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Kaiser Watch December 16, 2022: Implications of Fusion & LIFE Breakthroughs

Posted: Dec 16, 2022JK: Kaiser Watch December 16, 2022 with Jim Goddard and John Kaiser
Published: Dec 16, 2022KRO: Kaiser Watch December 16, 2022: Implications of Fusion & LIFE Breakthroughs
Kaiser Watch is a weekly 15-30 minute audio show produced by KaiserResearch.com with Jim Goddard and John Kaiser discussing the junior resource sector. The show has three parts: the first is a general topic, the second discusses developments involving the KRO Favorites which as of January 1, 2022 are no longer exclusive to KRO members, and the third is a peek inside the members only KRO Bottom-Fish Workshop. KRO is transitioning into a Do-It-Yourself research platform that covers all Canadian and Australian resource listings and which also features a Bottom-Fish Workshop where John Kaiser highlights juniors with solvable "missing pieces". Companies that graduate from the Workshop may become part of the Annual Favorites collection whose profiles and related commentary are unrestricted for non-members. Visit the KRO Favorites Dashboard for quick access to all the unrestricted Favorites related content. KRO is not sponsored or compensated directly or indirectly by public companies. The business model is based solely on membership fees in the form of a USD $450 Annual Individual Membership that at some point will increase substantially to reflect KRO's shift to a research platform. However, when the change happens active members will be grandfathered to renew indefinitely at the current rate provided they maintain a continuous paid membership. Kaiser Watch is available at Kaiser Research YouTube and as a Podcast downloadable from KaiserResearch.com. Each episode will be made available through the publication of a Kaiser Media Watch blog report which will provide links to specific questions and include supplementary graphics. All episodes will be archived at Kaiser Watch.

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Kaiser Watch December 16, 2022: Implications of Fusion & LIFE Breakthroughs
Jim (0:00:00): Does the fusion breakthrough announced this week have any implications for the mining sector?

The breakthrough announced on Tuesday by the National Ignition Facility at the Lawrence Livermore Laboratory which is located about 30 minutes form my office has no immediate practical implications for anything but it represents an important beacon of hope for the younger generations when they inherit the planet after the sun has set on most Boomers. The NIF was conceived in 1997 and finally finished in 2009 at a cost of $3.5 billion. Its footprint is equivalent to several football fields. Its primary purpose is to allow the United States to test nuclear weapons on a tiny scale so that it no longer has to test bombs underground or in the air. While other fusion research labs have worked with a tokamak, a magnetic bottle within which the hydrogen fuel is super-heated, NIF is based on laser technology which involves super-heating a pencil eraserhead sized pellet of deuterium and tritium encased in diamond.

Nuclear fusion creates clean energy because in simple terms the fusing of hydrogen atoms in plasma form at millions of degrees to create helium results in a loss of mass that is released as energy. The promise of nuclear fusion is that once you can get a fusion reactor going, it becomes something of a perpetual motion machine which could result in a 90% or more drop in the cost of energy production. This would be a revolution akin to discovering and harnessing oil as a transportation fuel. Nuclear fission reactors using uranium cannot achieve such a cost revolution because they generate dangerous radioactive by-products that have to be contained. The problem with fusion is the extraordinary inner-sun equivalent temperature required to get it going. The goal of fusion research is to achieve an energy output greater than the energy input required to achieve ignition. But until Tuesday this has not been achieved and the promise of fusion energy has been permanently several decades down the road.

Since 2009 the NIF has not made much progress with fusion research but it finally started making progress in 2021. On December 5, 2022 they turned on 192 lasers to blast a pellet with 2.05 megajoules of energy - apparently the equivalent to a pound of TNT - which generated a flood of neutrons measured as representing 3 megajoules for a 1.5 factor of energy gain. This is a major first time accomplishment, but it is not a solution for tomorrow. Commercial scale nuclear fusion is still two decades down the road, but the really exciting thing is that we can now believe that nuclear fusion will become reality in the 2040-2050 decade by when we have the goal of limiting global warming to 1.5 degrees by achieving a zero net carbon economy. Fusion research is no longer this glib promise by researchers eager to keep their well paid jobs alive until retirement.

The reason it will take another couple decades for nuclear fusion to become reality is that it will be a huge engineering challenge to commercialize nuclear fusion. For example, although they converted 2 megagoules into 3 megajopules, they had to pull 300 megajoules from the energy grid to prime the lasers. The energy pulse lasted only one hundred trillionth of a second. In order to generate electricity the fusion has to become a sustained process. One insider affiliated with the Livermore lab told me that the ceramics in the lasers take six hours of cooling before they can be used again. Clearly there are huge materials science research challenges. A NYT article suggests energy gains in the order of 30-100 times are needed. In other words the stadium size footprint of NIF has to shrink massively.

These are engineering challenges which can be solved if enough effort and capital gets committed, as happened when the Manhattan Project was launched in 1942 to develop the nuclear bomb. Nuclear fusion, however, is a weapon for mass destruction, so secrecy is not required. Already there are privately funded startups working on technologies other than the tokamak. Nuclear fusion will have many components that can be worked on in parallel with public and private funding. The NIF announcement provides the basis for launching a Manhattan Fusion Project. For an idea of what would be involved, check out the publication Bringing Fusion to the U.S. Grid the Department of Energy asked the National Academies of Engineering, Science and Medicine to produce in 2021.

