GGL Diamond reports on the activities of the Company for the year ended November 30, 2008 and on events taking place subsequently up to March 23, 2009.
DISCUSSION AND ANALYSIS
GOLD PROPERTIES
Gold deposits are among the most difficult of mineral deposits to find. Their geophysical signatures aresubdued and not directly related to gold, but instead are a reflection of the properties of the enclosing geology as opposed to most base metal deposits which are directly related to strong geophysical anomalies. While base metal deposits often have a strong surface color anomaly, which attracts the attention of the explorer, gold deposits are often much less conspicuous and require sampling to detect if gold is present and even then deposits can easily be missed due to the often erratic distribution of gold in rock.
The discovery of gold is always an exciting moment. The history of gold camps with subsequent producing gold mines start with a surface discovery – a good gold assay – and later exploration leads to the definition of deposits. A good gold assay does not guarantee a gold mine, but almost all gold mines are the result of exploration based on the geologic model determined by the initial gold discovery in the area.
GOLD PROPERTIES – MCCONNELL CREEK
The Company’s most advanced gold property is the McConnell Creek gold property in British Columbia, acquired in 1981 from the prospectors – Jack Gerlitzky and John Leontowich – who discovered the gold and named the property after themselves, Gerle Gold; a name still reflected in the stock symbol GGL. They staked the first claims in 1947, and in that same year Dr. Bill White of the BC Department of Mines wrote a report on the gold showings and described a strong shear zone up to 50 feet in width. He took twelve channel samples which returned assays ranging from trace to 4.41 oz/ton gold. It was this report that first drew our attention to the property.
Canex, the exploration arm of Placer Development (later Placer Dome) optioned the property from the prospectors in 1953. They completed additional trenches and did some x-ray (a small diameter core) drilling that despite very poor core recovery returned some good gold values. The remoteness of the area at that time and the low price of gold discouraged further work.
Gerle Gold Ltd. (now GGL Diamond Corp.) began work in 1981 just as the price of gold was falling from its all time high of US $850 per ounce. This work traced the shear zone described by Dr. B. White for two kilometers by mapping, and for a total length of 12 kilometers and a width of up to 800 meters, by geophysics.
Lornex optioned the property from GGL in 1984 and drilled a number of holes with some encouraging results but the price of gold continued to fall, recovering only in 1987-88 when GGL continued a trenching and drilling program. This program was the first in which the gold bearing shear zone was adequately sampled by way of a series of trenches blasted into the rock face and from which three separate channel samples were collected. Subsequent sampling in 1988 involved chip sampling of 1 meter x 1 meter panels within the trenches.
A weighted average of gold values was calculated for a series of gold bearing trenches that returned gold values over widths ranging from 1 to 6 meters. Two zones of better gold grades were identified by this sampling. One zone, with a strike length of 145 meters (475 feet) and an average width of 1.8 meters (5.6 feet), averaged 6.79 grams/tonne (0.211 oz/ton) gold. The second zone, traced over a strike length of 30 meters (100 feet) and ending in overburden too thick to trench by hand, averaged 6.79 grams/tonne (0.198 oz/ton) gold over a width of 1 meter (3 feet). The last trench at the edge of deep overburden contained values of 8.0 grams/tonne (0.232 oz/ton) gold over a width of 1.8 meters (5.9 feet).
Various diamond drilling programs within the area of trenching traced the gold mineralization to depths of 250 meters.
In 1990 Placer Dome optioned the property from GGL and attempted trenching of the shear zones in the area of extensive overburden. Few of these trenches encountered bedrock but several widely spaced drill holes were completed and one of these returned 5.25 grams/tonne (0.153 oz/ton) gold over a hole length of 2.25 meters. This intercept, from a subsidiary shear zone west of the main zone hosting the previously described zones of better gold grades, suggests the possibility of enhanced gold grades not only along the known 12 kilometers strike of the main zone but also within the 800 meters width of the shear zone system. Gold values from soil samples collected over the entire shear zone system include many ranging from 200 to 2000 ppb (parts per billion where 1000 ppb = 1 gram), indicative of the significant potential of the system.
The McConnell Creek Gold property has many characteristics of a significant underground (or possibly an open pit) gold deposit but requires extensive additional exploration to define the economic potential of the property.
