Some big players behind Arctic still, buy more here or will we see $0.02......
Arctic Star makes plans for Credit
2008-10-15 17:58 ET - Street Wire
by Will Purcell
The long-suffering shareholders in Patrick Power's Arctic Star Diamond Corp. can only hope that a big, dilutive share sale at the bottom will pay off next spring at Credit Lake in the Northwest Territories. The company plans to drill several more targets on the diamond play west of Lac de Gras and it will test some nickel anomalies as well. Last month, Arctic Star sold 16.75 million shares at eight cents for $1.3-million. For existing shareholders it was a 10-per-cent dilution. Mr. Power thinks it will be worth it, as he hopes to finally solve the mystery of the rich but unexplained mineral chemistry at Credit Lake.
The plan
Mr. Power said most of the news cash would go to the Credit project, with smaller sums earmarked for diamond hunts in Ontario and Nunavut. The tentative plan for Credit would see Arctic Star split the budget between gems and nickel, although the split would likely change considerably with a drill success.
Arctic Star contemplates drilling up to 10 holes on the kimberlite targets. The company's drill efforts failed to hit any kimberlites since it started working in the area several years ago, but it now thinks it has the possible source area reduced to about 600 hectares. "The train ends, so it has to be in there," said Mr. Power.
A former Diavik man, Buddy Doyle, runs the company's exploration program and Mr. Power said he would likely attack Credit Lake much like the early days spent at Diavik. When geophysics and geochemistry left the Diavik geologists perplexed, a good look at the terrain provided some answers that paid off. As a result, Arctic Star's crews will be looking close at any depressions or small lakes in their target zone.
The Siku project in Nunavut is another candidate for drilling next year, but the cost and lack of results so far are dampening enthusiasm for the play. Arctic Star shares the project with Diamonds North Resources Ltd., which carved it off its Amaruk property a few years ago.
Amaruk holds a higher priority for Diamonds North. It operates Siku as well, and the partners were supposed to drill several anomalies there this summer. Winter has now arrived along the Arctic coastline and most drill crews in the region beat a southward path late last month. Mr. Power is not optimistic for good news. "If we would have hit something, I think we would have heard."
The encouragement
The Credit Lake district produced arrays of indicator grains with exceptional mineral chemistry, but Kennecott Canada Exploration Inc. gave up after spending several millions of dollars without finding any pipes. Arctic Star picked up the play from Kennecott in 2004, along with Mr. Doyle. The company has now spent well over $10-million, but without a single kimberlite to tout.
Detailed sampling has shown most of the earlier assumptions of where to look were wrong, and Arctic Star followed a few errant paths as well. Both Mr. Power and Mr. Doyle think the mineral chemistry of the Credit Lake grains is potentially better than that found at Diavik or Ekati, and it is possibly the best in Canada. As a result, any kimberlite find after all these years might spark a flicker of notice from otherwise weary investors.
Meanwhile, the company will keep trying for some worthwhile nickel intersections. This summer, it produced assays of about 1.7 per cent nickel and 1.0 per cent copper, but over a narrow interval. Unfortunately, nickel is now worth barely $5 per pound, which was its normal range before the big rally began in 2005.
Arctic Star closed up two cents to six cents Tuesday on 955,000 shares
