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How North Arrow insiders got lucky ahead of spectacular diamond find

by Frik Els | November 7, 2013 | Reprinted by permission of MINING.com

 

UPDATE: North Arrow Minerals contacted MINING.com about this post, pointing out an erroneous TSXV filing by a major shareholder of the company and explaining that the purchases filed as open market acquisitions were in fact part of a private placement that closed October 31. See statement below original article.

 

Shares of North Arrow Minerals TSXV:NAR rocketed more than 50% on November 5 after the explorer announced the results of drilling at its Pikoo diamond project in Saskatchewan.

While enthusiasm for the Vancouver-based company’s stock has died down somewhat since then—North Arrow is down 4 cents or 7% to $0.52 November 7 amid a soft mining sector—those who timed their purchases are sitting on a pretty paper profit today.

What got punters excited was a 209.7-kilogram sample from the TSX Venture-listed company’s Pikoo property in central Saskatchewan from a kimberlite discovered by North Arrow earlier this year. North Arrow retrieved 745 diamonds larger than the 0.106-millimetre sieve size, including 23 diamonds larger than the 0.85-mm sieve size.

President/CEO Ken Armstrong said at the time the results where so exceptional that it “establishes Pikoo and the northern Sask Craton as a new diamond district in Canada.”

North Arrow, worth around $23 million in Toronto, is a company formed by Canadian diamond and mining industry royalty in March this year.

Its chairman is Grenville Thomas, founder of Aber Resources and the man behind the discovery of Canada’s second diamond mine, Diavik.

Prospecting alongside the colourful Welshman in the early ’90s in the high Arctic was his daughter Eira Thomas, who is credited with the discovery worth billions of dollars under Lac de Gras in the Northwest Territories.

She later founded Stornoway Diamond TSX:SWY and took over Quebec’s Renard diamond project.

She left Stornoway two years ago and is now working as an adviser to North Arrow, which also employs a number of her former colleagues. Pikoo is optioned from Stornoway and North Arrow intends to vest its 80% earn-in option.

William Lamb, CEO of Lucara Diamond TSX:LUC, recently joined the company’s board of directors. Zebra Holdings & Investments, the trust of the legendary Lundin mining family, is the majority shareholder of North Arrow.

In the week before the November 5 announcement both Grenville Thomas and Zebra Holdings made huge purchases of North Arrow. According to Canadian Insider data Zebra Holdings picked up just over 2.7 million shares at $0.45 on October 31 and Thomas 1.55 million at $0.40 the day before, adding to the more than 60,000 bought earlier in the month.

A back-of-an-envelope calculation shows a tidy $860,000 paper profit for the insiders for the day’s work on November 5, when North Arrow topped out at $0.60 a share in massive volumes.

North Arrow is also advancing a diamond project in Nunavut and in the Lac de Gras district.

 

*MINING.com was contacted by Nick Thomas, investor and community relations manager of North Arrow, following publication and he sent us this clarifying statement:

Both the 1.55M shares purchased by Gren Thomas and the 2.7M shares purchased by Zebra Holdings were part of the 13.625M share / $5.45M private placement that closed on October 31, 2013. The private placement was priced at $0.40 per common share. We have notified Zebra that their insider filing is incorrect and we understand they are in the process of fixing it.

Mr. Thomas’ remaining purchases were made in the open market prior to October 22nd, as disclosed.

The private placement financing was initially announced on August 26, 2013 and the participation of insiders in the placement was disclosed at that time. The private placement was re-priced and amended on October 3, 2013 as we were unable to complete the financing on the original terms.

The ‘book’ on the placement was closed on October 24th and the filing for final acceptance from the TSX Venture Exchange was made that day.

The Exchange issued its bulletin approving the financing on Monday October 28th. The treasury was then submitted to our transfer agent and the placement was closed the financing on October 31st.

North Arrow received the diamond results late on the evening of October 31 and a management trading blackout was implemented that night.

 

Reprinted by permission of MINING.com

 

Interview by Resource Investing News with Ken Armstrong:

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