After 1992 the politics in British Columbia discouraged investment in mineral exploration for ten years. Now, not only is the political climate better but the gold price is high and existing infrastructure includes all weather road access and a hydro electric power line within 11 kilometers of GGL’s wholly owned McConnell Property.
The shear zone at McConnell is developed in an amphibolite derived from mafic (basalt) volcanics. This geological unit is unique in that it is significantly older than most of the rocks in this part of British Columbia, being Pennsylvanian to Permian in age. This is in contrast to the copper-bearing zones at the McConnell Property which are hosted by younger (Jurassic and Cretaceous) intrusive rocks and Takla volcanics of late Triassic age.
PGB 2008 EXPLORATION SUMMARY
The 2008 exploration program completed upon the PGB Property of GGL comprised 8,221 line kilometers of airborne VTEM surveying between March 11 and April 26. The mapping and prospecting program consisted of a total of 810 man days between July and mid September. During this time Aurora and GGL personnel collected a total of 828 rock samples thus completing a major part of first pass exploration over the 120 kilometers length of the PGB Property. Many areas still need examination and areas that yielded positive results in 2008 require follow up work.
Overall, the exploration work completed to date has successfully identified a number of areas with potential for gold, base metals, silver and nickel mineralization.
The work completed is in the process of being compiled and documented for purposes of filing assessment work to maintain the PGB claims.
The 2008 exploration program was carried out by Aurora Geosciences Ltd. of Whitehorse. They erected a camp and cut 87.95 kilometers of lines and completed 67.3 kilometers of IP (Induced Polarization) ground geophysical surveys. Under their supervision, three diamond drill holes were completed for a total of 1,073 meters.
One drill hole was completed on the MC copper showing located in the southeast section of the property and averaged 0.384% Cu over 4.45 meters. Two drill holes in the north central area of the property tested the south and north edge of an IP conductor. Disseminated pyrite was encountered to explain the conductor accompanied by some geochemically anomalous copper and gold values. Government restrictions on our drill permit prevented the preparation of new drill sites to test the central part of the zone. The permit restrictions appear to be arbitrary and not based on ground inspection and we expect that this situation can be resolved for future work.
A new copper showing containing bornite was located by GGL’s geologist in the south central part of the property. A sample from the outcrop assayed 4.79% Cu, 0.695 grams/tonne Au, and 37 grams\tonne Ag. This is a high priority area for future exploration.
FUTURE PLANS
Assessment work will be recorded for the Company’s wholly owned PGB and McConnell Properties and the Company’s core diamond assets at the Doyle and Fishback will also be maintained. The agreement with De Beers in the Doyle area remains in force.
The Company will immediately seek financing by way of a private placement and/or joint ventures to enable it to continue its business requirements and exploration. The Company is free of debt and has reduced its expenses to core requirements.
We anticipate that we will be successful in this endeavor based on our excellent portfolio of mineral prospects.
MCCONNELL CREEK COPPER
Since our October 2008 report to you the worldwide financial crisis has deepened, particularly as it affects the metal markets. Mine closures for the base metals, nickel, copper, zinc and lead have continued to take place. Despite the large reduction in supply of these metals – as a consequence of the mine closures -prices have declined and only recently show signs of stabilization. The metal prices for the most part remain below the costs of production except for a few high grade and low cost producers that can satisfy the diminished demand.
When the world’s economies begin their rise out of this deep recession, the demand for metals will temporarily be satisfied by the return to production of the now closed mines. Despite the long-term requirement to find more economic mineral deposits to supply the demands of an ever-increasing world population, little financing for exploration for base metals is available at this time. Japan and China have taken a longer view to obtaining the commodities required to sustain their economies.
The worldwide financial crisis is spawning a lack of trust in paper currencies and combined with the inflation of money by means of the printing press, has resulted in a demand for precious metals. The gold and silver markets are robust. Gold exploration is in favor and some financing and joint ventures are taking place.
We were correct in evaluating the Providence Greenstone Belt as a source for diamonds, nickel and VMS base metal deposits. That potential remains and is very much enhanced. The reality is that under thepresent economic situation it is gold that commands attention.
Our gold properties and new gold discoveries should take precedence while we maintain our base metal and diamond prospects.
