NAUJAAT/REPULSE BAY
The latest diamond parcel recovered from exploration company North Arrow Minerals' (TSXV-NAR) Qilalugaq Diamond Project is very small, and at a valuation of what the company called "disappointing".

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"The news was not positive," president and CEO Kenneth Armstrong told Nunavut News/North. "It's definitely a setback for the project."

The company announced that the parcel of 383.55 carats of diamonds recovered from the site 9 km from Naujaat (Repulse Bay) was valued at $13,795 or $36 per carat, and included some rare Type Ib yellow diamonds.

Armstrong was blunt in his assessment of these numbers.

"The valuation's are not high and they're not in the range that would make the project economical," he said. "We need to figure out if there's work we can do for a reasonable cost that could see the possibility of this thing being potentially economically viable."

Armstrong was also direct with his conclusion about the size of the bulk parcel not being large enough and the need to get more diamonds. The North Arrow executive also emphasized that the site's deep yellow stones were still a key part of the project and presented an additional challenge for the company. "We only have about 72 to 80 carats of these to evaluate," Armstrong said. "For any valuation, you need more diamonds than that."

How much North Arrow still needs to get has yet to be determined.

"Would 1,000 carats do it?" Armstrong said. "Do we need 3,000? 5,000 carats? And how much would it cost to do that?"

The company was upfront in revealing it cost $4 million to collect this sample to get an indication of value.

"That totally made sense to do because drilling there can cost much more than that," Armstrong said.

With the current market situation in regards to fundraising, Armstrong acknowledged that "risk money" is really difficult to get right now.

"If you're going to raise $2 million to do some work that's going to lead to the need for more work to get a positive answer before the share price will go up, you can't raise that kind of money right now," he said. "You need to raise enough before you get to a decision point."

When it comes to determining what to do next, Armstrong admitted it could be a few months or even a number of years while the company waits for the market to turn around.

This sort of hold-up ind development is not uncommon for deposits of any type, Armstrong said.

"They get defined to a certain point and have to sit for a number of years before they can be advanced any further," he said, citing the example of the Mary River project where an iron ore deposit sat undeveloped for decades until Baffinland recently entered its first phase of production. "We need to spend some time with the information and try to best determine how to move forward with the project."

Armstrong said it was fair to say the state of Qilalugaq is now uncertain and the company would focus on its other explorations, including two early-stage projects in the territory: Mel and Luxx. "Unfortunately, the vast majority of the time exploration is unsuccessful," he said, pointing out that even with the best case scenario, best work and a cost-effective program, there were no guarantees. "In the back of your mind, you've got this thought that this is probably not going to work out so what else is going to be available to do, what other projects are out there?"

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