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Slow and steady at North Arrow
Diamond exploration efforts focus near Hall Beach but Qilalugaq near Naujaat and Luxx near Chesterfield Inlet not forgotten

Michele LeTourneau
Northern News Services
Monday, May 30, 2016

NUNAVUT
North Arrow Minerals hasn't given up on its Qilalugaq diamond project, nine kilometres outside of Naujaat, although the 2016 summer field season will only see the company active at its Mel site.

Mel, also a diamond exploration project, is located at the Melville Peninsula, 140 km south of Hall Beach and 210 km northeast of Naujaat.

"Plans for the summer of 2016 include till sampling and prospecting in the areas that have been defined as source areas of the kimberlite indicator minerals found in the till samples and will most likely be conducted in August," said Nick Thomas, the company's community relations manager.

Thomas says a solid exploration project has slowly developed at that site since the company announced its acquisition of the property in 2013.

"It has essentially been a project we have managed to do small amounts of till sampling at since 2013 during the downtimes of work at the Qilalugaq project. In 2015, we managed to collect 227 till samples and those results have really helped to define the source areas for multiple kimberlite indicator trains."

Thomas adds: "North Arrow hopes that because of very good rock exposure in this part of Nunavut that kimberlites, or direct evidence of kimberlites, may be discoverable by prospecting and drilling may not be a requirement for discovery."

The budget for the program is approximately $250,000.

Meanwhile, the company is working on making a case for the value and economic viability of the yellow-diamonds project near Naujaat after disappointing valuation results last June.

"If you recall, the Q1-4 diamond deposit has a few very positive attributes that could help give it economic potential," said Thomas. "It is a large kimberlite by Canadian standards, coming in at (approximately) 12 hectares in surface area so it is amenable to an open pit operation. It is closely located to tidewater (seven kilometres) and to a community with infrastructure and a workforce that would be able to sleep in their own beds at night if it ever became a mine."

Thomas says when he and his colleagues looked at the results of the valuation "it was clear that the 77 carats (of) yellow diamonds recovered were not given any premium over the white diamonds for a few reasons."

Essentially, North Arrow is building a case for investors so that it can carry out a larger sampling effort for Qilalugaq in order to prove the project is viable. A larger sampling would help answer the following questions: Could the cubic crystal forms be polished? Would the yield be high enough to be worth it?

Would there be clear, gem quality yellow diamonds in larger sizes? What would the resulting polished colour be from the different categories of yellow-hued rough diamonds? Would the yellow diamonds demand a premium in the market if cut and polished?

These questions remain unanswered at this time because of the small sample size and the fact that there were two very distinct diamond populations, according to Thomas.

"We have cut and polished eight yellow diamonds now and we've been very pleased with the resulting colour certifications. Working backwards from the valuations of the polished product, it is very clear that the yellow diamonds have a lot more value that what they were given in the rough diamond valuation of 2015," he said.

Plans for North Arrow's third Nunavut project, called Luxx and located 60 km northwest of Chesterfield Inlet and 100 km north of Rankin Inlet, are undetermined.

"North Arrow has conducted two short till sampling and prospecting programs since 2013 and the project is essentially drill-ready as far as kimberlite targets are concerned," said Thomas.

"The program would only be approximately one week long, testing three targets, and would be conducted out of Chesterfield Inlet but it is not top priority for the company currently."

Luxx was on the back burner through 2015.

"We plan to get back up to the community (Chesterfield Inlet), which we visited in 2014, early this summer before any further work is done to discuss the drill plans and to receive feedback on how the community would like the program conducted to best mitigate concerns about environmental impact we received in the permitting stage."

North Arrow continues to keep the other related communities informed, although a November trip into communities was foiled by weather.

"Plans to get to the community of Hall Beach are still being determined but we hope to get there as part of this summer's short work program. At the moment North Arrow keeps mayor and council up to date on Mel developments by e-mail and mail," said Thomas.

Related to Qilalugaq, Thomas says once the decision to move forward or not is made, North Arrow will arrange a visit to Naujaat.

"The visit will be rescheduled shortly," he said.

Thomas says it's been a difficult few years for the funding of early stage diamond exploration.

But despite a downturn in the diamond market over the past couple of years, a report released in December on the global diamond industry prepared by the Antwerp World Diamond Centre and Bain & Company states the long-term outlook remains positive, with demand expected to outpace supply starting in 2019.

Qilalugaq has an inferred mineral resource of 26.1 million carats and 48.8 million tonnes in total. Its main kimberlite, the Q1-4, is the largest diamondiferous pipe in the eastern Canadian Arctic. Stornoway, whose flagship asset is the 100 per cent owned Renard Diamond Project now under construction and on track to becoming Quebec's first diamond mine, has 20 per cent ownership in Qilalugaq.

- with files from Meagan Leonard

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