Feature article March 26, 2019:
Star Advancing Timantti Diamond Project in Finland
"Arctic Star is now in the center of what
could continue into a Tier 1 diamond discovery at Timantti."
ADD) (US Listing: ASDZF) (Frankfurt: 82A1)
Share data, Capitalization, & Corporate info
52 Week High/Low:
Current Market Capitalization:
~$10.2 million Canadian
Project, Finland (100%-owned);
advancing the recent discovery of
a cluster of diamondiferous kimberlites with
large upside / world-class potential.
Experienced management, and skilled
technical leadership; taking point
for Arctic Star Exploration Corp. are
the same individuals that as lead
exploration geologists discovered the Diavik diamond mine in Canada, and the
Grib diamond mine in Russia.
Arctic Star Exploration Corp. (TSX-V: ADD) (F: 82A1) (US
Listing: ASDZF) is a Canadian-based diamond exploration mining
company focused on advancing its flagship 100%-owned Timantti
Property in Finland, located 17 km from the town of
Kuusamo, and only ~450 km SE of the multi-billion dollar
Grib diamond mines in Russia.
'Timantti' is the Finnish word for diamond, and Arctic
Star is now in the center of what could continue into a Tier 1 discovery.
The large land package consists of a 243 hectare Exploration Permit and a
190,000 hectares Exploration Reservation. The caliber of the
exploration professionals that are associating themselves and
reputations to the project is impressive, they include the
former lead geologists that discovered Diavik diamond mine in
Canada, and the discovered nearby Grib diamond mine in Russia.
In 2018 Arctic Star proved-up
a cluster of 4 newly discovered diamond bearing kimberlites
ripe with microdiamonds; following caustic fusion processing 1,746
diamonds were found in 987.06kg of samples from four kimberlites,
and curve analysis yields +1.18mm stones in each kimberlite. Three
of the kimberlites, known as 'the three wolves', are within 300
metres of each other, they were found under only 1 to 3 metres of
overburden, only a few hundred metres off the highway, and adjacent
to power. Analysis of the distribution
from caustic fusion of samples from Arctic Star's best grading kimberlite
structure, named the White Wolf, yielded ~0.7 carats/T (+/- ~20%) commercial
stones, an earmark of if not a future mine on its own,
certainly part of a future mine. The Company's 2019 exploration plan
is to prove the Timantti Project has world-class size potential by
confirming more kimberlites; the exploration team will be testing
several near-surface anomalous targets that are so apparently
indicative it is difficult to think what else the anomalies could be
other than more kimberlite pipes.
Figure 1. (below)
a)(left) -- Location of new kimberlites on Arctic Star's
Location map, note same geological belt as Grib & Lomonosov
Exceptional infrastructure: Arctic Star
is able to explore for diamonds at Timantti for ~1/3 the cost of
what most others spend in elsewhere due to the projects location
proximal to exceptional infrastructure (roads, airport, town,
power). There are regular flights from Helsinki to the local town of
Kuusamo (population ~16,000); its possible to take a taxi from the airport to Arctic
Star's first kimberlite discovery in ~20 minutes. Additionally
noteworthy, in 2018 two of the kimberlites were discovered simply by
excavating anomalies with a backhoe.
ADD.V poised for upside revaluation: Currently
trading with a miniscule market cap of only ~C$10.2 million, the share
price of Arctic Star Exploration Corp. is apt to rise near-term to
better reflect the inherent value of its recently discovered
diamantiferous kimberlite clusters at the Timantti Property and its
potential. The missing ingredient that is holding the share price of
ADD.V back is the streets need to see size/tonnage potential,
something the Company's geological exploration team is confident it
can deliver this 2019. The markets are tougher on diamond
exploration stocks now than in the past
due in-part to the fact there has not been a new
world-class diamond discovery made since 1990. If this was the 1990s
and Arctic Star had done what it has done lately at Timantti, the
share price of ADD.V would likely be over $3/share already.
Purchasers of ADD.V now are getting a deal on shares. Kimberlite
structures are rare -- the discoveries to date have mitigated the
project risk, with weak hands now out of the stock, and the
geological team dialed-in, it won't take much in terms of news flow
to attract majors, serious money, and street attention that will
jump the share price of ADD.V as the 2019 exploration season
Figure 2. (above) Diavik Mine, and Arctic
Star's VP of Exploration, Buddy Doyle, he was
lead geologist on the Diavik discovery.
Diavik has produced over 100 million carats
since 2003. Diavik is operated by Rio Tinto and
sold 40% to the Washington Group for $1.2B.
exploration team is aiming to hit a home run this
Arctic Star's exploration team is lead by Buddy
Doyle (VP of Exploration and Director) -- Buddy Doyle was the
lead exploration geologist that took the
Diavik Mine in Canada from discovery through to ribbon cutting.
