Ashton Mining of Canada Inc.

Ashton Mining of Canada Inc.

August 21, 2006 09:00 ET

Ashton Acquires Option to Increase Alberta Interest to 72.5 Percent

200 tonne bulk sample planned for 2007

VANCOUVER, BRITISH COLUMBIA--(CCNMatthews - Aug. 21, 2006) - Ashton Mining of Canada Inc. ("Ashton" or the "Corporation") (TSX:ACA) is pleased to report that its joint venture partners have agreed to amend the Buffalo Hills and Joint Venture Lands Joint Venture Agreement ("BHJVA") and to grant Ashton an option to increase its current interest in the joint venture from 45 to 72.5 percent.

"This agreement is one of several opportunities we have been pursuing to maximize value for our shareholders," said Robert T. Boyd, Ashton's President and CEO. "Restructuring of the joint venture gives Ashton the opportunity to increase its stake in Canada's third largest district of significantly diamond-bearing kimberlites. In 2007 we plan to collect a bulk sample from K14, a large tonnage, low grade kimberlite. Together with our on-going 10,000 tonne Renard bulk sample and trenching of the Hibou dyke in Quebec, and the 100 tonne bulk sample in Nunavut announced on August 18, this transaction further establishes Ashton at the forefront of diamond exploration in Canada with four bulk samples underway or planned on three properties."

The current beneficial interests of Ashton, EnCana Corporation and Pure Gold Minerals Inc. in the amended joint venture stand at 45 percent, 43 percent and 12 percent, respectively. Ashton can increase its interest to 72.5 percent by funding the next $15 million in exploration expenditures not later than April 30, 2010. Ashton has committed to spend at least $4 million by the end of 2008, of which $2 million must be spent by the end of 2007. Upon fulfillment of the option terms, the interests of three parties will be 72.5, 21.5 and 6.0 percent, respectively. The amended BHJVA allow Ashton to increase its equity interest faster than would have been possible under the original dilution formula.

As part of the 2007 program, Ashton will undertake systematic drilling on the K14 and K91 kimberlites to define tonnage potential. Also planned is a 200 tonne bulk sample to be collected from two surface exposures of K14. Additional exploration work in 2007 will include the drilling of a number of untested geophysical anomalies and property-scale exploration. The information gathered from the 2007 program could provide the basis for the collection of a much larger bulk sample from K14 and K91 in 2008. The valuation of the diamonds recovered from the large sample would then enable Ashton to make a preliminary determination of rock value for these two bodies.

The continued investigation of K14 and K91 is a priority for the joint venture given that the limited drill data suggest that these kimberlites have the potential to be larger than five hectares in size. In addition, the bodies are covered with less than 15 metres of overburden. In 1998, a 479 tonne bulk sample collected from K14 returned an estimated diamond content of 12 carats per hundred tonnes ("cpht") and a 36 tonne sample collected from K91 returned 13 cpht. The largest diamond recovered from K14 weighed 1.3 carats.

Robert Boyd continued, "The large kimberlites in the Buffalo Head Hills region appear to have many of the same attributes as those found in Botswana, Tanzania and Saskatchewan where large tonnage, low grade kimberlites with attractive diamond populations have either delivered significant economic rewards to their owners or are presently the subject of pre-feasibility studies."

The Buffalo Head Hills group of kimberlites is the third largest district of significantly diamond-bearing kimberlites in Canada after Lac de Gras in the Northwest Territories and Fort a la Corne in Saskatchewan. The joint venture has discovered a total of 38 kimberlites in the region, of which 26 are diamondiferous. Samples larger than ten tonnes have been collected from five of these bodies, three of which have returned a diamond content greater than 10 cpht. A 22.8 tonne sample collected from K252 in 2001 returned a diamond content of 55 cpht, the highest for the district determined thus far. The known kimberlites on the joint venture's properties range up to 45 hectares in surface area. Four of the kimberlites are exposed in outcrop.

Ashton believes that there is excellent potential to discover new kimberlite bodies on the 430,000 hectares of mineral permits that the joint venture currently holds.

Ashton Mining of Canada Inc., the leader in Canadian diamond exploration.

Ashton is widely recognized as the leading and pre-eminent explorer in the Canadian diamond industry. The Corporation enjoys an outstanding record of discoveries and a diversified portfolio of promising projects that cover the spectrum from early stage reconnaissance to advanced evaluation. At present, Ashton's most ambitious project is in Quebec, where a $29 million program is currently underway to collect a 10,000 tonne bulk sample from three of the highly diamondiferous Renard kimberlitic bodies. The bulk sample is expected to yield at least 6,000 carats of diamonds from the processing of approximately 6,000 tonnes of kimberlitic material. These diamonds will be valued during the first half of 2007 in preparation for a pre-feasibility study.

Ashton's competitive advantages include the extensive diamond exploration experience and the acknowledged expertise of its key personnel, as well as the Corporation's comprehensive diamond processing and laboratory facilities in North Vancouver, B.C. Integral to Ashton's exploration programs, these facilities include a five tonne per hour dense media separation plant, an X-ray sorter unit, a caustic dissolution circuit and a fully-equipped indicator mineral and diamond observation laboratory.

Ashton is the operator of the joint venture's exploration programs. Brooke Clements, Professional Geologist and Ashton's Vice President Exploration, is a Qualified Person pursuant to National Instrument 43-101. Mr. Clements is responsible for the design and conduct of the Corporation's exploration programs and for the verification and quality assurance of analytical results.

Contact Information

  • Ashton Mining of Canada Inc.
    Robert T. Boyd
    President and CEO
    (604) 983-7750
    Ashton Mining of Canada Inc.
    Mike Westerlund
    Manager, Investor Relations
    (604) 983-7750
    (604) 987-7107 (FAX)