Along with diamonds, it’s what North Arrow Minerals is looking for after a disappointing 2015 that saw a lower-than-expected valuation on a coloured diamond package from Qilalugaq hammer the share price.
It’s also the subject of the latest news out of the exploration company, which has sold a package of royalties on its Redemption project in the Northwest Territories for $800,000 cash. The buyer is Chris Jennings, a North Arrow director who, along with North Arrow chairman Gren Thomas, secured the ground that yielded the Diavik diamond mine in the staking rush that followed the Dia Met find.
North Arrow has the option to earn a 55% interest in Redemption from Arctic Star by spending $5 million on the property before July 1, 2017. A drill program is planned starting in mid-March, following up on ground geophysics and studies done last year.
The goal at Redemption is to locate the bedrock source of the large South Coppermine kimberlite indicator mineral train. The Ekati diamond mine is located 32 km northeast and Diavik is 47 km east.
At Pikoo, North Arrow’s 80% owned Saskatchewan diamond discovery, a full drilling program will also kick off soon, likely in mid-February. Pikoo hosts at least four diamondiferous kimberlites and drilling will focus on PK150 - the largest of them, which hosts good initial diamond counts and remains open at depth and along strike to the east.
Additional targets include two more recent kimberlite discoveries, PK311 and PK312, as well as targets identified through heli-borne magnetic surveys done in October. Infrastructure is good, with power and roads within about 10 kilometres of the southern boundary of Pikoo, north of Deschambault Lake.
As for Qilalugaq, the fancy yellow diamond project, North Arrow hasn’t given up on the story. The company had a couple of the nicer fancy yellow diamonds from the valuation parcel cut and polished. CEO Ken Armstrong showed them to me at Roundup, and the orangey rocks are eye-catching.
The .14-carat stone pictured at top was classified as a “fancy deep orangey yellow” and a .13-carat was pegged as a “fancy intense orangey yellow.”
North Arrow is in the process of appraising the two stones and reverse-engineering the values back to the valuation of the 383-carat sample, which came back at $36/carat (modelled range of $43 to $92). Armstrong expects the comparison to be very favourable.
It would be hard to draw too many conclusions, except for this: the value of exceptional diamonds such as fancy yellows can significantly skew carat values.
The cut-and-polish experiment indicates that Qilalugaq is clearly not dead in the water, even if it remains on the back shelf for the moment. North Arrow has an 80% interest in Qilalugaq, with Stornoway at 20%.
North Arrow Minerals
Cash: $4 million (as of Oct. 31)
Market cap: $10.8 million
NR: North Arrow to raise $800,000 selling Redemption royalty
Disclosure: Author owns shares of North Arrow Minerals, a CEO.CA client. Author is also a consultant to CEO.CA. This is not financial advice and all investors should do their own due diligence.