Star DIAM Mentioned (Thur,28 Apr) - Review by Will PurcellStar Diamond successfully completed a multimillion-dollar placement, Arctic Star Exploration is still trying. Meanwhile, Ken MacNeill and Ewan Mason's Saskatchewan diamond explorer, Star Diamond Corp. (DIAM), up one-half cent to 30.5 cents on 244,000 shares today, recently closed its $5-million placement, although it took two tranches and setting the offering price at a modest discount to accomplish the task. Star, which began the placement in mid-March, sold 13.96 million 30-cent shares in early April and another 2.71 million a few weeks later, selling all 16.67 million shares on offer.
Star Diamond said that it would use half the new cash to settle old bills, and another $2-million would go to "general corporate purposes," mainly administrative expenses. The remaining $500,000 is expected to cover technical expenses, mainly work to review and evaluate data supplied to it by Rio Tinto Exploration Canada Inc. under their joint venture agreement as FalCon, in central Saskatchewan.
Fortunately, while Star will ultimately be responsible for its 25-per-cent share of exploration costs at FalCon, it will not have to pay them until after RTEC gets a mine operating. Of course, Star's ability to raise cash will be put to the test once RTEC declares its intention to build a mine at FalCon, as it will have to meet the massive cash calls from RTEC to cover construction of a multibillion-dollar mine.
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The diamond and specialty minerals stocks box score on Thursday was a positive 104-71-135 as the TSX Venture Exchange rose nine points to 818 while polished diamond prices inched downward. Raising cash for Canadian diamond exploration remains a challenge despite near-record-high rough diamond prices, and a lack of cash could limit some energetic exploration plans this spring. One company with big plans is Patrick Power's Arctic Star Exploration Corp. (ADD), which rose one cent to 11.5 cents on 505,000 shares today.
The company set out in mid-February to raise $3.4-million, then boosted the goal to $3.8-million late that month. In mid-March, Arctic Star sold 8.19 million regular shares at seven cents and 3.7 million flow-through shares at eight cents, raising just under $870,000. A month later, it closed a second tranche, selling 12.67 million regular shares and another 3.03 million flow-through shares, grossing another $1.13-million.
Arctic Star also rejigged the breakdown of the shares on offer so that a further 10.57 million regular shares and 13.28 million flow-through shares remain to be sold, leaving the placement $1.8-million short of its target. The company now says that the placement will close one way or another at the start of May with a third and final tranche. The good news is that while the sale began at a premium to market in mid-February, Arctic Star's price has slowly inched upward, getting as high as 13 cents recently.
The cash is needed for another big drill program at the company's Diagras diamond project just northeast of Diavik at Lac de Gras, where Arctic Star discovered four new kimberlites last year on the 25-year-old project by using new geophysical approaches. Those same techniques have now identified a series of new targets to be drilled and the company also plans delineation drilling at Sequoia, the best of its 2021 discoveries.
Sequoia produced the best microdiamond counts from any of the nearly three dozen Diagras kimberlites discovered over the years -- nearly all of them found in the early days when De Beers Canada worked the project. While the diamond counts were nothing like what turned up at Diavik, Buddy Doyle, a former Diavik geologist and since 2004, Arctic Star's vice-president of exploration, believes that larger tests will help narrow down the potential grade -- and that potential grade, he cheers, could come in at the lower end of an economic range.
He has a point, as the Fox pipe at Ekati was economic with a grade of about 30 carats per hundred tonnes, largely because its diamonds were worth more than the array of goods mined at Misery, A-154 and A418, three nearby pipes with grades handily topping 300 carats per hundred tonnes. The drilling -- assuming Mr. Power, Arctic Star's president and chief executive officer, can find the rest of the cash -- could go a long way to proving or killing Sequoia while also potentially adding one or more new discoveries worthy of a closer look.