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Arctic Star Diamond Corp. A Long Time-In-Coming Diamond Story

With A Very Short Fuse!

By Brian Fagan – Editor – Stocks and Speculations – March 19, 2007 www.StocksAndSpeculations.com

Before we get started on this story, I want to tell you the context in which it is being told. You know my site is called, “Stocks and Speculations” – “An International Forum for Stocks Speculators”. That means when I see or someone else submits an idea or a story on a speculative stock - there is a good chance it’s going to show up on the site with little research behind it. Readers should know this and do their own due diligence before they take any action on anything you see here. The story that I’m about to tell you is based on a hunch and a lot of experience in evaluating and trading stocks in natural resource companies. It is in no way based on a lot of technical research. The stock I’m going to tell you about is Arctic Star Diamond Corp. (ADD-TSXV), a diamond exploration company trading in the 30-cent range on the Toronto Venture Exchange. A lot of speculators do not want to hear about diamond explorers because the news cycles for them can be extremely long in the tooth. Arctic Star, however, has a very short fuse on it. Maybe less than ten days! Two weeks ago, I was at the Prospectors and Developers Convention (PDAC) in Toronto with about 20,000 other people involved one way or the other in the minerals exploration business. By chance one night, I ran into a good friend, geologist, and associate I’ve known for thirty years. Let’s just call him “Geo-X” for now. If his story turns out to be a winner, I’ll give him the credit in another story. Anyway, Geo-X has a reputation of being very, very conservative. When you mention that he is unexcitable, most that know him will say, “Yeah, that’s an understatement!” Another characteristic of his, is that he is very smart and a true due-diligence-person. I spent at least two hours with Geo-X talking about old times and current events. As my normal habit goes, I eventually said to him, “So, what’s your most exciting story?” I was flabbergasted when he shot back at me, “I’ve bought 100,000 shares in Arctic Star in the $0.25 to $0.30 range and I think it could go to $5.00 or more.” I just about fell over and immediately knew I had to know more about this story and this company. The following location map is provided from Intierra Resource Intelligence www.intierra.com. Intierra is run by a close friend of mine, Glen Jones. Intierra is the last word on who is doing what in mineral information anywhere in the world. Just about all the major mining companies have a multi-facet subscription to Intierra’s data source. Individual investors should go to www.intierrainvestor.com. A subscription there will ensure that you have the latest property locations maps for whatever plays you are interested in.

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Geo-X said, “Arctic Star has been looking for diamonds about 35 kilometers southwest of BHP Billiton’s Ekati diamond mine and 55 kilometers west from Rio Tinto plc/Aber Diamond Corporation’s (ABZ-TSX) Diavik diamond mine in the Lac de Gras area, Northwest Territories, Canada, for the past three years. I’ve looked at the geochemistry of the samples from the kimberlite indicator dispersal trains, and from that geochemistry it looks identical to Ekati and Diavik.” It seems that Dr. Chuck Fipke (who along with Dr. Stu Blusson), discoverer of the Ekati diamond mine, has been studying the chemistry of diamond indicators for at least twenty years in his world renowned analytical laboratory in Kelowna, British Columbia (CF Minerals). The purpose of these studies is to be able to identify indicator minerals that are associated with diamondiferous kimberlite pipes and sills that produce big stones. CFM offers this analytical service to the diamond exploration industry. Arctic Star evidently ran this type of analysis on all their Credit Lake indicator minerals and many of them are chemically the same as those associated with the big stone pipes at Ekati and Diavik and everywhere else in the world where big diamonds are found. That got my attention! The next morning was the last day of the conference and when the exhibition hall opened, I headed directly for the Arctic Star display booth. I spent about an hour there looking at property maps, geochem, diamond indicator trains, and especially photos and geochem results from the indicator minerals from Arctic Star’s Credit Lake Project. I know very little about diamond indicator chemistry. They usually consist of chrome diopsides, eclogitic garnets, and g-ten chromite garnets. But - I do know that if they’ve been moved around any distance, they end up being round. All the grains of the indicators from Credit Lake that I looked at had sharp edges and chemical halos that indicate they are extremely close to the source of the kimberlite body they have been eroded from. In fact, some of these grains were attached to kimberlite material. To me, that meant they were very close to the kimberlite source. Getting excited, I asked when the target might be drilled. March 21, 2007, was the answer. Right then and there, I figured, my trip to Toronto was successful. I had found a speculative story trading at $0.30 to $0.35 that I was willing to take a shot on. That Wednesday night I flew back to Vancouver, arriving at midnight. The next morning when the market opened I bought, what for me, is a substantial position in Arctic Star right off the offering. Then I went back to work on several projects that had deadlines staring me in the face. I never thought about Arctic Star until Thursday, March 15th when I got a telephone call from Grant Gallelli, the person that I had been talking to in the Arctic Star booth in Toronto. He asked me if I had followed up on the story. I said, “No, but I did buy the stock.” He suggested that I drop by the Arctic Star office for an update. At 1:00pm in the afternoon, I walked into the Arctic Star office and met with Patrick Power, president of the company. Patrick is an old acquaintance from the Alberta diamond rush about 15 years ago. He told me the same story that I had heard in Toronto, but we did go into it in much more detail. Friday, the next morning, I purchased another substantial position in Arctic Star and started to write the story. My feeling is that if I don’t mention Arctic Star in this context and it hits, I’m not going to be able to live with myself for quite a while. If it doesn’t hit on the first holes – there will be plenty of activity to support the stock for the next few months. No matter what happens, I don’t expect to lose more than 25% of my money. On the other hand – the upside is blue-sky! With that said, I’m going to give you a quick synopsis of the project. Then you should go to the company’s website at http://www.ArcticStarDiamond.com . Do your own due diligence, and call the company at 604-689-1799 if you have any questions. Just remember, as you’re doing your due diligence, the drill rig and crew are slated to mobilize today, March 19th, and should be drilling in the Witch Bowl area of the Credit Lake Project by March 21st, weather permitting. The property is called the Credit Lake Project. It is 35 kilometers southwest of the Ekati Diamond Mine and about 55 kilometers west from the Diavik Diamond Mine. The project is managed by Buddy Doyle,

