Agoracom

Grizzly preys on new Alberta pipes

Grizzly Diamonds Ltd (C:GZD)

Shares Issued 19,326,069

Last Close 5/8/2008 $1.00

Friday May 09 2008 - Street Wire

by Will Purcell

Grizzly Diamonds Ltd. is planning another million-dollar drill program on its Alberta diamond projects starting this summer. The company was hoping to find diamonds in a spring discovery and although it was not disappointed, the promotable news came from an unexpected pipe. As a result, the company will drill at least one of its new discoveries this summer, and several new targets this winter.

The plan

In a May 6 press release, Grizzly said it found 54 diamonds in 56.6 kilograms of kimberlite taken from the BE-02 pipe. That worked out to nearly 1,000 stone per tonne. Earlier, the company had been directing most of its attention at the BE-01 pipe, where it recovered 265 kilograms of core. That bigger sample yielded just two tiny gems.

Bran Testo, the Alberta-based alpha male of Grizzly Diamonds, said he planned more ground geophysics over the BE-02 target to help find the core of the body. Drilling would quickly follow, and the company plans to drill three holes into the pipe to help assess its geometry. He said Grizzly might retest BE-01, but that would depend on the geochemical analysis of the current kimberlite sample.

The find whetted Grizzly's appetite for kimberlite and the company is sifting through reams of data obtained this winter from a geophysical survey. Mr.

Testo said he expected to have plenty of drill targets to test once the ground freezes late this year. The company expects to spend about $300,000 on the summer program and over $1-million this winter.

Grizzly has enough cash to carry out its plan, but Mr. Testo said he would like to top up the company's treasury. The timing seems right, as Grizzly is one of the few diamond companies without a stock chart resembling a downhill ski run. The new find and drill plans could keep investors interested through the summer.

The encouragement

The BE-02 kimberlite is an intriguing feature. Grizzly thinks it just grazed the pipe with its drill this spring, and it hopes the ground geophysics will provide some new clues. The discovery hole tested an area at the base of a small hill and Mr. Testo thinks most of the pipe could lie beneath that topographic feature.

All the BE-02 diamonds were small, but that may be the result of statistical bad luck. Grizzly recovered 26 diamonds larger than a 0.106-millimetre sieve, or about 460 stones per tonne. None sat on a 0.30-millimetre sieve, but five clung to a 0.212-millimetre mesh, so the size distribution curve remains open to question.

The BE-02 result ranks among the better Alberta finds. Ashton Mining of Canada Inc. pulled 263 diamonds from 227 kilograms of kimberlite, or about 1,150 stones per tonne. A mini-bulk test subsequently showed a grade of 0.55 carat per tonne from the pipe. We know nothing of Ashton's sieve counts and although its initial tallies included 19 stones longer than one-half millimetre, it is possible some of Grizzly's gems also reached that length.

Diamondex is now working the old Ashton play and it remains intrigued with the K-6 pipe. Ashton found 58 diamonds in 321.5 kilograms of kimberlite. That works out to only 180 stones per tonne. Just five of the diamonds were longer than 0.5 millimetre. A series of mini-bulk tests showed grades of up to 0.1 carat per tonne.

Ashton processed several individual batches of kimberlite from its K-14 pipe, another big pipe near the top of Diamondex's priority list. Those batches typically weighed about 50 kilograms and several averaged about 45 stones per batch, with just one or two measuring longer than one-half millimetre. As a result, larger samples of BE-02 could set Grizzly to clawing at a still larger sample next year.

Grizzly closed up six cents to $1 Thursday on 107,200 shares.

2008 Canjex Publishing Ltd.