He then stayed on for a term at Diavik during operations as the
Senior Exploration Geologist, serving a total of 23 years with
RioTinto. He also has other multi-billion dollar discoveries of
significance under his belt as well, see his CV at the bottom of
Also taking point as Country Manager in Finland
for Arctic Star is exploration geologist Roy Spencer (Director). Roy
Spencer was the leader of the team that discovered the nearby Grib
Diamond Mine across the boarder in Russia, which is in the same
geological setting as Arctic Star's Timantti diamond project.
Figure 3. (above)
Grib Mine and Roy Spencer. Otkritie Industrial Investments
purchased Grib for 1.45B. AGD Diamonds recently consolidated with
Indicators run high
for additional new kimberlite discoveries at Timantti
Kimberlites are likely to occur in fields
(a.k.a. clusters), which typically contain 30 or more separate
kimbelites. The Wolf kimberlites are just the first discoveries in a
more extensive cluster.
The 2018 works program involved ground
geophysics (magnetic, gravity, and EM surveys), excavator till
sampling (20 Samples ~50lbsm, and they drilled ~600m yielding 4
diamond bearing kimberlites.
Figure 4. (above) --
Imagery from 2018 exploration program.
Figure 5. a & b (above) -- location of three
wolves and synopsis of drilling which has Arctic Star has conducted.
The Three Wolves kimberlites discovered by
Arctic Star are not classic Kimberlite pipes. They were initially
drilled in the middle assuming they were classical pipes, however the
current interpretation is they are part of a dyke, sill system,
relatively thick 30m to 35m wide dipping to the North @ 35 degrees.
There is evidence this sill system continues and Arctic Star has an
opportunity to build kimberlite tonnage at the Wolves, similar to
how tonnage was built at Snap Lake, but here Arctic Star has a much
thicker sill system.
Figure 6. (above) -- White Wolf 2018 diamond
stones in the commercial size: Caustic fusion of White
Wolf's kimberlite generated excellent results. Caustic fusion is a
process whereby the kimberlite is split, half is kept for reference,
and the rest is sent to the lab (there are only 3 in the world; two
in Canada and one in South Africa). At the lab the kimberlite is
dissolved in extremely hot caustic soda leaving only diamonds
remaining. The distribution of microdiamonds in the sample can be
plotted and the dots form a curve from which a bi-polynomial
expression projects the curve into a large diamond space. This is a
technique Buddy Doyle used at Diavik with great success. Analysis
shows White Wolf is yielding
~0.7 carats/T commercial stones (+/- 20% to 25% -- this
number will become better refined as a larger sample size is
processed). It is too early to tell diamond prices as a statistical
cloud size is needed, however Arctic Star has 60% white stones in
the microdiamonds (anything above 30% is good).
Figure 7. (above) -- Grey Wolf, Black Wolf,
and Vasa Dykes 2018 diamond results
Highly prospective for additional diamond discovery of significance
The indicators being
found can't be explained by the discoveries so far, there is
obviously lots more kimberlite to be discovered, and Arctic Star's
geological team knows exactly where to look.
Figure 8. a & b (above) Left: Annotated location
map of Arctic Star's Timantti Land Package, Right: Sample sites with
indicators. Historic public data and recent till samples taken
by Arctic Star show a clear dispersion trains of diamond indicator
minerals east of Kuusamo. The Known Kimberlites discovered to date
can not explain all the indicator minerals, proof that there are
more kimberlites to be found. Red Dots, are sample sites. Red
Circles show samples with positive results, the larger the circle the
more indicators in the sample.
Timantti - New Targets
Figure 9. a & b (above) New targets -- Left
(above): Annotated UAV Mag survey; Arctic completed a 600 km2
UAV magnetic survey in the Summer-2018, adding to its Winter ground
Mag. Greenstones belts and gabbro sills dominate the image as long
linear Mag highs. Seen in the image are some of the new targets
highlighted with arrows, those are kimberlite targets. Kimberlite
targets in the quartzites tend to stand out.
Right (above): Annotated survey showing
nanoteslas (nT). 38 New untested drill targets for 2019. Red
arrows point to the top priority targets. As little as 1-3 m
overburden. The Wolves seem to form an East-West trend (Wolf Cubs).
