Fertile ground for quality diamonds.

The Temiskaming and Temagami regions are proving to be fertile ground for diamond discoveries. Kimberlites (the indicator mineral for diamond) have always existed in this part of northeastern Ontario, but early exploration ventures in the early 1980s turned up barren kimberlites.

However, that all changed when a junior exploration company, Contact Diamond Corporation (previously known as Sudbury Contact), discovered a kimberlite in Lundy Township named 95-2 during a three-year exploration program in 1995.

When the company recovered 52 carats of diamonds from an 800-kilogram mini-bulk sample from the pipe in October 2004, it spurred on more exploration in the region.

In Dec. 2004, Contact Diamond, 40 per cent owned by Agnico Eagle, hired Matt Manson as president and COO to oversee the project. Now, the company has a 113,000-hectare land holding, covering parts of approximately eight to 10 townships. Manson says it is one of the largest packages in the Temiskaming area.

To date, Manson says 22 kimberlite discoveries have been made in the area (by other companies as well), 12 of which contain diamonds. He considers 54 per cent a "pretty good success rate."

Since the original discovery of kimberlite 95-2, Contact Diamond has discovered eight kimberlites, (including SC-118 in Quebec) six of which are diamondiferous (contain diamonds).

Although the deposits have not yet been identified as economical enough to mine, Manson says their focus this year will be on proving up more ore near and around kimberlite 95-2, which he describes as "very good quality diamonds.

"The quality is as good as anything coming out of the North West Territories."

In addition, the company is planning 50 per cent of their exploration efforts around the Elk Lake area.

The community and surrounding area has benefited from the company's investments with an office in New Liskeard staffing about three to four people, in addition to their contract workers in the field.

Manson says Contact Diamond spent $4 million in 2004, and $5 million in 2005. Several millions more will go into the exploration budget for 2006, which hadn't been finalized at the time of the interview with Northern Ontario Business.

Another avenue the company has taken as in order to return value to the local people is a variety of option deals with local farmers. Since a significant portion of the land in Temiskaming is farmland, Manson says so far they made seven deals in the fall of 2005.

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"We're giving them cash and shares in the company," Manson says. "There is a very generous payoff if we end up with a mine on their farm."

He adds the deals are "very generous and fair," and the people seem quite receptive.

"We're very responsible after drilling on the property, and we clean up after ourselves."

www.contactdiamond.com

By ADELLE LARMOUR

Northern Ontario Business