Capital Markets Media - Arctic: Can I hit the ball out of the park once again?
(firmenpresse) - Can I hit the ball out of the park once again?
More specifically, can I identify a hidden gem of an investment opportunity that will outperform in spectacular style like I did with Great Bear Resources? That was my last big investment call. And it is truly a home run for the ages.
Yes, I am being bold enough to say I think I can do it again. The last time I got this enthusiastic about a mining stocks upside potential was in 2018. It was Great Bear when it trading at around $0.50. The shares subsequently rallied to a high of nearly $20 within two years, and it is still trading within several dollars of its all-time highs.
Ive been a stock market journalist and commentator for 30 years. And it is rare for a company to tick off all the right boxes - thereby setting the stage for an extraordinary, headline-grabbing success story. I think I have found a new one.
The Difficult Art of Picking Big-Time Winners
Prior to Great Bear, I admittedly have only had the good fortune to identify a small handful of outsized success stories long before they hit the big time.
Interestingly, the first I took an interest in was Dia Met Minerals back when I was a youthful business journalist. This was before this tiny mining start-up became a stock market sensation. Dia Met turned out to be the very first of a small handful of diamond exploration companies find diamond deposits.
In a parabolic rise, Dia Met rallied from pennies in 1991 to a high of $67 the following year, turning quite a few small-time investors into newly-minted millionaires. I met a few of them. They were a happy bunch.
This all came about because Dia Met discovered what was to become the Ekati diamond mine - Canadas first of its kind - which is in the Northwest Territories (NWT). It has since proven to be one of the richest diamond mines in the world, yielding billions of dollars worth of high-grade, ethically-sourced diamonds.
A few of Dia Mets happy investors even ended up rolling some of their winnings into Arctic Star Exploration Corp. (TSX.V: ADD) (Frankfurt: 82A2) (WKN: A2DFY5) (OTC: ASDZF) when the company went public in 2002 in an effort to replicate Dia Mets spectacular success. But their wait for a lucrative payback is taking a lot longer than was the case with Dia Mets meteoric rise to fame. Now it is finally Arctic Stars time to shine. And I believe the company is destined for a big breakout year in the wake of its recent discoveries in the NWT.
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Why the Odds Finally Favour Arctic Star
Since 2002, Arctic Star has drilled extensively all over Canadas frigid northern climes, with a primary focus on the NWT. But after numerous rolls of the dice, it has yet to roll anything close to a six.
Arctic Star has learned some hard lessons and plenty of exploration wisdom along the way, while spending an estimated $40 million or more on scouring thousands of square kilometers of barren wilderness - an area the size of France, Spain and Germany combined. In short, the company has more than paid its dues to earn its apparent new-found good luck.
Even from a statistical standpoint, Arctic Star is long overdue the thrill of rolling a six after nearly two decades of rolling low numbers. Match this reality with the reality of the companys recent breakthrough discoveries among some of the worlds richest diamond fields and its prospects begin to glitter with promise. With this in mind, Im backing Arctic Star to become the next Dia Met.
Also, its worth considering the fact that Canada is long overdue a new multi-billion-dollar diamond discovery. There has not been a truly world-class mine of prolific size discovered in Canada since the Ekati and Diavik mines were found in the 90s in the Lac de Gras diamond fields.
To date, Diavik and the nearby Ekati mine have together produced over $40 billion worth of some of the best-quality diamonds in the world. Both are located within a 36-kilometre radius of Arctic Stars new discoveries.
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Drilling Diamond Dreams: Is History Repeating Itself?
Arctic Stars recent discovery of kimberlite pipes (anomalous rock structures that often contain large quantities of diamonds) in Lac de Gras may yet prove very significant in terms of the big picture potential. More on this in a moment.
The company has so far demonstrated an initial proof of concept by drilling into four kimberlite pipes in five attempts. This high success rate is in itself quite remarkable because kimberlites are elusive prey, especially diamondiferous ones.
Also, the kimberlites encountered by Arctic Star are big and have no magnetic signatures. It is key to note here that the richest, most prolific pipes in the nearby Diavik mine all have similar geophysical signatures in this regard to Arctic Stars pipes.
