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Diamond discovery indicators position Arctic Star on Launchpad, 20X+ revaluation potential

Fredrick William Fredrick William , Market Equities Research Group
0 Comments| August 13, 2019

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  • The two newly discovered kimberlites are directly in line, only a football field away, from where the Company’s geological team previously assayed one of the strongest chemistry samples (indicative of diamonds) ever taken anywhere in the world. Chemistry is king when it comes to correlating with diamonds; if chemistry on these two new kimberlites comes back from the lab as a match, then the probability of a significant discovery goes vertical.

Arctic Star Exploration Corp. (TSX-V: ADD) (F: 82A1) (US Listing: ASDZF) is the subject of a Market Equities Research Group Market Bulletin regarding the potential for extraordinary returns for investors as ADD.V awaits lab confirmation of chemistry on two newly discovered kimberlites on its 100%-owned Timantti Property in Finland. Arctic Star currently trades for pennies and has a miniscule market cap compared to the advanced-stage nature of its diamond project, positive developing scenario from the current exploration program, the reputation of the exploration team (Buddy Doyle and Roy Spencer cumulatively have over $USD80 billion worth of diamond finds globally), and the fact kimberlites are being excavated economically from surface by backhoe for a fraction of the cost surrounded by modern infrastructure (only ~17 km from the border town of Kuusamo). As the market better appreciates the magnitude of what the geological team is achieving the share price is apt to rise, and certainly upon positive confirmation of chemistry and subsequent caustic fusion processing of the newly discovered kimberlites.

FW1.jpg
Figure 1 (above) Image location map. Timantti is in the same geological belt as the nearby Grib & Lomonosov mines (nearby just across the border in Russia).

Timantti is advancing towards being Europe’s first diamond mine: Entering the 2019 exploration season Arctic Star had already found four kimberlite bodies and proved up >1,000 diamonds out of 409 kg of kimberlite material that underwent caustic fusion (from its White Wolf kimberlite body alone), which is ~2.5 diamonds per kg -- a fantastic number on par or better than most diamond mines in the world. The Company is aiming to get something it can put into production in the next two years. They already have a mine quality kimberlite at White Wolf, all they need is to add tonnage by finding some more on par or better.

The 2019 exploration program is going spectacularly well; on budget of less than C$700K the team has done geophysics, excavating, and discovered two kimberlites. The chemistry on the two new finds are now being worked on and results are imminent.

Why we believe a technical and market success of significance appears imminent: The two new kimberlites are located near where the Company had Vasa kimberlite dyke discoveries a year or so earlier, near where the Company had registered one of the best chemistry samples that the geological team had ever taken anywhere in the world. The Vasa dyke did NOT match the strong chemical sample, which is good as such a chemical signature should have yielded much more robust diamond count – ALL EYES NOW SHOULD BE GLUED ON THESE TWO NEW KIMBERLITE AS THE MATCH. The two new kimberlites, given the ice direction, are dead in front of the aforementioned sample. Right now Arctic Star has samples of both of those new kimberlite in the lab, doing mineral work on it, and if it matches up with the aforementioned exceptional sample, which is only ~100 m sitting in front of the two new kimberlites – look for fireworks under the share price of ADD.V as it will reflect extremely well for diamonds. Chemistry is king (a good correlation to diamonds), does not fail (give false positives) often, so the likelihood of discovering diamonds will increase if things pan out as geologists are theorizing. These new kimberlites are only ~1.5 m deep, basically at surface, and if it does have that chemistry, then shareholders could look forward to very strong diamond results. If the lab is on schedule it appears we have only ~three weeks to wait to find out.

For the fusion, Arctic Star is going to send the samples to Ontario Canada, to Buddy’s old lab (Buddy built it himself when he was with Rio Tinto). The fusion will take ~6 to 8 weeks as it is a bigger process that involves kilns and caustic material in 10 kg batches. In total Artic Star will probably put through ~200 kg from each new pipe and it is highly likely ADD.V will have significant diamonds coming out of that.

FW2.jpg
Figure 2. (above) -- Sample kimberlite from H1-2019 Timantti site visit (full site visit can be see here): Associated commentary "A fairly large pyrope-garnet crystal in kimberlite matrix found near surface at the Grey Wolf Kimberlite during the site-visit. Olivine is a common mineral in the earth‘s subsurface and the primary component of the earth‘s upper mantle some 150 km below surface, where diamonds also originate from. Olivines and diamonds are carried from the upper mantle toward the surface by the kimberlite magma, finally erupting as small volcanoes whose remnants are referred to as kimberlite pipes. The back side of the kimberlite sample shown above included a pyrope-garnet. As you can see in the above picture, there are not only plenty of olivine crystals in the kimberlite but also pretty big ones, which is an indication that diamonds with similar sizes may be present, scattered throughout the kimberlite body. Consequently, diamond explorers must do bulk sampling of many hundreds to thousands of tons of kimberlite to get an indication of the diamond size distribution within the kimberlite body."

Globally, the diamond market is growing at 2% to 3% per year, and there is a near-term to intermediate-term supply crisis in the making; the Argyle Mine in Australia, one of the largest diamond mines in the world, just closed about a month ago, and next year two large mines in Russia are closing, and there is nothing new coming online.

Arctic Star’s diamond project in Finland is jurisdictionally perfect; in Europe, in a stable country, and the infrastructure is amazing. The exploration and development program continues to run economically as ADD.V does not have to bring in a helicopter, or fuel, or camp, or expensively mobilize. Once the 2019 summer exploration program is complete it won’t take much to take the project to bulk sample and PEA. Due to the uniqueness and location, Market Equities Research Group guesstimates it will only cost between USD$150 million and USD$200 million to get going and scale up from there to full production. That is a reasonable cheque to cut comparatively to others; Diavik in its day (nearly 3 decades ago) cost USD$1.1B to build then.

The following URLs have been identified for further DD on Arctic Star Exploration Corp.:
Company website: www.arcticstar.ca
Recent Mining Journal review: https://miningmarketwatch.net/add.htm

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Fredrick William, BA Ec.
Fredrick is a freelance information services professional and consultant to several financial publications, he monitors and invests in the resource, technology, consumer staples, healthcare, financial, energy, utilities, and biotechnology/pharmaceutical sectors.
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This document is not and should not be construed as an offer to sell or the solicitation of an offer to purchase or subscribe for any investment. The author has based this document on information obtained from sources he believes to be reliable but which has not been independently verified. The author makes no guarantee, representation or warranty and accepts no responsibility or liability as to its accuracy or completeness. Expressions of opinion are those of the author only and are subject to change without notice. The author assumes no warranty, liability or guarantee for the current relevance, correctness or completeness of any information provided within this Report and will not be held liable for the consequence of reliance upon any opinion or statement contained herein or any omission. Furthermore, the author assumes no liability for any direct or indirect loss or damage or, in particular, for lost profit, which you may incur as a result of the use and existence of the information provided within this Report.


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