Artice Star: A Diamond In The Rough

Finding diamonds is probably the most difficult venture in the entire exploration space. However, should a company succeed in discovering a diamondiferous kimberlite pipe, there is probably no other resource market in which the share price of the company can rise that strongly on the day of announcing it. With the start of the long-awaited drill program on Redemption, Arctic Star is poised to make such a discovery virtually over night.

After announcing the start of the drill program, Arctic Star Exploration Corp's (TO:ADD) share price started to move up. According to our perception, this price increase is solely the starter's shot as the company is valued with C$10 million only at its current share price of C$0.17. A market capitalization of some C$100 million is possible for Arctic Star over night, if a press-release is issued announcing the discovery of a diamondiferous kimberlite pipe. Such a rare, but for diamond explorers typical price appreciation potential is the reason why we believe that numerous market participants are already speculating on a drill success fueling the share price most recently.

As laid out in the research report, we value the probabilities as exceptionally high that a discovery can be made within the next weeks and months. The exploration efforts during the last years have shown that numerous diamondiferous kimberlite pipes may be located on the Redemption property. Arctic Star spent more than C$10 million over the last 6 years to systematically trace back the widely dispersed indicator minerals to its source. Recently, multiple high-priority targets were identified. If one kimberlite pipe can be found, the likelihood is quite high that the other targets are kimberlites as well.

Arctic Star's share price started to move up because, obviously, many investors are already speculating on a soon-to-be-made discovery as the company not only found and analyzed innumerable indicator minerals but as well fragments of kimberlite and diamonds itself - which leads to the conclusion, and speculation, that the source must be enriched with diamonds.

Should Arctic Star make an announcement shortly about having drilled through a kimberlite pipe enriched with diamonds, we anticipate an outstandingly strong share price appreciation, which would be typical for diamond explorers making such a rare discovery; especially when considering that the last major diamond discovery was 1997 in Zimbabwe and that the market may rush into the one making the next one.



Arctic Star‘s share price has consolidated within a (red-green) triangle since October 2013 and most recently broke through the resistive (red) triangle leg at around C$0.12. As this former resistance has been transformed into new support and the price started to move up already, we are positive that the thrust to the upside started recently. As soon as the C$0.20 level acts supportive, we anticipate a strong upward-trend to the C$0.35-0.45 level, thus providing a short-term appreciation potential of 77% and 175%, respectively, from its current price of C$0.17.

Disclaimer: Please read the full disclaimer within the research report