diamonds have lagged until recently

 A Fancy Contrarian Opportunity
Source: James Kwantes for Streetwise Reports 03/01/2021
James Kwantes of Resource Opportunities discusses North Arrow Minerals and explains why he believes the stage is set for a diamond rebound.
Tulips were introduced to the Netherlands in the late 1500s and the country soon fell in love with the brightly colored flowers. Their arrival coincided with the Dutch Golden Age, when control of lucrative trading routes to the Far East made the Netherlands high quality replica handbags china a marine superpower and one of the world wealthiest nations.
Trade and the resulting prosperity set the stage for the tulip bulb mania of the 1630s. Businessmen who became wealthy buying shares in the Dutch East India Company would decorate their estates with lavish flower gardens of tulips, which had been introduced from Turkey. The rarest and most valuable tulips were the ones with genetic impurities, which produced vibrant colors and unique patterns. Human beings love natural beauty.
In diamonds as in tulips, the rarest and most beautiful are the most valuable. Lucara Diamond Corp. (LUC T) has been demonstrating it for years, pulling spectacular stones out of its Botswana diamond mine and selling them for prices as high as US$63 million. That price tag, for the 813 carat Constellation, was more than Lucara paid for a controlling interest in the Karowe project before it became a mine. Fancy pink 1:1 replica handbags diamonds from Rio Tinto recently closed Argyle diamond mine in Western Australia also command high prices.
Human beings love natural beauty. It something of a counterpoint to the narrative that De Beers created the demand for diamonds with its legendary Diamond Is Forever Fake Louis Vuitton Replica Bags advertising campaign in the late 1940s. That branding certainly introduced diamonds to new markets, such as Japan, and established mass market appeal for diamond engagement rings. Natural diamonds, of course, have been objects of desire for thousands of years.
According to legend, a single Semper Augustus tulip bulb sold for the price of a fine Amsterdam canal house at the peak of the Dutch tulip bubble. Centuries later, it was determined that a virus had produced the vibrant high quality designer replica handbags wholesale colors and unique patterns of the Semper Augustus. The tulip bubble quickly collapsed. Almost 400 years later, though, the Netherlands remains a flower powerhouse globally.
In diamonds as in tulips, chemical impurities create the vibrancy and color. Fancy diamonds fetch higher prices because the stones are rare and because they are beautiful. The presence of nitrogen, for example, is what gives a population of diamonds from North Arrow Minerals Inc.
The staying power of natural diamonds has been challenged by everything from lab grown stones to changing demographic trends to COVID 19. It been a rough ride for investors in Canadian diamond stories, too Diamond Corp. and Stornoway Diamond Corp., operators of two of Canada diamond mines, were both forced into bankruptcy protection.
North Arrow has not been spared. The stock has mostly been in the penalty box since a disappointing 2015 valuation of a 383.55 carat parcel of Naujaat diamonds. The primary conclusion of the valuation was that results and modelled values should be treated with considerable caution because of the small size of the sample. North Arrow has cost effectively advanced Naujaat and its other Canadian diamond projects since, with successes including the discovery of new diamondiferous kimberlite fields at replica louis vuitton Pikoo (Saskatchewan) and Mel (Nunavut). While other diamond explorecos went bust or switched commodities, North Arrow shed non core assets, sold small royalties on secondary projects and did modest raises with help from its billionaire backers.
As the world slowly emerges from the pandemic grip and consumers from their homes, natural diamond prices and sales are bouncing back strongly. Rough diamond prices have rebounded and recently eclipsed pre pandemic levels, reports New York diamond analyst Paul Zimnisky in the February 2021 edition of his State of the Diamond Market. De Beers just raised prices at its third consecutive sale,.
The pandemic appears to have created pent up demand for jewelry and replica louis vuitton bags diamonds. Tiffany Co., the world largest jeweler, reported record sales for the November 1 through December 31 holiday period. China is leading the way, as the growing consumer powerhouse leaves COVID 19 in the rear view mirror. Tiffany Chinese sales rose 50% during the holiday period. Richemont, the world second largest luxury conglomerate, said Q4 sales in China surged 80% year over year (Richemont is the parent company of Cartier and Van Cleef Arpels). Chinese jeweler Chow Tai Fook opened 286 net new stores in the country in the fourth quarter of 2020.
From an investment perspective, diamonds may be one of the last contrarian bets left within the commodity complex. Base metals, battery metals, precious metals of each have surged in the past year as inflation looms. Diamonds have lagged until recently, despite favorable supply demand dynamics coming out of a long bear market that saw global diamond exploration screech to a virtual halt.
Large diamonds and rare colored diamonds are leading the way. Last year Louis Vuitton, the world most powerful luxury brand and the recent acquirer of Tiffany Co., purchased 1,758 carat Sewelo and the 549 carat Sethunya (above) plans to turn them into brilliant centerpieces. The Sewelo is the second largest rough diamond ever mined. A 59.6 carat fancy pink diamond, the Star, sold for a record US$71.2 million in 2017.
