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[Arctec]

Weekly Update March 25, 2007

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New research this week on Motapa (diamonds and uranium) but first a quick update on Orko Silver (OK.V $0.84) which we featured here Feb 5th at $0.57. With Friday's close the stock is now up 47% but we'll continue to follow the company into April and see what develops. They are attracting strong buying from Europe right now and should be reporting new silver assays soon as 2 drill rigs have been running steady this past month. Silver resource to date is close to 40 million ounces but we'll wait to see what the drill turns up in April before deciding on coverage through Q2.


Motapa (MTP.V $0.56)
www.motapadiamonds.com

We've only covered one other diamond stock this past year (HUD.V $1.20) and it was first presented to free subscribers April 2006 near $0.70. It took longer than expected but last month traded to $2.30 and pushed the 10 month gain to 230% before we dropped coverage. Our next entry into this sector is Motapa, not only for its strong exposure to diamonds, but diversification of risk through uranium and their joint venture with Cameco in Africa. A rare combination and one that could pay off in spades if any of their projects hit over the next year.

Hambro Bullish on Diamonds

Evy Hambro of London is one of the world's smartest resource investors. He manages one of the largest mining funds in the world and his insight is invaluable. Back in August he had the following to say about diamonds and its one of the reasons we want a strong diamond exploration company in our portfolio.

"For the first time in 25 years, diamond production is declining and that may make the world’s most coveted stones a better investment than copper, nickel and zinc, this year’s top- performing commodities. Diamonds have "the best fundamentals," said Evy Hambro, who manages the $6.6 billion World Mining Fund in London for Merrill Lynch. "The gap between supply and demand is much bigger relative to other commodities."

Motapa's Little Known JV Partners - DeBeers & Cameco

The makings of a great exploration play need world class management (or the technical team of geologists), large land positions, and historically proven properties or joint ventures with major mining companies that see strong potential. Motapa not only has this, but the added (abnormal) benefit of high impact diamond exploration with uranium. The uranium property helps spread the risk at a time when uranium prices could test $100/lb this year - currently at $90 which many thought we would never see.

The uranium side to Motapa is something few (besides existing shareholders) realize exists. For the past 6 months uranium stocks have done exceptionally well and likely will continue to outperform for the remainder of 2007. Motapa's diamond properties provide us with high impact potential but the uranium is an intriguing bonus partnered with the world's largest uranium miner - Cameco. The large property position in Africa was secured years ago (well before uranium was in vogue) and the joint venture with Cameco was announced a year ago - well before the sector took off and few ever noticed it.

I met with these fellows in Toronto recently and it was evident they have several high impact projects in the pipeline over the next year. This is exploration so every single one could be a bust. But you need to spread risk and Motapa is excellent for this. A hit on even one (let alone a couple) would push the market cap dramatically higher.



Overview & Property Pipeline
Motapa is among the leading diamond explorers in Africa and has 100% interests in approx. 10 million hectares (over 20 million acres) of diamond prospective properties located in Namibia, Zambia, Botswana, Gabon and Mozambique. In Gabon, they own uranium, manganese and gold exploration rights in the central portion of their land holdings. Properties are joint ventured with DeBeers, Government of Namibia, and Cameco. These joint ventures are all very active in 2007 and we will see drilling on various fronts. The majors carry the exploration costs and leave significant ownership rights should something be hit.

Key Senior Management and Directors

John Gurney (Chairman) is widely recognized as being the single most influential person on how diamond exploration has evolved in the past 20 years through his research at the University of Cape Town.

Larry Ott (CEO) is a PhD geologist who ran the feasability on Ekati (Canada's first diamond mine) for BHP between 1993 and 1998.

Jim Rothwell (Director) is the former President of BHP Diamonds, former Chairman of Dia Met (became Ekati), and current chairman of Shore Gold (likely Canada's next commercial diamond mine)

Bob Bishop (Director) publishes a widely followed resource advisory in the U.S. called the Gold Mining Stock Report (annual cost is $1000). He was one of the first to spot Dia Met (went from $0.40 to over $40) and Diamond Fields in Voisey Bay which was bought out by Inco and performed equally well.

Property Pipeline
Africa is the world's most prolific diamond producing continent with large areas under-explored. John Gurney's industry connections will likely lead to continued property acquisitions and joint ventures.

1) Mothae in Lesotho is an 8.8 hectare proven diamondiferous kimberlite that has never been properly tested. A few kilometres away is Gem Diamond's Letseng diamond mine where they are recovering some of the most valuable diamonds in the world (averaging $1500 per carat with gem quality diamonds 2 carats to 200 carats). All Motapa's work to date says that geologically, Mothae "should" be very similar to Letseng and their plan is to bring in a processing plant and take a 50,000 to 100,000 tonne bulk sample. Over the next month they are raising a few million dollars to finance this. If bulk sampling hits and proves the economics of this project, it becomes highly valuable. The company worked for a long time on securing this project and was finally successful last year and this will be the first time the property has been commercially tested. They know it hosts diamonds but recoveries have been sporadic. Bulk testing will attempt to prove up their theory. This would likely start in Q4/07 and take several months with the plant on site.

Gem Diamonds (www.gemdiamonds.com) owns Letseng and four development projects in Africa. The company was formed in July 2005 and started trading on London last month. The market cap is over a billion dollars after raising several hundred million dollars recently. If Motapa proves similar geology to Letseng next door, it will do exceptionally well given the fact Motapa's market cap is less than $20 million Cdn. Its an elephant style play and their other exploration properties are similar to Gem's if you remove Letseng from the equation.

Info on Letseng (6.5km SE of Mothae) - www.gemdiamonds.com/lesotho.asp

2) In Gabon, Motapa has rights to 3.3 million hectares of diamond exploration. Strong indicator minerals and aeromag surveys have helped them identify numerous high quality targets. Cameco jumped on the opportunity last spring to fund and explore their rights to uranium over a large section of land in the Northwest.

This basin of Gabon is geologically similar to the Athabasca basin of Saskatchewan. Deposits in the neighboring Oklo-Mounana district have produced in the order of 100 million pounds of uranium ranking it one of the world's most significant uranium districts. Production by a Cogema-controlled consortium began in 1960 and continued until 1999. Motapa and Cameco feel that the extensive land position is underexplored and offers excellent potential for significant uranium discoveries. An exploration program, which is anticipated to commence this spring and summer is being finalized.

If a junior just announced a huge land package in Africa and a subsequent joint venture with Cameco, the stock would do dramatically well. Right now, few even know this exists. Even with full dilution by Cameco on a discovery, Motapa would be left holding 20% of a major African uranium property. Its the blue sky scenario we also gamble on with the diamonds.

3) Kavango Project in Namibia is something junior diamond miners dream about but is also dramatically under the radar. Motapa has a 100% interest in 1.6 million hectares and has joint ventured under excellent terms with Namdeb Diamond Corp - a partnership between the Namibian government and DeBeers. Namdeb is financing all exploration and drilling (which should start this spring) and most important, DeBeers should be using their proprietary Zeppelin Airship - it uses the most advanced geoscience equipment in the world to discover diamonds.

4) In addition, the company has exploration underway on several other projects that host excellent potential. These include 500,000 hectares in Mozambique, 2.4 million hectares in Zambia, and 900,000 hectares in Botswana.



Given the share price and market capitalization, this is an excellent way to play the diamond sector given the risk/reward scenario. Diamond plays are high risk but very high impact. With so many irons in the fire to spread the risk and the uranium play for a bonus, this makes a great mid to long term resource speculation.



Danny Deadlock
Microcap.com

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