EDMONTON - Brian Testo firmly believes he's going to open Alberta's first diamond mine, but he might get an argument from other players as a renewed interest in the province has sparked a flurry of exploration activity.

Testo has been searching for the motherlode in Alberta for decades, and his Grizzly Diamonds Inc. has staked out a good chunk of the Buffalo Head Hills and Birch Mountains areas adjacent to kimberlites discovered by Ashton Mining over the years.

"I just believe we're going to have a diamond mine in Alberta, and I'm going to be the one to do it," said Testo, a 55- year-old retired businessman who lives in Peers, northeast of Edson.

"I'm going to keep looking till I die, which I hope won't be too soon."

None of the 38 kimberlites Ashton discovered proved economically viable and it moved on to concentrate on its Quebec Renard play.

But improved technology, especially in computer geophysics, has made companies like Grizzly, Edmonton's Shear Minerals, Shore Gold and Diamondex Resources take another look.

Shear CEO Pamela Strand laughs at Testo's bold prediction, but understands his passion.
They've known each other for 10 years. Strand helped Testo get Grizzly started and sits on his board.

"He's got the drive and has a lot of land in Alberta," she said. "He's also got a board that supports an aggressive exploration program ... that's important."

While Shear's Alberta interests are small compared with its Churchill project in Nunavut, Strand said they are excited about a spring drilling program planned at Liege, just south of Birch Mountains, where they have an earn-in agreement with the oil and gas developer of the property.

Shear also has an earn-in option at Piche Lake near Lac La Biche, which was previously explored for diamonds, and has a 50-per-cent interest in an undeveloped area of the Birch Mountains.

Shore Gold got into Alberta last summer by partnering with Diamondex to buy Ashton's majority interest in the Buffalo Head Hills Joint Venture for $17.5 million from Stornoway Diamonds, which acquired Ashton in a hostile takeover last year.
The joint venture was a partnership between Ashton (45 per cent), Encana (43 per cent) and Pure Diamonds Exploration (12 per cent).

Shore Gold believes Buffalo Head resembles the large-tonnage, low-grade play it's developing in Fort a la Corne, Saskatchewan. It has just completed a $30-million private placement to fund Canadian exploration projects.

Vancouver's Diamondex in 2005 acquired mineral rights to 2.5 million acres that stretch from about 185 kilometres northeast of Edmonton to the Saskatchewan border.
Testo and Strand agree there is potential for large, lower-grade kimberlites in Alberta that were missed during previous exploration.

"Shore Gold coming in has made a big difference," Testo said. "I've always felt Alberta's kimberlites were as good or better than Saskatchewan's, but nobody wanted to spend the money."

Shore is developing the largest kimberlite in the world at Fort a la Corne, and Buffalo Head has also yielded some big kimberlites, he said. It's a question of finding the right combination of grade and tonnage.

You don't need the same high diamond grade as you do in the Northwest Territories and Nunavut, where exploration and development costs are higher, Testo added.

Some of the Buffalo Head kimberlites are within seven or eight kilometres of Red Earth Creek with easy access to oil and gas roads and power, he said.

He plans to spend $1 million drilling at 20-25 sites in January after raising $2.5 million in a private placement.

Grizzly is also working with Stornoway on ground surveys at the Call Of The Wild property between Lesser Slave Lake and Calling Lake. Stornoway CEO Eira Thomas discovered the Diavik mine in the Northwest Territories.

Strand said exploring in Alberta is easier than the Arctic because of year round access, better land tenure and a more co-operative regulatory system. But she believes the provincial government can do more.

At a meeting with Premier Ed Stelmach a month ago, diamond exploration companies urged better geoscience resources, and incentives such as mineral tax credits to keep non-oil and gas exploration money in the province.

Meanwhile, the hands-on Testo will be up north in January supervising his exploration program.

"The best diamond pipe in Alberta hasn't yet been found," he said.

finlayson@thejournal.canwest.com

SPARKLE SPOTS

So far, 48 kimberlite pipes -- the volcanic material where diamonds are found -- have been discovered in three separate areas of northern Alberta.

Buffalo Head Hills has yielded 38 pipes between 1997 and 2003 by Ashton Mining of Canada Inc., in a joint venture with EnCana Corporation and Pure Gold Resources Ltd. It has the highest diamond content results to date with 26 pipes containing diamonds. At least three of the kimberlites contain estimated diamond grades of 11 carats per hundred tonnes, while one had preliminary mini-bulk sample produced grades of 55 cpht. Analysts believe there needs to be another kimberlite of similar grade to make it commercially viable.

Two pipes were discovered in 1989 at Mountain Lake near Grande Prairie by Monopros Limited, at the time the Canadian exploration subsidiary of De Beers.

Birch Mountains have produced eight pipes, seven by Kennecott Canada Exploration Inc., Montello Resources Ltd. and Redwood Resources Ltd. in 1998, and one by New Blue Ribbon Resources Ltd. in 2000.