change rapidly with another discovery that demonstrates good diamond content.

“However, we wouldn’t be exploring and spending money in Alberta if we didn’t feel there was an opportunity for commercial discoveries.”

VanderBurg is enthusiastic about the potential for diamond mining in Alberta, noting that “the first diamond found in Alberta was found in my constituency in 1958.” He sees potential for a multibillion-dollar industry that could help diversify Alberta’s economy and shift it away from its heavy reliance on the oil and gas industry.

VanderBurg has been meeting with industry representatives for the past two years and has presented a draft proposal to Economic Development Minister Mark Norris and Energy Minister Murray Smith. A final proposal could be ready by April or May.

Some of the recommendations include a provincial top-up of the flow-through federal tax credit for exploration investment similar to that of other provinces including Quebec, and a royalty fee reduction similar to that for oilsands development.

Norris says: “I’m extremely excited by what we’ve seen about the potential for diamond mining in Alberta. I think we need to look at what the government can do to make this industry viable in Alberta.”

Strand says that incentives would be for Alberta residents and the money would have to be invested in projects in Alberta.

“The flow-through incentives for residents will attract some of the investment dollars immediately for exploration,” says Kryska.

Blue Diamond, which is exploring in an area called Legend north of Fort McMurray, has completed a first round of financing, raising $240,000, and is about to embark on a second.

Blue Diamond has found nine kimberlites, two of which have diamonds but are subeconomic. “On average, it takes 100 kimberlites to discover a diamond mine,” says Kryska. “It might be 101 or number 10. Diamond exploration is a very risky business. As far as mining is concerned, it’s the riskiest but has the highest reward. You’re not talking of a million dollars of deposits, you’re talking billions.”

Strand, a geologist who had been working in the North, moved to Edmonton when her husband, a helicopter engineer, was transferred here.

She acquired Shear Minerals in a reverse takeover and shares office space and services with Apex Geoscience Ltd. in an industrial park in southeast Edmonton. “It helps keep the overhead down,” she explains. “I don’t have to keep 10 people on staff – I have one or two and the rest I can contract out.”

Shear has spent the past five years on what Strand describes as “really grassroots exploration that has taken us to where we are today. We have 13 diamond projects; eight of those are drill- ready.”

She grew up in an outdoorsy family in Ontario.

“As a child, we were always outdoors, lots of fishing, lots of time at the cottage, lots of boating. I was very strong in sciences; geology is a multidisciplinary field that encompasses all of the sciences and math, and that was an attraction to me.

“I used to pick up rocks. When I found out that this was a profession, in science, looking at rocks, exploring and discovering, it was pretty exciting.”

On graduation she ended up in the North, working in the Yukon and the Northwest Territories and Nunavut. Shear Minerals is exploring in Alberta, Nunavut and the Northwest Territories, three distinct geological environments, explains Strand, “so that lowers the risk; we’re not focused in one jurisdiction.”

Shear Minerals has just raised $1.2 million in financing which will go toward drilling most of the eight projects. The first one is the Churchill property. She expects to start drilling in a few weeks.

“It’s still early days in diamond mining in Alberta,” says Strand. “You’ve got to remember that Ekati was 10 years from discovery to mining operation.”