Resource World Magazine

BROK ER 'S P I C K S Alf S te wa rt Arctic Star Exploration following strong indicator mineral train Arctic Star Exploration Corp. [ADD-TSXV] is returning to its diamond exploration roots in the Arctic with a spring drill program on its Redemption Project southwest of Lac De Gras in Canada's Northwest Territories. This area experienced previous disappointment and heartache for the company as it has spent 14 years and $20 million pursuing a diamond indicator mineral trail, which has yet to yield its bedrock source despite previous drilling campaigns. A brief explanation of the history of Canada's diamond exploration and the importance of the Lac De Gras area is in order to set the context of the risk/reward opportunity that Arctic Star represents. Kimberlites are the host rock of most diamond deposits and the first one discovered in the Northwest Territories was at Point Lake in the Lac De Gras area in 1985. In 1991, micro-diamonds were discovered in another pipe at Lac De Gras sparking one of the largest staking rushes in mining history. This area ultimately became the Ekati Mine, and the junior stock involved in the discovery, Dia Met Minerals Ltd., increased in value from an $0.80 initial public offering to more than $50.00 per share. This discovery was followed, in short order, by the discovery of the Diavik Diamond Mine in May 1994, the focus being the rich A154 kimberlite which was actually located under Lac De Gras Lake. The junior stock in this discovery went from pennies to $40.00 per share. These two major discoveries set off a diamond exploration boom in Canada which has yielded a few more diamond deposits, but none to match those of the Lac De Gras area. Consequently, and with hindsight, it is apparent that Lac De Gras has relatively unique and valuable geology for hosting diamond deposits. Until recently it has been difficult for Arctic Star to aquire ground to follow the indicator mineral trail. Due to current market conditions Arctic Star has been able to aquire property throught claim staking and acquisitions. Pioneering research work by South African geochemist, John Gurney, had established that diamondiferous kimberlite pipes also contain more abundant garnets with a special composition termed G10. Consequently, if these are found in an indicator mineral train, there could be a diamondiferous kimberlite pipe in the vicinity. The indicator mineral train that Arctic Star is following is a very strong one, yielding abundant indicator minerals, including G10 garnets, and even micro-diamonds which are an exceedingly rare occurrence in glacial tills. Complicating matters is that the indicator mineral train is "washed out" or covered over by subsequent fluvial/ sandy zones. This has Arctic Star's Winter diamond exploration camp. Photo courtesy Arctic Star Exploration Corp. led to, in the past, 32 www.resourceworld.com the company drilling in the wrong areas. Arctic Star is confident, however, that the kimberlite source, if located, will be well mineralized. The company's current target is an electromagnetic conductor which is cylindrical or pipe-like in vertical dimension and circular in plan. It is located at the head of the currently interpreted indicator mineral trail. This spring drill testing should confirm whether or not this target is a kimberlite pipe. Since the Redemption Project is only 35 km south of the Ekati Mine and since the Diavik Mine is also nearby, it is conceivable that any diamond ore could be processed at one of these two sites. Arctic Star's management, headed by CEO, Patrick Power, and VP Exploration, Buddy Doyle, is a veteran team. The company's capital structure, as of February 4, 2013 has 43.3 million shares issued and outstanding and 57.4 million shares fully diluted. If a kimberlite is discovered by the company this spring, the capital structure and low share price of $0.23 support the possibility of major capital gains. I like the risk/reward potential of this stock and I'm making Arctic Star Exploration my Broker's Pick for this issue. n This article expresses the opinions of writer, Alf Stewart, Financial Advisor, and not necessarily those of Raymond James Ltd. Statistics and factual data and other information in this article are from sources RJL believes to be reliable but their accuracy cannot be guaranteed. It is furnished on the basis and understanding that Raymond James is to be under no liability whatsoever in respect thereof. It is for information purposes only and is not to be construed as an offer or solicitation for the sale or purchase of securities. The author may, or may not, own securities and/or options to acquire securities of the companies mentioned herein. APRIL 2013

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