Artic star - L oh L 1 cent Diamond & Specialty Minerals Summary for December 3, 2024
by Will Purcell
The diamond and specialty minerals stocks box score for Tuesday was a mediocre 86-73-151 as the TSX Venture Exchange rose seven points to 620. Yes, Canada's diamond miners have been struggling to stay solvent amid the current depression afflicting the rough diamond sector, but those companies are faring better than their junior siblings looking to advance early-stage exploration projects.
One of those ailing juniors is Patrick Power's Arctic Star Exploration Corp. (ADD). Arctic Star, which lost one-half cent to one cent on 7,000 shares today, holds an 81.5-per-cent interest in several kimberlite targets on the Diagras project, just east of Ekati and northeast of Diavik in the diamond-rich Lac de Gras district of the Northwest Territories. It also holds a 100-per-cent interest in the Timantti property in northern Finland, which is also host to several diamond-bearing kimberlites.
A few years ago, Mr. Power, president and chief executive officer, and his vice-president of exploration, Buddy Doyle, had big plans to advance Diagras through a bulk sampling program. Now, they concede that "the current junior mining public market is in recession and for those focused on diamonds more so." They sigh that Arctic Star's "strategy during this difficult period is to consolidate and to continue to move forward with permitting" for a bulk sample on the Sequoia kimberlite at Diagras, and for drilling at Timantti, so that "these projects are ready to go when the cycle turns more positive."
Of course, once that cycle turns for the better, Mr. Power and his crew will have to bring some positivity to Arctic Star's balance sheet. The company had a working capital deficiency of nearly $880,000 at the end of September, and at its current burn rate that deficiency has likely reached the $1-million mark. In July, the company attempted to sell 13.75 million shares at two cents apiece, but apparently the price was too rich for investors.
In early October, Mr. Power killed that offering but launched another, this time cutting the price to 1.5 cents and trimming the exercise price for a warrant attached to each share to five cents from eight cents. Nearly two months have now passed without further word. Meanwhile, Arctic Star's stock as often as not has been trading at a single cent over the past two months.
And so, Mr. Power and Mr. Doyle will have to outlast the diamond depression before pressing ahead with their plan to prove or kill Sequoia. Arctic Star did complete preliminary drilling of the large but irregular body in 2021, ultimately collecting 1,482 diamonds from a 2.16-tonne batch of kimberlite. The rock held just 690 diamonds larger than a 0.106-millimetre sieve -- an apparatus through which you would have a tough time threading a human hair -- but with a better size distribution profile than what the other Diagras pipes historically yielded.
Five of the gems were of a commercial size, weighing perhaps 0.09 carat -- good for a sample grade of four carats per hundred tonnes. That would be laughably low if not for the nugget effect, in which larger samples invariably tap into pockets of rock with larger and more plentiful quantities of gems. Indeed, Mr. Doyle cheers his data as suggesting that Sequoia -- if one is an optimist -- could grade 70 carats per hundred tonnes. Even if one adopted a "more pessimistic model," he touts an expected grade of about 20 carats per hundred tonnes.
And so, with some of the mined Ekati pipes having yielded just 30 carats per hundred tonnes, Mr. Doyle is champing at his drill bit to get cracking on a larger sample. Grade aside, Arctic Star will also need a hefty diamond value, but there is encouragement on that score. Along with the potential size distribution profile, he touts the microdiamonds on hand as showing an "unusual 100-per-cent white and clear population," while elsewhere in the Lac de Gras area, grey and opaque stones are in the majority.
Even if the Sequoia kimberlite does have an economic value, building a stand-alone mine in the remote area based on a solitary low-grade pipe seems unlikely. Nevertheless, with both Ekati and Diavik in their twilight years, either might be amenable to processing Sequoia kimberlite to stay in operation a few years longer, thereby deferring the big expense of closure and environmental remediation. And so, Mr. Power and Mr. Doyle will wait out the tough times, looking for their chance to take their next hack at Sequoia.