who led the Rio Tinto team that discovered and evaluated Diavik, along with Eira Thomas from Aber. Until recently, Buddy led Rio Tinto’s diamond exploration in North America. It was Buddy that was able to option the Credit Lake Project from Rio Tinto for Arctic Star. Rio has a 60% back-in on the property by spending two times Arctic Star’s expenditures, which will approach ten million with this year’s program. This is the same type of deal that Aber has with Rio on the Diavik property. Aber has a 40% interest in Diavik and now trades in the C$40.00 range. Although diamond exploration is slow and tedious, it’s also very easy to understand. You look for targets through geochem and geophysical surveys. In areas that have been subjected to glaciation, geochem samples are taken in straight lines to pick up diamond indicators that have been dispersed by glacial ice movements. Glaciologists figure out the movement of ice flows which disperse these indicators from the kimberlite source. Fence, after fence, after fence of geochem samples are taken perpendicular to the ice movement - tracing the indicator minerals back to the source. At Credit Lake, thirty grains of indicator minerals out of each 20 kilo sample is encouraging. As the survey approaches the source, the number of grains increases. When you get to the source, the number of grains skyrockets into the hundreds and sometimes over 1,000 grains per sample. As soon as the survey moves past the source, the number of grains drops` down to almost nothing. You can see that in the “Pyrope in till” map for the Credit Lake Project. Take a look at the Witch Bowl mineral train. As soon as you get up ice from the yellow dots, the grains of pyropes just about disappear. It took three years and over 3,000 samples of geochem survey to identify the three targets you see on this map.

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The next map shows a total field geophysical magnetics survey. It is coincident over the Witch Bowl geochem target.

The next map is a geophysical Bouguer corrected gravity survey. Again, it is coincident over the magnetic and geochem target. The horizontal black lines are seismic lines shot this year. The results of the seismic survey are being processed on site and the results are available in the Vancouver office almost immediately. All of these surveys are stacking on top of each other screaming, “Drill me right here!”