This is according to Buddy Doyle, Arctic Stars vice president of exploration. And how good is his assessment that Arctic Star is hot on the trail of prospectively world-class diamond pipes?
Well, hes the guy who found the nearby diamond pipes that become the Diavik mine nearly 30 years ago when he was running Kennecott Canadas diamond exploration program - which was subsidiary of the worlds biggest mining company, Rio Tinto plc.
All told, he discovered 101 diamond pipes, of which 91 had magnetic signatures. The remaining 10 had no magnetic signatures. And it was four of those differentiated pipes that proved to be the very best of them all, becoming the multi-billion-dollar Diavik mine.
So far, the skills he used to find a diamond mine with Kennecott are getting the kind of early-stage validation that he has been hoping and dreaming for.
The key takeaway here is that his discovery of four diamond pipes to date promises to help unlock the value of any other undiscovered proximal pipes - some of which may exhibit excellent geological potential to be diamond-bearing. Plus, Arctic Star may already have already uncovered a gem of a find in the form of the very large Sequoia pipe. This discovery exists in plain sight of the nearby Ekati and Diavik mines, which have produced tens of millions of carats.
Doyles Dream: Duplicating His Past Glory
Finding a multi-billion-dollar diamond discovery a second time is something that geologist Buddy Doyle has been dreaming of every day. For two decades, its been his obsession.
Doyle is convinced that the NWT has at least one more dazzling secret to give up at the heart of Canadas most prolific and richly-mineralized diamond fields.
Remember, back in the early 90s, it was Doyle whose team revealed the exact whereabouts of Diaviks huge treasure trove of diamonds among over 100 pipes, most of which were barren or contained relatively few diamonds.
Now were about to see if hes amassed enough geological savoir faire to pull off a masterstroke in the sunset of his 30-year-plus career. The timing would be serendipitous, Doyle says.
"Both the Ekati diamond mine, which first began production in 1998, and the Diavik diamond mine, which began production five years later in 2003, are approaching the ends of their expected lifespans. Arctic Star''s timing could not be better."
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Investment Summary
It bears repeating that a truly world-class diamond discovery has not been made in Canada since the 90s. A new discovery is long overdue.
So will Arctic Star be the next Dia Met Minerals? Only time will tell if Arctic Star has finally triumphed over very long odds to find one more extraordinarily rich, world-class diamond mine.
The next step to Arctic Stars long-awaited shot at glory is the announcement of assay results within the next several weeks. This will reveal whether the four pipes so far discovered contain diamonds.
The stock has already rallied on big volume in the wake of the recent pipe discoveries. Until the assay results are published, the companys share price will presumably continue to trade high volumes in a sideways trading pattern in anticipation of a pivotal news announcement.
So it seems that no-one has missed the boat as yet. Arctic Stars share price is still very inexpensive relative to the companys risk/reward profile. Indeed, the companys big picture is only now beginning to come into sharp focus. This clearly offers plenty of runway for higher share price multiples in the advent of upbeat news flow in the coming months.
Will the news be good? Im betting plenty of my own money that it is.
Link to the original article: https://stockhouse.com/news/newswire/2021/05/20/arctic-star-my-next-home-run
ABOUT THE AUTHOR: Marc Davis has a deep background in the capital markets spanning 30 years, having mostly worked as an analyst and stock market commentator. He is also a longstanding financial journalist. Over the years, his articles have appeared in dozens of digital publications worldwide. They include USA Today, CBS Money Watch, The Times (UK), Investors Business Daily, the Financial Post, Reuters, National Post, Google News, Barrons, China Daily, Huffington Post, AOL, City A.M. (London), Bloomberg, WallStreetOnline.de (Germany) and the Independent (UK). He has also appeared in business interviews on the BBC, CBC, and SKY TV.
An enthusiastic shareholder of Arctic Star Exploration, his opinions are therefore biased and should not be relied upon for making investment decisions. That said, Arctic Star did not pay for this article. Nor did anyone else.
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