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 Thu Jun 18, 1998
Tracker 1998-42: Ascot - Monopros scores 4 kimberlites in 7 targets
    Publisher: Kaiser Research Online
    Author: Copyright 1998 John A Kaiser

 Kaiser Bottom-Fish Tracker 1998-042

June 18, 1998

Ascot Resources Ltd (AOT-V: $0.76)

Tel: (604) 684-8950
Web Site: None

Monopros scores 4 kimberlites in 7 targets

Ascot Resources Ltd and Major General Resources Ltd (MGJ-V: $0.42) announced on June 16 that Monopros had intersected four kimberlites out of 7 targets during a recent drill program on the Victoria Island project. Monopros used a 4.5 inch diameter reverse circulation drill rig to collect 300 kg from each pipe to a maximum depth of 20 metres. All the pipes were found within a 2.5 km radius. Major General's Glenn Shevchenko was reluctant to estimate the size of the geophysical anomalies, but my initial impression is that they do not imply large targets of the sort Ashton has encountered in Alberta. No explanation was identified for the three dud targets, though with only one shallow hole per target and no clear understanding yet on how the geophysical anomalies relate to the geometry of the pipes, it is too soon to write off these targets. Of the four kimberlites three were drilled from lakes. Of the lake targets two are covered by small lakes and could be drilled from land with angle holes. Major General expects to have micro diamond counts within 8 weeks, though given the short work season it is conceivable that Monopros will rush these samples. The drill has moved back onto the Monopros block where Monopros is continuing with its strategy of identifying kimberlites as quickly as possible. If any of the kimberlites kick back decent micro diamond counts, Monopros will want to drill all accessible pipes this summer using a diamond drill. The objective will be to delineate promising pipes for possible mini-bulk sampling in the spring of 1999. Monopros has apparently acknowledged that its RC drill has a high diamond breakage rate, so investors should not be too disappointed if macro counts are not high. Also, Monopros will report the micro/macro split according to the 0.5 mm square mesh standard it has used on its Mountain Province project. It is impossible to compare results produced by this reporting standard with the counts reported using a measurement in the longest dimension. The latter will produce higher macro counts, but these are virtually meaningless on a comparative basis. When we get the Victoria Island results we will want to compare them to the Mountain Province pipes, for which we now have mini-bulk sample grades, not the Lac de Gras or Alberta counts.

The speed with which Monopros scored four kimberlites out of seven targets is very impressive, but the market for Ascot and Major General has softened during the past few days. On Victoria Island we will want to see either above average pipe sizes, or high grades and values. We may have pipe sizes by the end of summer, but grades and values won't be available until mini-bulk samples are taken and processed next spring. If Ascot and Major General are to attract higher prices during the next six months, Monopros will have to mount an aggressive drill program this summer. If Monopros has reason to believe that Victoria Island has good diamond potential, based on the work it has done on its own diamondiferous pipes to the north, then it will definitely be aggressive this summer. Geophysical surveys are now underway. Both the Major General/Ascot and Monopros permits (about 9 million acres) expire at the end of 1998. The permit holders have exclusive staking rights within their permit boundaries until the end of the year. Obviously Monopros will have to know which areas it needs to secure by staking before the permit expires. Major General and Ascot could undergo sharp price increases if we get high diamond counts, but a more realistic investor objective for the next six months should be a high number of confirmed kimberlites. The market strength last week reflects big picture speculation that Victoria Island hosts a major field of kimberlites. In this sense the Major General/Ascot play resembles Ashton's Alberta diamond play more closely than, say, Winspear's Snap Lake play in the NWT. The strategy that makes most sense right now is to buy and hold Major General or Ascot for at least a one year time horizon. Currently I think Major General is the better buy because its stock price would benefit from a nickel-copper discovery at South Voisey's Bay. Donner has barely begun its $14.8 million summer drill program, which will be capable of producing results through November. As of June 12 Donner had extended hole 97-2 on the Major General block to 878 metres, where it has encountered 506 metres of gneiss contaminated gabbro similar to that associated with Eastern Deeps. The market is moving towards fully discounting success at South Voisey's Bay, which sets the stage for surprise results and a sudden reversal in sentiments over SVB that could only benefit Major General.

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