A diamond may be forever, but not every diamond exploration company is. But some have the staying power and the right properties in the right location that savvy investors are looking at in the long run.
Enter
Arctic Star Exploration Corp. (
TSX-V.ADD,
OTCMKTS: ASDZF,
Forum) – a junior natural resource company engaged in the acquisition, exploration, and development of mineral properties around the world…primarily diamonds. Some of the diamond projects of the company comprise Timantti in Finland, Stein in Nunavut, and its flagship diamondiferous kimberlite project – Diagras – located in the Norwest Territories. The company also operates a rare metals project here in BC.
In this exclusive video podcast, Stockhouse Media’s Dave Jackson caught up with company CEO Patrick Power to get our investor audience up-to-date with all things Arctic Star Exploration.
(Click to play video)
TRANSCRIPT BELOW:
SH: To start off with, Patrick, can you tell us a little bit about yourself and the history of the company, along with the experience and innovative ideas your management and board teams bring to the diamond exploration space?
PP: Sure. I was a floor trader back in the eighties. When I left the floor, I got my first exploration company in 1991, which was a diamond company. I was brought into the business with a friend of mine called Chuck Trippy and you may remember his name from the first person who found the first mine in Canada. So that was my first experience in there and I've been doing diamond exploration ever since.
SH: Can you update our investor audience and your Arctic Star shareholders on any new company developments, especially in the wake of COVID-19?
PP: Yeah, we lost a whole year's exploration in the diagraph project because of COVID-19 our permits were pulled back by the government and actually couldn't fly two Yellow Knife at one point. So we lost a whole season. Our seasons are very short in that part of the world for a drilling it's three months from latter part of March early April to June, if we're lucky. So it's very important that we get in there and last year was a terrible year for that. So we pick up a year and we made sure we got back in this last few months.
SH: Let’s talk about your priority project right now Diagras. What makes this diamond property so special?
PP: Well, the history of lock to draw, there's two mines up there that were the two major mines for a long period of time before Gaucho came in and snapped like at one point was there as well but what makes it incredibly interesting is that we're connected to both mines. Property is contiguous with both Cody and Diavik part of our team and a very large part of our team is Buddy Doyle, who is the person who found Diavik back in the day for Rio Tinto and the average joint venture. So we've been working together since 2004 and we've had this idea or quite frankly, Buddies had this idea of diamond preservation and how to look for kimberlites a little differently than they did back in the heyday in the nineties. He found just about 101 kimberlites when he was working with reel in that area.
So just under half of all the kimberlites found up there, he is the person who found them. So he's got a really good experience in the area. He understands it extremely well. His philosophy here is we're going to drill non-magnetic targets, the early history of blocked Gras, everyone drilled mag lows, but none of those pipes for any company ever made it to a mine plan. It's only when they started drilling EM in gravity, that those pipes like all the Diavik pipes are non-magnetic, they're either EM, gravity, or combination of both. When we acquired this property, it came originally from DeBeers it hit 23 kimberlites on this almost all mag lows and had no success but it's right in the quarter of hope. It's, it's 17 Ks away from Diavik. It's 30 K’s away from CATI even closer to misery. So it's even closer to Cottey than that, but there should it be more success?
So DeBeers, you know, never really had a mine up there other than SnapLock, which they purchased. So they have their exploration that didn't do all that well. So after hitting 23 targets, and none of them becoming economic, they held onto the property for approximately 27 years, dropped it and we picked it up the next day, reason being, we wanted to go around their magnetic kimberlites and do very large ground grids of gravity and EM, and see what we could see in that world And lo and behold, when we started doing that, we started finding target after target that were not magnetic. They were EM gravity or combination of both and that's what we've been drilling. It's produced four Kimberlites so far, a very, very, I would say five, but Sequoia is a very kimberlite complex it's killing your lawn, which is the biggest thing in the territories. We've got tools into that during the lab presently, and we're waiting for a real results. It should be one to three weeks. Any much lab. We have two labs working for us, fifties lab CF minerals and SRC in Saskatchewan. They both have a kimberlite and those should be out one or two weeks, maybe three. So we're crossing our fingers, but the philosophy is those things will produce better quality diamonds and more diamonds than the Meg counterpart, which has been proven in the past.
