Agoracom

Brian Testo's Grizzly Diamonds Ltd. plans summer drilling on its BE-02 kimberlite discovery in the Buffalo Hills region of Northern Alberta. The company may also put more holes into BE-01 if the company's first find in the area yields encouraging gem counts. Grizzly has plenty of other targets to drill on its Alberta play, but most of those anomalies will wait until next winter.

The plan

Mr. Testo said Grizzly's BE-02 target was proving a challenge. The company had permission to drill to a depth of 150 metres and it did not hit kimberlite until a depth of 122 metres. Grizzly subsequently got approval to extend the hole to 200 metres, but it need not have bothered. The drill abruptly left kimberlite at 141 metres and did not return.

Grizzly's top bear said the BE-02 anomaly was not geophysically impressive, adding the decision to drill the feature was "the flip of a coin.";; The decision to drill paid off and the company now believes the discovery hole hit a tuff ring at the fringe of the pipe. To prove the point, the company will drill at least a few new holes into what it thinks is the core of BE-02. If the theory is right, Grizzly will have a few hundred kilograms of kimberlite for diamond testing.

Mr. Testo said Grizzly sent about 400 kilograms of kimberlite from BE-01 off to the lab for diamond recovery. Results are due in about a month, although lab schedules are erratic at best. Still, the company should know the outcome of the BE-01 tests before it starts to drill the nearby BE-02 pipe in late July or early August. If the counts match some of the better Alberta pipes, Grizzly will quickly add plans to collect more rock from BE-01 to the summer program.

Grizzly thinks it can drill BE-02 for about $200,000, but the company is planning to spend at least $1-million on drilling and exploration later this year.

Mr. Testo worked as a welder and pipefitter until 2001, when he found investing more profitable and undoubtedly more comfortable than working on the Alberta pipelines. Many of his investment successes were in the oil and gas sector and a timely purchase and sale of Peyto Exploration and Development Corp. gave him the opportunity to sink a million dollars into Grizzly.

Alberta diamonds might seem an unlikely gleam-in-the-eye for Mr. Testo, seasoned as he is now in the oil and gas business, but he has an appealing story to explain his broadened horizons. He says he caught the gem bug as a mere child in the late 1950s while delivering the Edmonton Journal in the prairie town of Hinton. As the only paper boy in the history of the planet to read his product, young Mr. Testo devoured an old article covering Einar Opdahl's discovery of a one-carat sparkler in the Evansburg area, about 175 kilometres to the east of the prairie town.

The encouragement

Hinton's schoolteachers did their best to explain to their unusual young reader that diamonds came from South Africa, not Alberta, and that old Einar was so full of it he must be a stock promoter; but 40 years later, several explorers proved the teachers wrong. Meanwhile, the future oil and gas man took up panning for gold in the local rivers, where he found stones he dubbed rubies.

The diamond potential of Grizzly's BE-01 kimberlite is unknown, but the rock does contain various indicator minerals, including the same stones that Mr.

Testo now calls garnets.

Those mineral grains and the mantle xenoliths within the BE-01 rock provide encouragement that the pipe is diamondiferous. Geography provides further promise. Grizzly's two new pipe finds lie within the Buffalo Hills cluster, where about two-thirds of the three dozen discoveries yielded diamonds.

Of those, at least six pipes still intrigue the current operator, Diamondex Resources Ltd. The company and its partner, Shore Gold Inc., think the bodies are comparable with the big pipes in Saskatchewan. The grades are a match, but the diamond value is still uncertain. The two companies plan a multimillion dollar to find some answers this year.

Grizzly closed unchanged at 95 cents Monday on 6,000 shares.