The plan is to begin excavator sampling in March 2019, drill testing
in June 2019.
level runs high: One
section of the survey shows a trending line of anomalies that appear
similar in structure that typify kimberlite. The anomalies continue
for another 1.5 km. Elsewhere Arctic Star has intense anomalies in
the 1000s of nT, then there are anomalies in the 100s of nT that are
key, likely very quartzite -- the targets Arctic Star is going for
are along the Wolf trend and they are sort of circular, 100m wide,
Lac De Gras/Diavik-style sort of targets in the quartzites. It begs
the question "What else would intrude the quartzite and be 100 nT?"
-- the logical answer is kimberlite (nothing else makes sense).
Figure 10. (above) -- Mag filter designed to
highlight kimberlite like targets. Boxes highlight targets in
new Exploration permit (note: one of the targets is ~200m across,
looks dumbbell shaped, which kimberlite often looks like). Blue
arrows show targets in current permit.
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Insight -- Status of the Current Diamond Market
Zimnisky Global Rough Diamond Price Index
Chart 1. (above)
Zimnisky Global Rough Diamond Price Index. Commentary: Gains
made in early 2018 have been lost in the later part of that year,
stabilizing now. Most of the price pressure is in the 'small good',
less than 3 pointers (0.3 carats). Mainly due to producers
reprocessing old tailings where smalls dominate, therefore short
lived. USA & China demand strong.
Diamond Production Forecast
Figure 11. (above) -- World Diamond
Production Forecast (Source:
Bain & Company published December-2018).
Shortfall in global new rough diamond supply
growing; The above annotated chart of
World Diamond Production Forecast shows a growing shortfall.
The world consumes 127 million
carats of rough diamonds per year. That’s equivalent to
the reserve of a medium size diamond mine per year (127
million carats is ~ the original reserve of the Diavik
Mine -- the world consumes a Diavik Mine every year).
The problem facing the industry supply chain now is that
there is no new supply being discovered and mines are
Argyle diamond mine is
scheduled to close 2020.
Udachnya and Mir diamond mines
have recently closed (Mir cannot go underground due
to natural gas seepage into mine).
Very little global diamond
exploration since the 2008 GFC.
No new significant discovery
Note on synthetic (artificial)
diamond market: The artificial
market is being relegated to junk status and not
impinging on natural market.
Demand for synthetic diamond
production in 2018 was ~7M carats. Compare that to
natural demand (of ~130M carats), as a portion of the
market synthetics is small. Synthetics have been around
for a while, however they have gotten better of late.
Debeers and the Geological Institute of America have
deployed detection instruments in every reputable
jewelry store in the the world -- so you can tell the
difference. In order to speed the departure of the
artificial market piggybacking off of the natural
market, and relegate it to a separate market, in
November 2018 DeBeers began producing their own
synthetics on their own patented equipment/process, and
they are pricing way low -- making a separate market.
Simply look to rubies, emeralds, and sapphires -- they
have had very good synthetics since the 70s and they are
separate markets (one can go into a lapidary store and
buy a thumb-size artificial ruby for $70, whereas a
thumb-size natural ruby would be $multi-millions).
Diamond Pipeline - Producers have the highest profit
Figure 12. (above) Diamond
Pipeline (source of data:
Bain & Company) -- The table shows where the money
goes between mining and getting a very nice ingot. The
big takeaway from a review of margin data is that its a
producers club; diamonds are one of the only mined
commodities where producers set the price, not the
buyers. Diamonds are not industrial driven like most
other mined commodities. Large stock piles have been
gone since the mid-90s. Occasionally the producers will
ring up each other "We are going to hold back on X-size
group, we are seeing weak prices", and those diamonds
will get stored at the mine site. This is a healthy
mechanism for the producers as it would be irresponsible
to flood the market. If one or two sites hold back on
supply of a size, the price comes back.
Exploration Steps to Production
It is a quantum leap to do the bulk
sample, so Arctic Star wants to bring as much selection
of kimberlite to that quantum leap before it makes it.
Figure 13. (above) Exploration
Steps to Production -- Arctic Star is currently at
the 'diamond' phase of the above illustration, before
bulk sample. Since they know there are more kimberlites
they can prove up, they want to find them and bring them
all to the diamond phase. Doing a bulk sample on several
sources of material is much more economic and mitigates
risk. A decent bulk sample would involve producing
1,000s of carats and cost a few million. The plan is to
get ~400 kg from each kimberlite discovery (150 - 400 kg
of microdiamonds), line them up and see which are the
best and bulk sample 4 or 5 of them all at once. Once
Arctic Star has done that they are almost at
prefeasibility study. Unlike finding gold, which can be
nebulous, a geologist can easily identify kimberlite and
the tonnage can be calculated quickly. Because each
stone has its own price, each kimberlite is unique, so a
fairly big fingerprint of diamonds is needed in order to
know the average price of the diamond per carat before
an economic study can be performed.