At PDAC last week, one of the companies that Resource Investing News made sure to speak with was North Arrow Minerals (TSXV:NAR). Just prior to the conference, the company released an update on the processing of a bulk sample from its Nunavut-based Qilalugaq diamond project, and President and CEO Ken Armstrong was able to shed some light on what it means for the company.
“We reported the first diamond recovery results from about half of the sample, about 46 percent, and they’re encouraging,” he said. “The real … takeaway from it I think is to get across that we’ve been able to answer so far some of the preliminary questions that we had going into this, which was, ‘do we see larger diamonds in the pipe as we get a larger sample?’ And we’re seeing larger diamonds.”
Additionally, Armstrong noted, a “real population” of yellow diamonds has been identified in the kimberlite, and “they carry on into the larger diamond sizes as well.” That’s important in part because they could “have an important positive impact on the valuation.” Armstrong noted that they could be treated as yellow fancies, which “command a premium price to regular white diamonds.”
Speaking further about the yellow diamonds, he addressed some concerns that have surfaced about their shape, noting that yield could be seen as an issue. However, he emphasized, “right now we’re happy that they’re there. If they command a premium price, it’s going to drive the valuation regardless.”
In closing he touched on the timeline for getting the entire bulk sample processed, also explaining what’s going on with the company’s Saskatchewan-based Pikoo project. Watch the video for more of what he had to say.
RIN: I am Charlotte McLeod with Resource Investing News. And here with me today at PDAC is Ken Armstrong, president and CEO of North Arrow Minerals. Thanks for joining me today.
KA: Thanks, Charlotte.
RIN: Great. So, let’s start by talking about North Arrow’s bulk sample processing update for the Q1-4 kimberlite. What should the takeaway be for investors?
KA: Well, thanks. Yeah, we issued some results just the other day on a bulk sample that we collected in 2014. We collected 1,500 tonnes from a kimberlite near the community of Repulse Bay in Nunavut. And the idea of that was to get a large-enough sample that we could process, recover the diamonds from and then get a valuation on the diamonds. The kimberlite itself, we have an inferred level resource on it. It’s 48 million tonnes grading just over a half carat per tonne.
And the next piece of information you need with any diamond deposit, of course, is a value. So, the purpose of the sample was to get that valuation And we reported the first diamond recovery results from about half the sample, about 46 percent. And they’re encouraging. The real sort of takeaway from it, I think, is to get across that. We’ve been able to answer so far some of the preliminary questions that we had going into this which was do we see larger diamonds in the pipe as we get a bigger sample and we’re seeing larger diamonds.
And then, also we’ve been pointing out and we identified a population of yellow diamonds in the Q1-4 parcel. And in these new results, we’ve confirmed that those diamonds are there, they’re a real population and, in fact, they carry on into the larger diamond sizes as well. And that’s a real positive thing because ultimately, that’s going to have, we think, an important positive impact on the valuation.
RIN: Okay. So, for those who may not know why are yellow diamonds a good thing for you to have?
KA: Well, they’re good – the yellows that we have, we think that they’re what you call a fully-saturated yellow diamond, and by seeing them in these larger sizes, we think they could be treated as yellow fancies. And yellow-colored diamonds of any type that are fancy command a premium price and yellows are included will command a premium price to regular white diamonds or what you call regular commercial diamonds.
RIN: Okay. So, on the flipside, some people have expressed some concerns about the shape of the diamonds. How have you been responding to that?
KA: Well, I think that that’s probably has been expressed to some of the yellow diamonds in particular. The white diamonds have very nice shapes. But the yellow diamonds have more of a cubic habit. Some are as aggregates or cubic aggregates. So, a concern from that can just be from the perspective of yield when it comes to cutting and polishing those stones, you can’t – you don’t retain as much mass in the ultimate polished diamond. But right now, we’re happy that they’re there. If they command a premium price, it’s going to drive the valuation regardless.
And, I think, now, sort of more than ever, probably more than we expected, the valuation of those yellow stones is going to be what this project hinges on.
RIN: Okay. So, what is the timeline for getting the entire bulk sample processed?
KA: Just, we’re really close. Those results on Thursday were 46 percent of the sample. We have essentially another half to go. We expect to have all of the diamond sorting done in April, and be able to announce to the market at that time what the total parcel is and looks like and ideally nice photos again like we did the other day.
And then, the next thing is to get the valuation done, and that, once the process is ready to go, we’d send it over. Currently, the plan will be to go to Antwerp. And that might take another month or so. It all depends. The valuation itself doesn’t take long, you just need to make sure all the people that are required to do it are available.
RIN: Right. Okay. Now, aside from that, what other milestones is North Arrow looking to hit in 2015?
KA: Well, those are the key ones, for sure. If we hit a positive valuation with this, we already have an inferred resource for kimberlite that’s located essentially right on Tidewater in Arctic Canada, near a community. And we would with the positive valuation, we think we can move straight into a preliminary economic assessment. We wouldn’t need to do more drilling to complete that. And that could happen by the end of the summer quite quickly.
And then, the other thing for work at Qilalugaq and on the Q1-4 kimberlite would be some more definition drilling. So, upgrade the resource starting that in the second half of this year and into the first part of 2016.
And then the other key project for us that we’re drilling right now is Pikoo in Saskatchewan. And sort of this time last year, that was our main focus and had garnered a fair bit of market attention because of the diamond recoveries from a discovery that we made there in 2013 were really some of the best microdiamond results that we’ve ever seen for a new discovery in Canada.
So, we spent last year doing a lot more of the work required, still sampling and so on to come up with other targets, and we’re back drilling. We’ve been drilling there for a few weeks and we’ll be drilling through to the end of March. And that’s right at that discovery point.
So, it’s actually kind of unique for North Arrow right now. It’s not every day that a company has itself positioned where there’s two projects underway and really meaningful work programs that could lead to one of those inflection points that we like to point that on stock charts when a discovery has been made or when a project goes from being a discovery and into a production path program, or project rather, and we have two that fit that bill right now.
RIN: Yeah. Sounds like you’ve got lots going on so it’ll be an exciting year.
KA: Yeah. So, the end, we’re fully funded to do it all and we’re looking forward to getting on with it.
RIN: Oh, great. Okay. Well, thank you for joining me today. North Arrow trades on the TSXV under the symbol NAR, and I am Charlotte McLeod with Resource Investing News.
Securities Disclosure: I, Charlotte McLeod, hold no direct investment interest in any company mentioned in this article.
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