In a 1939 radio broadcast, Winston Churchill famously said of Russia, “It is a riddle wrapped in a mystery inside an enigma.”

He might just as well have been talking about diamond exploration, a high-risk venture populated by obscure minerals such as ilmenite, eclogitic garnets and chrome diopsides.

The good news is, finding those types of kimberlite indicator minerals means you’re in a diamond neighbourhood. And North Arrow Minerals has proven that its Pikoo diamond discovery is such a neighbourhood. The company is now trying to determine the neighbourhood’s layout and how many diamonds might be there.

It’s been a rough year for the North Arrow, whose chairman Gren Thomas discovered the Diavik diamond mine through his company, Aber Resources.

The low point came on June 9 when the company reported disappointing diamond values from its Qilalugaq coloured diamond project, touted as a repository of rare high-value yellow fancies. Shares lost half their value that day, dropping from 95 cents to 42 cents, and the stock hasn’t moved much since.

North Arrow had luckily raised $4 million in flow-through financing the previous month. The focus shifted to the other flagship property, Pikoo, an emerging diamond district that North Arrow had optioned from Stornoway Diamonds.

On Tuesday, North Arrow reported that drilling had enlarged the PK150 kimberlite, which has seen the most drilling on the property, as well as identified additional kimberlites. When it comes to Pikoo, size matters and if the kimberlite(s) have any hope of becoming a diamond mine, North Arrow will have to increase tonnage.

I talked to North Arrow CEO Ken Armstrong on the phone today to get his take on the results and find out about next steps. He said the results were positive, if not “splashy,” and confirmed Pikoo’s promise. The stock dropped slightly and closed flat Tuesday.

Check out visuals describing the latest results in the video atop this post, narrated by North Arrow CEO Ken Armstrong.

Armstrong said one of the more revealing holes was No. 34, drilled to the east of PK150 with the goal of defining the eastern edge of the kimberlite body. Instead, the drill unexpectedly hit more kimberlite, which contained diamonds but also had a weaker magnetic signature as well as a texture suggestive of a kimberlite pipe rather than a dyke, according to Armstrong. That increases the chances the kimberlite is a bigger body, he said.

Caustic fusion analysis of 323 kilograms of PK150 kimberlite yielded 487 diamonds larger than a .106 mm sieve size, including 9 greater than the .85 mm sieve size. It’s a lower number of both small and large diamonds than were recovered in a 210-kg sample in the fall of 2013, but Armstrong was happy with the consistency – including in hole 34 to the east.

“This is a highly diamondiferous kimberlite,” Armstrong said. The next question is “Just how big is it?”

North Arrow also recovered 5 diamonds from a small 14.5-kg sample from PK312, confirming that kimberlite is diamondiferous. Expect more drilling around PK312, which Armstrong described as perhaps the “best-looking kimberlite.”

“You can visually see chrome diopsides, which is very rare,” he said. Chrome diopsides are one of the least abundant kimberlite indicator minerals and form deep within the Earth’s mantle, within the “diamond stability field” that produces the valued stones.

Microdiamond results from PK314 – another larger kimberlite body that contains promising pyrope garnets – were not included but are expected within the next month. North Arrow is also planning a helicopter-borne magnetic survey over Pikoo in order to define additional targets ahead of a winter 2016 drill program, Armstrong said.

On the Qilalugaq front, Stornoway has not surprisingly passed on its option to increase its stake in the project from 20% to 40%.

North Arrow continues to do till sampling and ground work at its Mel project northeast of Qilalugaq as well as at the Redemption property at Lac de Gras.

News release: North Arrow confirms high diamond counts at PK150

Disclosure: I own shares in North Arrow Minerals. All investors are responsible for their own trades and should do their own due diligence.

Go to chat.ceo.ca for the all the latest on the markets and your favourite (or least favourite) junior resource stocks. Join the conversation!