Will Purcell.........Take Twoby Will Purcell
Patrick Power's four-cent diamond hunter, Arctic Star Diamond Corp., is still a believer in the Attawapiskat diamond play in Northern Ontario and it would like the responsibility of exploring the property. Chuck Fipke's Metalex Ventures Ltd. holds a majority interest in the project, but its treasury is empty, its other gem hunts carry higher priorities and its own shares are trading for less than a dime these days. Despite the market woes, Mr. Power thinks putting some new sets of eyeballs on the play, which lies close to the Victor diamond mine, could lead to a kimberlite discovery.
The plan
Mr. Power said Arctic Star was continuing to work harmoniously with Mr. Fipke. The Vancouver based promoter said his partner would be sending along all the Attawapiskat sampling and geophysical data in digital form shortly, so that Arctic Star's geologists could take a good hard look at the information. Apparently, Metalex -- that would mean Mr. Fipke -- would like Arctic Star to become the project operator.
That would not be a surprise, as Mr. Fipke's public company still carries eight active diamond projects on its books, and the Attawapiskat spending ranked seventh during the company's last quarter. At the start of August, Metalex reported a working capital deficiency of about $1.4-million and it has yet to top up its treasury. Indeed, with it shares trading as low as 5.5 cents recently, a new private placement would probably put Metalex's existing shareholders in an even grumpier mood than they already are. Some of Mr. Fipke's faithful long-term backers paid over $5 for a Metalex share in 2003.
Arctic Star's financial situation is just marginally better. The company started July with about $115,000 in working capital, although it has sold over $2-million in new shares since then. That money is earmarked for Arctic Star's projects in the North, so it would presumably need to go back to its backers one more time to find the money for Attawapiskat. Fortunately, Arctic Star's interest in the project is only 20 per cent, assuming its Attawapiskat partners would continue to contribute.
If Arctic Star does assume responsibility for running the Attawapiskat project, there would likely be a change in focus. Mr. Fipke is a huge fan of indicator mineral sampling and the inevitable geochemical analysis, and Mr. Power said that "there is a ton of sampling data" already available. Still, he expects Mr. Doyle would rely more on geophysics than Mr. Fipke has so far.
The encouragement
An area about 3.5 kilometres square remains the most intriguing part of the play, at least to Mr. Fipke and his faithful followers. That zone contains a fan of indicators with sparkling mineral chemistry that does not yet have a suitable geological explanation. Metalex was just warming up its drills when one of the partners, Big Red Diamond Corp. got into a spat with Mr. Fipke over who was responsible for paying some small bills.
Mr. Fipke was content to outlast Big Red and he apparently accomplished that this year, when Big Red's new management apparently agreed to dilute itself out of the project. That would presumably allow Metalex to resume work, but it has been preoccupied with its Angolan play so far this year.
The Victor mine provides the main enticement to Mr. Power. De Beers Canada Inc. built a $1-billion mine based on about 30 million tonnes of kimberlite grading barely 0.23 carat per tonne. The diamonds are the real story, averaging over $500 (U.S.) per carat at last report. As a result, several rivals in the region are pressing ahead with exploration of kimberlite finds, despite modest microdiamond counts and low mini-bulk grades.
(Disclaimer: Stockwatch has written often about Arctic Star. Every optimistic story has been followed by lower prices.)
Arctic Star, which now has limited downside, closed unchanged at 3.5 cents Wednesday on 34,100 shares.