SH: You’ve recently announced the discovery of four new kimberlites and are awaiting lab results at Diagras. This may be news to many investors. Can you unpack some of the highlights for our audience?
PP: Sure. we've hit, as you said, four new kimberlites that are all non-magnetic, which gives them a better chance of producing something interesting that's economic. So we have the first two pipes Birch and Sequoia versus with CF Minerals and Sequoia is with SRC. Those are being processed right now. They go to cost of fusion. You take Timberlake, but eight to 10 kilos of it. You throw it in the kiln. So cost of material in superheated and all that's left is a pulp with chromites and diamonds. They pick, they put the diamonds, they photograph them, and you get a result. So we're in that process right now for the first two pipes. When they come back, we'll send the next two pipes in, and then we anticipate getting back into the field and doing some more geophysics and possibly drilling. We've got some land-based targets and we're considering even using a barged drill off of in the lakes, because most of these targets are water bound.
SH: You’ve said that Arctic Star is one of only a few remaining diamond mining companies with incredible potential. When results come out, what should investors be looking for?
PP: Well, we're looking for micro diamonds in the first set of holes. We're only drilling you know, when we drill, and we have a two-inch drill and we split it in half and then send that half to the lab. So it's not really a big sample. What it's supposed to do is give us micro diamond counts and with enough sample and enough micro diamonds, is we can plot those in a curve and then we can predict the bigger size diamonds coming in with more tonnage. So that's what Buddy is looking for is to get to, first of all, just to get a sniff of duns we'd like to have some, one millimeter, two millimeter diamonds in that grouping, because if you do, that's a very, very, very good sign, but we're just looking for micro diamonds at this point and we'll go back and look at the pipes that Proust the best results. We'll probably do a lot more drilling for each one of those pipes. We have a lot of targets left. We produced a lot of geophysics at the same time we were drilling, and we have new targets based on that. So a lot is going to come from this property and it's just proving Buddy's philosophy very well. Presently.
SH: For company shareholders and potential investors, what kind of future development and progress can we expect at your other projects in Finland and Nunavut?
PP: Well, Nunavut is optioned off to a company called GGL diamonds and they have an option to earn 60%. They can achieve that by hitting a kimberlite. So we made it a unique kind of an option agreement. It's about success. It'll be the first in a new field, but you know, the train they're following is unexplained other than these beautiful mag targets with chemistry running right up to them. So that is an option agreement. That's going to be fulfilled by them I believe this summer and our other property matching in Finland. It's progressed quite nicely. We have three or four pipes there that have really good Dun results, super infrastructure there. It's hard to express how wonderful that places to work. So it's a great jurisdiction, great infrastructure. We're looking for slightly bigger intrusion to make this happen. We've gotten smaller intrusion was really good diamond results but lacking a little bit in the tonnage.
So we're going to be back in there and we can work that particular place. 24/7, 12 months a year, it's all on road. You can take it. You can actually have bus stops two miles from one of our kimberlites. So you know it's very cheap to work there. The reason we're not working there just at this moment is it's hard to run two big diamond programs at one time based on success at Diagras. That certainly will be revisited very shortly with a good budget, and we'll continue on there, but it's super exciting. We own a hundred percent of that. It's great working with the geological people in Finland. It's just a really nice place to work and it's a good place to have a diamond discovery. It will be the first European diamond mine. If we get there, there's never been a diamond mine a year before. So very interesting. Not counting Russia.
SH: I have to mention your stock has had a very nice bump over the last three months…more than tripling in value since early March. What can you tell our investor audience regarding the current valuation of your stock and why you think it’s still a good buy right now?
