Star DIAM Mentioned (Fri, 03 Sep) - Summary by Will PurcellSaskatchewan resource investment company, 49 North Resources, sees its investment in Star Diamond dwindle. While miners are cheerful again, institutional investors still appear leery of diamonds. Tom MacNeill's 49 North Resources Inc. (FNR), unchanged at seven cents on 8,000 shares Thursday, continues to hold a modest stake in Ken MacNeill's Star Diamond Corp. (DIAM: $0.205). At the end of June, 49 North owned about 2.93 million shares worth about $600,000, stock that it paid $654,000 to acquire.
Three months earlier, 49 North owned about three million shares worth $569,000, which had cost $666,000 to buy. At the end of 2020, the company held just under 3.2 million shares that carried a market value of $634,000, stock that it paid $672,000 to acquire. Those numbers suggest that while 49 North is still buying and selling Star Diamond shares, the net trend is downward.
Now a thin trading stock, nestled below the 10-cent mark since January, 49 North was once a high-flyer. In 2008, it ran from below $4 to a high of $13.35, just as bankers were scratching their heads over their increasingly delinquent sub-prime mortgage accounts. At the time, the company was sitting with over $50-million in equity investments, much of it in Saskatchewan coal and potash explorers: Dawn Zhou's Athabasca Potash Inc. and Scott Drever's Goldsource Mines Inc.
Tough times lay ahead, sending 49 North's stock as low as 1.5 cents in 2019. It got back to 20 cents last summer, aided by a debt restructuring plan, but the brief rally ended as fast as it began. At the end of June, 49 North's investment portfolio was worth just $15.7-million and with mention of coal and potash long gone, the bulk of the value was contained in metals explorers.
Diamonds, however, and Star Diamond in particular, figured prominently in 49 North's promotion through the early and mid-2010s. The company's chief executive officer, Tom MacNeill, is brother to Star Diamond's Ken MacNeill, and the former unabashedly promoted the latter's company once its stock fell below $1. By the end of 2011, 49 North owned two million shares and brother Tom cheered that Star Diamond, then called Shore Gold Inc., was primed for a major financing, would be headed northward of $5 soon, and would then "move dramatically" once a mine was in production.
When the big move came, it was unfortunately downward as there was no production and no mine, but 49 North nevertheless kept up its spiel. Rather than acquiring millions of new shares on the cheap, 49 North went on to sell most of its suddenly cheap shares, only to start a new cycle a few years later. Indeed, the value of its investment peaked in mid-2017, just after Rio Tinto arrived as a potential joint venturer, when 49 North's six million Star Diamond shares were worth just over $2.6-million.
Success was fleeting, unfortunately, and just after Rio Tinto declared a joint venture formed late in 2019, 49 North owned just three million shares worth $1.2-million. It got worse, as Star Diamond took Rio Tinto to court over the alleged joint venture, a fight that may not be settled until next year. The strife was too much for brother Tom, as 49 North sold more shares through early 2020 and is showing no interest in reversing course.