North Arrow & Burgundy Diamond Mines In June, Burgundy signed a JV deal with North Arrow Minerals (NAR) that will see Burgundy earn a 40% stake in Q1-4 by funding a $5.6-million bulk sample of 1,500 to 2,000 tonnes at Naujaat, North Arrow’s coloured-diamond project in Nunavut. Burgundy advanced $300,000 of that last year so North Arrow could ship fuel and sampling supplies to Naujaat on the annual sealift. The objective of the bulk sample is to confirm that the more valuable coloured diamonds occur in larger sizes throughout the deposit.
The favourable JV deal allows North Arrow to retain majority control of Naujaat on a partner-financed path and established timeline. It undoubtedly helped that North Arrow CEO Ken Armstrong cemented a relationship with Peter Ravenscroft, Burgundy’s Managing Director and CEO, while the latter was in charge of resource delineation at the Diavik diamond mine in NWT. Ravenscroft is a diamond veteran with 40 years in the industry including with De Beers, Anglo American and Rio Tinto.
So what is Burgundy buying into? Naujaat’s Q1-4 kimberlite hosts Canada’s largest undeveloped diamond resource 100% held by a junior. The deposit hosts an estimated 26.1 million carats (Inferred) from surface to a depth of 205 metres; 2017 drilling showed Q1-4 extends below 300 metres depth. The outcropping kimberlite has a distinct population of rare orangey-yellow diamonds that could drive the value proposition and make the deposit economic. The Q1-4 deposit is seven kilometres from tidewater, near the community of Naujaat.
If this summer’s bulk sample is successful, Burgundy could earn an additional 20% interest in Q1-4 (60% total). North Arrow and Burgundy have a non-binding letter of intent to negotiate a second option agreement giving Burgundy the right to earn the additional 20% interest by paying for collection of a subsequent 10,000-tonne bulk sample.
The purpose of that exercise would be to definitely answer the diamond value question. The price tag for that bulk sample would be much higher, too — in the order of roughly $20 million.
SIZE MATTERS. SO DOES SATURATION
Intriguingly, the fancy orangey-yellow diamonds tend to be larger than the other diamonds in Q1-4. The coloured diamonds are a distinct, younger population of stones. In earlier samples taken by North Arrow, they made up between 9-12% of the stones but as high as 21 to 30% by carat weight. Establishing the size-frequency distribution of that fancy diamond population is the main objective of this summer’s 1,500 to 2,000-tonne bulk sample.
High-quality diamonds that are saturated in colour can sell for multiples of the price of white diamonds, but the mines producing them are shutting down. The latest is Rio Tinto’s Argyle mine in Australia, the world’s primary source of fancy pink stones. Argyle closed last year. The Ellendale mine, also in Australia, produced 50% of the world’s fancy yellow diamonds and was Tiffany’s primary supplier for those stones. Ellendale closed in 2015 (although another company is attempting to revive the project).
There were some initial doubts that the Naujaat fancy coloured diamonds would cut and polish well. North Arrow addressed those concerns with its cutting and polishing exercise that yielded beautiful, valuable stones. The polished diamonds received favourable certifications by the GIA (Gemological Institute of America). The diamonds were certified by GIA as fancy vivid orangey yellow — fancy vivid diamonds have the highest colour saturation and command premium valuations.
https://resourceopportunities.com/north-arrow-minerals-nar-v-a-fancy-contrarian-idea/