Star DIAM Mentioned (Mon, 30 Aug) - Summary by Will Purcell Ken MacNeill's Star Diamond Corp., a 40-per-cent owner -- or is it 100 per cent? -- of the FalCon diamond project in Saskatchewan, (DIAM) lost one cent to 21 cents on 59,000 shares. Star's stock, which has gracefully oscillated about the 20-cent mark for most of the past nine years, is pulling back from another brief run. Star's chart is speckled with brief surges that promptly run out of gas and become ragtag retreats; a pattern akin to the Second World War's Battle of the Bulge in late 1944.
Exactly a year ago, the company's stock surged to 24 cents from 19 cents, only to touch a multiyear low of 15 cents before Halloween. A more impressive rally at the end of 2020 took Star's stock to 25 cents from 16 cents, but before winter was over it was back to 17 cents. A mid-April rally and slump completed a cycle from 23 cents to 29 cents and back again within just a few days, while another in late May and early June carried Star on a round trip shuttle from 24 cents to 30 cents.
Each of these short-lived rallies evoked the same response from the company's long-loyal band of retail shareholders, many of whom have been holding and adding to their positions for the past 20 years. "Good times ahead!" cheered one Internet wag, while another, not-quite-so-starry-eyed investor hopefully intoned: "If this keeps up and [we get] credible news, it will make for a long weekend with wonder."
Unfortunately, Star's 10-year chart looks all the world like an electrocardiogram record, dutifully logging all the blips that came before with a certain frequency, if not regularity. (A doctor, upon gazing at Star's chart, might set the paddles to charging and bellow "Clear!" as he attempts to restore a regular rhythm, but there is no wonder that, in the absence of desired news, Star's rallies -- about two dozen easily identified ones over the past nine years -- have all petered out much as they began.)
Several of Star Diamond's rallies occurred around the time the company was working on a private placement, although most of those came in late fall or early winter. Indeed, the company has no pressing need for cash -- other than to cover the looming cash calls from Rio Tinto Exploration Canada Inc. (RTEC) that presumably will come once the dispute between the two companies is resolved. At the end of June, Star Diamond still had $3-million in working capital, and while it must spend $1.8-million by the end of the year on qualified exploration expenditures, it will still have $1.2-million to pay administration and legal bills to the end of the year, a time when Star private placements are as common as Christmas carolers.
Nevertheless, the hope carries on among Star's loyal followers that this rally will be the impetus prompting RTEC to offer a big bundle of cash to acquire their company and move on at FalCon without having to deal with Mr. MacNeill and his band of thorn-in-the-side associates. Perhaps -- some day at least -- but for now, it appears that an increasingly intransigent RTEC has dug in its heels as deeply as have Mr. MacNeill and his crew.
Indeed, RTEC has been patiently sprinkling mothballs over the project since the dispute went public in the early days of 2020, and early this month, the company said that the FalCon project "remains on standby while Rio Tinto evaluates options for future work." It seems a stretch to expect that a company willing to wait two years for a court to decide a case it believes it will win will now suddenly open its wallet to make a buyout offer that Star and its many retail shareholders would accept. In the meantime, Star's stock is likely to continue its oscillation between hope and despair.