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In the context of diamond exploration, this drill target is as good as it ever gets. Many professionals in the diamond exploration business are aware of the chemistry associated with this target. If the drill core returns a long intersection of kimberlite material, those professionals are not going to be waiting for assays. I’m betting the stock will trade at multiples of its current price. That’s my bet. Don’t go out and bet the farm on this, but if you’re a shooter or an aggressive speculator, you probably want to have some sort of a position in Arctic Star before that drill gets very deep into the tundra. For the record, Arctic Star had about 108-million shares issued and about C$7-million in the bank. I’ve attached several documents and photos to acquaint you with the terrain and activities of Arctic Star’s Credit Lake Project. It starts with the Arctic Star news release of March 14 announcing the mobilizing of crews to Credit Lake and the information hand-out I received at the PDAC. Then you will see some summer activities followed by several winter shots that are less than a week old where the temperature has hovered around forty degrees below zero. Fortunately, the temperature is forecasted to get above zero by mid-week. Enjoy the shot of the Arctic wolf wondering what the heck is going on in his own backyard. 6

Arctic Star plans surveys, drilling for Witch Bowl area

2007-03-14 14:58 ET - News Release

Mr. Patrick Power reports

ARCTIC STAR MOBILZED AT CREDIT LAKE

Arctic Star Diamond Corp. has mobilized field crews to the Credit Lake property, Northwest Territories. The first phase of work will consist of a seismic refraction focused in the Witch Bowl area. Both magnetometer and gravity surveys are also planned; this work is designed to enhance drill targets on the property.

The Credit Lake property contains several indicator mineral dispersion trains and the company has been diligently tracking down the source of these trains over the last three years. Recent till sampling results show that one of the more prominent dispersion trains ends at a small lake. This area has been dubbed the Witch Bowl and measures about 150 metres by 350 metres. Mineral indicator counts of up to 980 separate grains from an 18-kilogram sample can be found here, whereas just up ice, the counts drop to zero. This strongly suggests the source is nearby. The indicator mineral grains in the Witch Bowl area are angular, have delicate surface coats, and show kimberlite injected into surface fractures and cracks, all further signs of a source at close proximity. The indicator mineral grains have been analyzed by electron microprobe and the results demonstrate that their source should be well mineralized with diamond.

The seismic refraction survey should show the depth of till over the Witch bowl area and may also directly detect kimberlite as a velocity contrast anomaly beneath the till. A magnetometer survey will enhance subtle magnetic targets already recognized in the area.

A drill rig and crew are slated to mobilize on March 19, 2007, and should be drilling in the Witch Bowl area by March, 21, 2007, weather permitting. The drill targets will be seismic, topographic, gravity and magnetic targets with the Witch Bowl area.

Once finished in the Witch Bowl area, the geophysical crews and drill rig will move on to the other mineral indicator dispersion trains on the property.

Buddy Doyle, AUSIMM, a qualified person, takes responsibility for the accuracy of technical information contained in this news release.

We seek Safe Harbor.

Arctic Star Diamond Corp

Symbol ADD Shares Issued 107,672,240 Close 2007-03-13 C$ 0.305 Recent Sedar Documents

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Layout of Artic Star Diamond Corp.’s Credit Lake Camp at Lac de Gras, Northwest Territories, Canada.

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Twin Otter float plane delivering supplies to Credit Lake camp from Yellowknife, NWT.

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Typical accommodations at Credit Lake camp. Patch over hole in left tent is from a bear that walked in one side and out the other.

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Caribou, shedding summer coat, inspecting the Credit Lake camp facilities.

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Summer conditions produce swarms of mosquitoes and black flies that make working conditions a nightmare.

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Camp mascot hiding in a sample bag from the mosquitoes.

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Glaciologist figuring out the movement and direction of ancient ice flows.

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Patrick Power, president of Arctic Star taking a soil sample. Each sample weighs 20 kilos.

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Each soil sample is collected up to the line on the bucket to come up with the consistent size wanted.

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One of the many helicopter trips to collect the 3,000, twenty-kilo samples taken.

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Preparations for the winter camp at Credit Lake.

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March 2007 – Flying into the Credit Lake Camp in winter.

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March 2007 Arriving for the first time at Credit Lake this season.

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March 2007 Fueling the helicopter at minus forty degrees at Credit Lake.

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March 2007 Inside the kitchen at Credit Lake.

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March 2007 First fish dinner this year from ice fishing at Credit Lake. (Arctic Char)

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Inside the technical and communications tent at Credit Lake.

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March 2007 Sunset at Credit Lake.

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March 2007 Arctic wolf observing all the activity at Credit Lake and thinking, “There goes the neighborhood!”

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The production bench at the Ekati Diamond Mine, 35 kilometres northeast of Credit Lake.

END OF PHOTOS

END OF ARTICLE (for now)

To be continued. – Stay tuned at www.StocksAndSpeculations.com

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