Smart contrarian investors are taking notice. One is Michael O an Australian entrepreneur who has made shareholders lots of money in coking coal and iron ore. A metallurgist by training, fake designer bags O got his start at Mt. Isa Mines and Glencore Australia before launching his own ventures. O took Perfect Quality Louis Vuitton Replica Riversdale Mining, a $7 million Australian coal junior with assets in Mozambique, to a $3.7 billion buyout by Rio Tinto in 2011.
These days, O runs Champion Iron Mines (CIA T). In 2015, Champion bought the Bloom Lake iron ore mine in Quebec Labrador Trough out of bankruptcy for $10.5 million and assumed about $43 million in liabilities. O has turned the operation around, developing Champion into an exporter of premium iron ore concentrate to markets in China, Japan, Europe and elsewhere. Champion shares bottomed at $1.10 at the end of March and now trade at $5.40, for a $2.6 billion market capitalization.
O (above) settled on diamonds after scouring the investment landscape for contrarian opportunities. He teamed up with diamond veteran Peter Ravenscroft, who was independently forming a strategy to consolidate the diamond project development space. They formed Australia listed Burgundy Diamond Mines (BDM AX), which plans to become a mid cap diamond producer by developing premium projects that have been overlooked and/or under funded.
In June, Burgundy signed a JV deal with North Arrow Minerals (NAR) that will see Burgundy earn a 40% stake in Q1 4 by funding a $5.6 million bulk sample of 1,500 to 2,000 tonnes at Naujaat, North Arrow colored diamond project in Nunavut. Burgundy advanced $300,000 of that last year so North Arrow could ship fuel and sampling supplies to Naujaat on the annual sealift. The objective of the bulk sample is to confirm that the more valuable colored diamonds replica louis vuitton bags from china occur in larger sizes throughout the deposit.
The favorable JV deal allows North Arrow to retain majority control of Naujaat on a partner financed path and established timeline. It undoubtedly helped that North Arrow CEO Ken Armstrong cemented a relationship with Peter Ravenscroft, Burgundy managing director and CEO, while the latter was in charge of resource delineation at the Diavik diamond mine in NWT. Ravenscroft is a diamond veteran with 40 years in the industry including with De Beers, Anglo American and Rio Tinto.
So what is Burgundy buying into? Naujaat Q1 4 kimberlite hosts Canada largest undeveloped diamond resource 100% held by a junior. The deposit hosts an estimated 26.1 million carats (Inferred) from surface to a depth of 205 meters; 2017 drilling showed Q1 4 extends below 300 meters depth. The outcropping kimberlite has a distinct population of rare orangey yellow diamonds that could drive the value proposition and make the deposit economic. The Q1 4 deposit is seven kilometers from tidewater, near the community of Naujaat.
If this summer bulk sample is successful, Burgundy could earn an additional 20% interest in Q1 4 (60% total). North Arrow and Burgundy have a non binding letter of intent to negotiate a second option agreement giving Burgundy the right to earn the additional 20% interest by paying for collection of a subsequent 10,000 tonne bulk sample.
The purpose of that exercise would be to definitely answer the diamond value question. The price tag for that bulk sample would be much higher, too the order of roughly $20 million.
aaa replica designer handbags SIZE MATTERS. SO DOES SATURATION
Intriguingly, the fancy orangey yellow diamonds tend to be larger than the other diamonds in Q1 4. The colored diamonds are a distinct, younger population of stones. In earlier samples taken by North Arrow, they made up between 9% and 12% of the stones but as high as 21% to 30% by carat weight. Establishing the size frequency distribution of that fancy diamond population is high quality replica handbags china the main objective of this summer 1,500 to 2,000 tonne bulk sample.
High quality diamonds that are saturated in color can sell for multiples of the price of white diamonds, but the mines producing them are shutting down. The latest is Rio Tinto Argyle mine in Australia, the world primary source of fancy pink stones. Argyle closed last year. The Ellendale mine, also in Australia, produced 50% of the world fancy Designer Louis Vuitton Replica Handbags yellow diamonds and was Tiffany primary supplier for those stones. Ellendale closed in 2015 (although another company is attempting to revive the project).
There were some initial doubts that the Naujaat fancy colored diamonds would cut and polish well. North Arrow addressed those concerns with its cutting and polishing exercise that yielded beautiful, valuable stones. The polished diamonds received favorable certifications by the GIA (Gemological Institute of America). The diamonds were certified by GIA as fancy vivid orangey yellow vivid diamonds have the highest color saturation and command premium valuations.
In the notoriously risky junior mining sector, investing with people who have track records of making investors money greatly increases the odds of success. Gren Thomas, North Arrow chairman and a Canadian diamond pioneer, fits the bill.

On the heels of Chuck Fipke September 1991 diamond discovery, Thomas and South African diamond expert Chris Jennings (now a North Arrow director) headed north on a cloak and dagger staking mission. They flew into Yellowknife and split up at the airport, staying at different cheap hotels as they systematically staked as much prospective ground as possible.