Arctic Star Diamond Pushes Ahead With Nickel Discovery

When junior explorer Arctic Star Diamond (ADD-v) acquired its Credit Lake property — “within sight of Canada’s greatest diamond mines” in the Northwest Territories four years ago–it didn’t expect to find nickel instead.

But that’s precisely what happened.

Fifty-five km west of BHP Billiton’s (BHP-n) Ekati diamond mine and 1.2 km south of Desteffany Lake, Arctic Diamond’s Providence nickel discovery in the Providence Lake Greenstone (PLG) belt is the first in situ occurrence of nickel mineralization reported in the Slave geological province, the company says.

The PLG belt includes mafic and ultramafic rocks, as well as tholeitic basalts, komatiites, serpentinized peridotite, and gabbro intrusions. The belt also is made up of deep-penetrating faults, sulphur-bearing sediments in the form of sulphide-bearing iron-formation and black shales, and massive sulphides.

“In the late 1990s, the Geological Survey of Canada did some mapping of the area and identified 2.7- billion-year-old komatiites,” Mike Senn, a consulting geologist involved in the project, explains in a telephone interview. “It was always a question why there weren’t any ultramafic intrusives in the area but the fact of the matter was they hadn’t been discovered yet.”

Arctic Star controls 37 km of the PLG belt in two 100%-owned projects, Credit Lake (21 km) and New Bigg (16 km). In May 2005, Arctic Star staked about 109 sq. km of ground just south of New Biggining Lake, 30 km southwest of its Credit Lake property.

Now the bulk of assays are in for the massive sulphide intervals at the flagship Credit Lake property following a 1,650-metre, 15-hole drill program. The most extensive massive sulphide intercept of 5.1 metres was in drill hole 18, which served up 1.73% nickel, 1.75% copper and 0.17% cobalt.

Mineralization appears consistent, starting at surface, and seems to be open in all directions, the company states.

“We’ve pretty much expanded this to about 500 metres of strike length,” Senn says. “It’s open in both directions and we’ve chased it by drilling down to 150 vertical metres and it continues downdip. So there’s a lot of blue sky at the discovery site.”

Combining the massive sulphide intercepts to date yields an average intercept per hole of 2 metres grading 1.36% nickel and 1.05% copper, with maximum assays of 1.91% nickel over 1 metre in hole 23 and 4.1% copper over 0.35 metre in hole 18.

The massive sulphides also contain significant amounts of cobalt averaging 0.14% to date.

Each sulphide intercept has carried palladium and platinum. A 2.25- metre intercept in hole CR13 graded 7.63 grams platinum and 1.06 grams palladium.

Palladium assays higher than 1 gram per tonne occur more consistently in the massive sulphides, while platinum values vary between 0.2 gram and 11 grams per tonne in the individual sulphide sample analysis, the company noted in a statement.

The discovery drill hole, No. 10, a 0.6-metre massive sulphide intercept, returned 0.14 gram per tonne osmium, 0.29 gram ruthenium, 0.19 gram iridium and 0.46 gram rhodium.

“The results so far suggest we have located a nickel-bearing system similar in style and character to Raglan, Thompson and Kambalda,” the company said in prepared remarks.

“Our plan right now is to take the next step in-house,” Senn says. “We want to do more work at the discovery site and test additional targets that we’ve developed at the site. We’re also going to test targets we’ve identified from airborne and soil samples further to the west along strike. We want to discover more occurrences in the belt.”

At this point, Arctic can’t yet say if it plans to develop a nickel project and if so, with whom.

“A major may be considered to come in but it’s too early to tell,” Senn says.

Rio Tinto (RTP-n) subsidiary Kennecott Canada Exploration may be an obvious choice. When Arctic Star acquired the property from Kennecott in 2004, Kennecott retained a 51% back-in right, but only for diamonds. (The back-in is triggered when Arctic takes more than 200 carats from a kimberlite discovery on the property.) Till sampling on the property so far has demonstrated at least five separate diamond indicator mineral trains.

In the meantime, however, Arctic Star will focus on nickel.

“There are targets we’ve discovered through geophysical studies that we hope to explore in 2009,” Senn says. “These ultramafic intrusions extend over 24 kilometres. . . and we have identified multiple new targets that look identical to the discovery site in terms of geophysics.”

In Toronto, Arctic Star’s shares recently traded at about 3.5 apiece. The company has a 52-week trading range of 2.5-23 per share and has 188.15 million shares outstanding.