PP: Well let’s put it this way. We have no competitors really out there anymore in the diamond exploration space. So all the people that are interested in diamonds, which are actually a lot that we were finding that they're coming back to the table because we have interesting results and on the verge of hopefully far more interesting results. So all the diamond money that's out there and interested we think is going to come our way, because there's in 1995, there was 150 listed companies that were in diamond exploration. Now there's probably three or four and probably two that are real serious and that's it. So there's a pool of money out there. That's really interesting. We could see that we could tell by our market how it's reacted, phone calls that have come in since we've been successful, and we think that money will be diverted to us. So we think there's a really good space. Plus diamonds I've had really good last three, four months. They're real tough time during the COVID period but have rebounded fantastically and actually are performing better than you did before the COVID period. So we've got a good diamond market. There are diamond mines closing across the world. There's no new expiration to bring new ones on. So we've got a little perfect storm for ourselves right now.
SH: What’s the long-term strategy for the company moving into 2021 and beyond, and what retail and institutional investors should be looking out for?
PP: Well, our plan with particular Diagras is we don't want to build a mine there. There are two active mines looking for four. So what we want to do is bring a pipe two, three, four through feasibility, you know, put a price tag on it and sell one of the existing mines, which will take years and years and years less time than trying to permit a mine and build one. There's no point in talking mines here. It's just talking about bringing in pipe through feasibility and putting the price tag on it and selling to one of the existing mines. So it's a really short-term thing. So our shareholders will be rewarded far quicker than if we were like a diamond in the old days who took, you know, they made the discoveries that it took 10 years to put that into production. So we're looking to be a year and a half, two years maximum. Okay.
SH: Pandora, a retail jeweler came out last May saying they will no longer be selling mined diamonds and will be switching to synthetic diamonds. How are synthetic diamonds affecting the real diamond market?
PP: Well, two things. Pandora sells it's less than 1% of their business in the first place. So it really does. They're inconsequential what they say, because that's not a big part of their business. Secondly, just for an example of a parallel story. Ruby's have had a synthetic market for decades and decades and decades, and they don't compete against each other. They're priced differently and they're not in the same space. Same thing will happen with diamonds. One of the miss total misnomers out there is that they're green. Do you know how much energy it takes to build a fake diamond?
They generally made in China. So it's definitely coal burning and there's a tremendous amount of energy involved in producing one diamond. So the green thing that's not reality. It's a huge energy consumer. A lot of the energy is coal-burning energy, which is kind of the worst energy in the world. So we don't think synthetics or even like, we don't think of them cause they're not part of our world. Do you know people say, I don't want to buy synthetic? I want to buy a real diamond. They make their choices and their different markets, and they trade at different prices. There's 60%, 70% difference in those two commodities. Buddy, in particular, there's a great understanding of this is not even concerned in any way, shape, or form.
SH: Just as an aside patter for investor audience. When we say synthetic diamonds, are we talking about zirconia? That style?
PP: No, these are actual done is that are produced with tremendous amount of energy, squishing them to get turning carbon into diamond. So they're not, no, that's a different stone. It's close, but on the hardest scale is not ten diamond on the hardest scale is 10 of the 10, I think zinc nine. So it's around, but not there.
SH: And finally, Patrick, if there’s anything I’ve overlooked please feel free to elaborate.
PP: Buddy and I have been doing this combined for like 60, 70 years. So we've seen markets go up, markets go down. It was really, really nice to see is the response to success. I think the reason diamonds had a really rough period, in the latter two thousands and on is because there wasn't much success if any, in the exploration world. So it was burning a lot of money and the investors, you know, put a lot of faith in it and billions of dollars in it, quite frankly, and it didn't pay off. We're aware of that. We've come with a different approach. This isn't just picking up. It's the approach that's important here. This is a philosophy of drilling non mag because we believe not, it will deliver the product. So every kimberlite we hit is going to be an interesting, it's going to be interesting to see the results of it because there could be really interesting results in any one of them because of their non magnetism. It's just the process of an occupation.
For regular updates, visit
www.arcticstar.ca.
FULL DISCLOSURE: This is a paid article produced by Stockhouse Publishing.