North Star touts Manitoba gems
2005-07-18 14:56 ET - Street Wire
by Will Purcell
Walter Stunder's one-cent pink sheets promotion, North Star Diamonds Inc., continues to poke about in southeastern Manitoba for diamonds. The company got its start in the summer of 2003 as a diamond hunter in Ukraine, but it added projects in the area southeast of Winnipeg a few months later. North Star continues to tout its Manitoba plays, but exploration lags behind Mr. Stunder's promotion and the company's shares continue their two-year slide. As a result, North Star will likely have to drill into a kimberlite pipe and move up to the OTC Bulletin Board to attract serious notice.
The plays
In a promotional salvo fired late in May, when the stock was usually under one cent, Mr. Stunder said that North Star planned to get cracking on its Manitoba diamond hunt. The company had drilling permits at the ready and North Star planned to complete its geophysics and set a drill date within a week.
Mr. Stunder made it to the area in mid-June and North Star laid plans to begin drilling immediately. The company selected at least three prime targets on its Phase 4 project. The play, also known as the Whitemouth Lake project, is about 90 kilometres southeast of Winnipeg and about 30 kilometres northwest of Whitemouth Lake.
Few things are immediate on the mighty pinks, and North Star's toutable targets were still without drill holes at last report. The company cited soft ground as the reason for the drilling delay, but it touted bigger plans for the area nevertheless. Late in June, the company added the nearby Phase 6 project to its proposed drill program.
The Phase 6 play, also known as the Grunthal project, has four more features that hopeful Mr. Stunder thinks could be worth drilling. The four Grunthal targets are about 55 kilometres southeast of Winnipeg and within 10 kilometres south of Steinbach. That brings the number of potential drill targets on the two projects to seven.
Last year, North Star revealed that it was selecting joint venture partners for some of its Manitoba plays, which cover close to 50,000 hectares of ground across the southern and central parts of the province. Those areas are hardly diamond hotbeds, so Mr. Stunder's pinkie indeed seemed fortunate to have a selection of potential partners.
Just before Christmas, when the stock was around two cents, North Star revealed that it picked "a very well-known Canadian joint venture partner." Unfortunately, the identity of that well-known partner remained unknown to investors, but the anonymous partner apparently agreed to pay for drilling on four of North Star's Manitoba plays, including the Whitemouth Lake and Grunthal projects.
North Star's drill program hit snags, not kimberlite. The negotiations with the proposed partner dragged on, apparently because of the illness of the unnamed, well-known partner's president. Eventually, North Star put off its plans until this fall, as its well-known partner proved not to have a sufficiently well-endowed treasury to drill its pink partner's plays. Undaunted, North Star said it was "actively pursuing additional joint venture property option partners."
North Star has not been all talk. The company did manage a drill program on its Phase 1 play, also known as the Hadashville project. Late in 2003, the company drilled four targets on the property, about 100 kilometres east-southeast of Winnipeg.
The company's drill began turning just before Christmas with a promotional bang, and the company's shares temporarily reversed their slide, briefly jumping to nearly a dime early in 2004. (All share prices are in U.S. dollars.) One of North Star's targets proved to be a lamprophyre, but there was no word of any diamonds and interest quickly waned.
The track record
North Star is not Mr. Stunder's only crack at a Pink Sheets promotion, but it is one of his better efforts. Now in his late 60s, Mr. Stunder briefly tried to get a pinkie off the ground in 2003. Aurora Precious Metals Inc. was to be an explorer poking about in Ukraine for gold, although the company also touted its ability to extract gold from oil sands.
As things turned out, Aurora's story did not fare well with speculators. The company, which had been a dot-com failure in a few earlier market incarnations, became V-Net Beverage Inc. before the end of 2003. The company is now RushNet Inc., as the result of a recent transformation.
The Vancouver-based Mr. Stunder also tried his luck with Black Sea Minerals Inc. He became president of the company in 1998, and a few years ago, the company seemed poised to pursue a garnet project in Ukraine. Black Sea filed a few documents with the Securities Exchange Commission in 2003, but fell silent after that brief volley and the company currently seems dormant.
Mr. Stunder also runs Aurora Pacific Consulting and Development Corp., a private company that he set up in the mid-1970s. He speaks Russian and Ukrainian, which came in handy on his various gem projects in Ukraine over the years. He grew up on a farm and spent a year running a gravel plant in Prince George before teaching mathematics, physics and chemistry in high school. Later, Mr. Stunder worked as a seismic surveyor.
Mr. Stunder created North Star out of Omicron Technologies Inc. in the spring of 2003. He once again turned to Ukraine and gems to get his promotion rolling on the mighty pinks. A share cost just a penny during the summer of 2003, but the Ukrainian story had enough sparkle to send North Star's shares rocketing upward to the 20-cent mark. Gravity took over and North Star's shares are now a much earthlier hue of pink, as the stock dipped below one cent this spring.
Despite the flagging interest in North Star's diamond story, Mr. Stunder continues to tout plans to lift North Star off the Pink Sheets and onto the loosely regulated but heavily prosecuted OTC Bulletin Board. The first mention of a possible move came late in the summer of 2003. Mr. Stunder touted North Star as "a rapidly growing company" that would be more at home with a Bulletin Board listing.
Progress has been slow since then. North Star is still not a reporting company and remains relegated to the mighty pinks, but just a few weeks ago, Mr. Stunder claimed that North Star was making progress. The company says that it has two years of financial records and it has an accountant to audit its books.
The Manitoba hope
Mr. Stunder is not the first to tackle diamonds in Southern Manitoba, nor is he the first to have problems coming up with exploration dollars for the hunt. The Superior craton has long been a prime area for diamond exploration, and Northern Ontario attracted the likes of De Beers Canada Inc. and BHP Diamonds Inc.
Much of the effort went for naught, but De Beers thinks it has Ontario's first diamond mine in the Attawapiskat region of Northern Ontario, about 900 kilometres northeast of Winnipeg. The diamond giant plans to mine about six million carats from just under 30 million tonnes of kimberlite. That points to a modest grade, but the diamonds in the Victor pipe carry a high value, making a mine seem profitable.
De Beers turned up a large cluster of diamondiferous kimberlites in the Attawapiskat region and Spider Resources Inc. found five pipes about 100 kilometres farther to the west in the early 1990s. That sparked interest in the westernmost parts of the Superior craton, and a few explorers drifted across the Manitoba border in their searches.
Early in 1993, Winslow Gold Corp. picked up ground about 140 kilometres southeast of Winnipeg, near Whitemouth Lake. The company also picked up two partners, Surf Oil Co. and Northwind Ventures Ltd., and the play grew to over 17,000 hectares. Geophysics produced some promotional fodder. The partners identified more than a dozen anomalies that appeared quite large. More work followed in 1994, but none of the promised drill programs came about, and Winslow's promotion quietly faded to black.
The area around Lake of the Woods caught the attention of Dalton DuPasquier's Consolidated Newgate Resources Ltd. in 1993. The company picked up ground about 25 kilometres east of the Manitoba border, about 175 kilometres east of Winnipeg.
Newgate also touted an array of geophysical targets that could be kimberlites and the company added hints of indicator mineral promise to its promotion. The play attracted Chris Jennings and his SouthernEra Resources Ltd. and the partners drilled at least one of the targets. That was the end of the story and nothing more was heard of the Falcon Island play.
One of the bigger projects popped up briefly in 1994, when Lucky Break Gold Inc. and Rhonda Mining Corp. applied for about 250,000 hectares of ground in southeastern Manitoba. Diamonds were to be the focus, but the two partners reeled off a lengthy list of metals that they thought could be lurking on their big play. Rhonda grabbed over one million hectares of ground that stretched from Winnipeg to the Ontario border, in an arrangement with Mill City Gold Mining Corp.
Other companies hopped aboard the Manitoba bandwagon in the 1994 rush. The flurry of interest was fleeting, and the promotions died off with barely a whimper. Manitoba gems did attract some well-known explorers in the late 1990s, but De Beers, BHP Billiton Inc. and Kennecott Canada Exploration Inc. threw several millions of dollars at the northeastern part of the province. As a result, Winnipeg diamonds seem likely to remain a tough tout until an explorer produces a kimberlite find with some promotable diamond counts. That will take a good supply of cash, which could be a challenge for Mr. Stunder's company, although its financial status remains unknown until North Star becomes fully reporting,
North Star closed at 1.2 cents on Friday, off one-10th of a cent on 295,000 shares.