The true significance of the NIF breakthrough is that it gives hope to the post-boomer generations, Gen-Z and the Millennials, who will inherit what the Boomers left of the planet in 2040 and beyond. Biden did manage to get the Inflation Reduction Act passed which provides support for the energy transition, but the problem with climate change policies is that they do not promise to make things better, just slow down how bad they get and likely hand out lots of sacrifices along the way. We are merely shifting the energy supply foundation from fossil fuels to other foundations such as renewables and nuclear fission which do not imply a future reduction in energy costs. For the younger generations to begin rebuilding a prosperous future in the 2040s we need an energy revolution, both to undo the consequences of creeping climate change and secure the raw materials the world will need to keep growing or at a minimum improve overall standards of living.

Fusion energy would obviously provide electricity, so the electrification of the transportation sector continues to make sense. So does beefing up the electricity grid. If fusion delivers a huge reduction in the cost of energy per unit consumed, it will help solve a looming problem which is the future disruption of freshwater supply, essential for agriculture and feeding the planet. Three forces are threatening our future water supply. One is the rising consumption that comes with a growing global population which recently hit 8 billion. A second is the salination of cropland through irrigation that drains aquifers and allows seawater ingress, a big problem facing southern California as an example. The third is changing weather patterns as a result of global warming which could deprive some regions of rainfall driven water supply, and others of water storage from mountain snowpacks. The nightmare scenario is that fertile cropland ends up mismatched with freshwater supply. Banning water intensive usage is one policy that can be applied, but that might mean no more almonds for the world, a major water sucking crop in the Central Valley. A much larger scale solution is desalination of seawater as is currently done by Saudi Arabia which burns surplus oil. Desalination is energy intensive. But if much cheaper fusion energy emerges, desalination will be a large scale solution to the water problem.

In terms of implications for the mining sector, the immediate question that comes to mind is, what is the uranium equivalent input for nuclear fusion and should we start exploring for it? Nuclear fusion energy will put nuclear fission energy out of business, except perhaps in the form of small modular reactors in remote locations during the early decades when large scale fusion power plants get developed. But that is 20 years down the road. The negative implication for the uranium sector is that given the long permitting and development cycles for nuclear power plants, how much political will to do so will remain if the promise of fusion power plants is taken seriously?

The key inputs for nuclear fusion are two hydrogen isotopes, deuterium and tritium. These are necessary because human designed nuclear fusion will not be the same as the fusion that takes place inside the sun. Hydrogen is unusual among elements in that it has one proton and one electron but no neutrons. Within the sun where the temperature is over 15 million degrees the electrons are stripped from the hydrogen atom to create a fourth form of matter called plasma. Gas, liquid and solid are the other three. While an element is defined by the number of protons, each element can have different numbers of neutrons as part of the nucleus. Neutrons are slightly heavier than protons because they represent the neutralized charges of a proton and electron. These are called isotopes. Hydrogen has two isotopes: deuterium which has one neutron, and tritium which has 2 neutrons.

Nuclear fusion in the sun is a complex series of chain reactions but the simplest has 3 steps and requires 4 protons. The first step of nuclear fusion in the sun is when 2 protons collide to create deuterium, the hydrogen isotope which has one proton and one neutron. Since a neutron is slightly heavier than a proton this involves a mass gain, a consumption of energy. The second step involves a collision between the deuterium isotope and another proton. The result is a helium atom with 2 protons and 1 neutron which is unstable. The third step is the combination of two of these helium isotopes which spits out 2 protons and results in a stable helium atom with 2 protons and 2 neutrons. Somehow the mass of the resulting helium is less than that of the inputs which under E=mc2 means energy has been created. This energy allows the sun to operate as a giant furnace, gradually burning up its hydrogen stock.

Human designed nuclear fusion cannot create a sun like furnace, but it follows the principle of fusing hydrogen atoms to form helium. Deuterium is a stable isotope of hydrogen, but there exists only 1 deuterium atom for every 6,400 regular hydrogen atoms with no neutron. And all of it was created during the Big Bang. None of the deuterium created inside stars ever escapes without being converted into something else. Water or H2O is the primary source of hydrogen through electrolysis, another energy intensive activity. Distillation is used to concentrate the water molecules whose hydrogen atom is deuterium. This is called heavy water. Tritium is a very rare and unstable hydrogen isotope with two neutrons that is created as a by-product from lithium metal inside nuclear fission reactors. Fusing these two isotopes creates helium with two protons and two neutrons, and a free neutron that represents the energy gain. So the mining industry will never look for deposits of deuterium and tritium.

The main implication for the mining industry from the future reality of fusion energy is the potential collapse in energy costs. Energy is a major input cost in the mineral extraction industry. You need energy to break ore from its surrounding waste rock. You need energy to crush and grind ore small enough so that chemical processes can liberate the target metals from the minerals in which they are tied up. It takes energy to make the chemicals needed by the flowsheet, and sometimes the flow-sheet requires heat, another energy cost.

When they talk about peak copper or peak any metal, this is not the same as talking about peak oil. Oil is an organic compound with origins at the earth's surfaces. It can be depleted, and the only reason nobody talks about peak oil these days is because new technology in the form of fracking allowed the extraction of stickier shale oil whose deposits are much more abundant than regular oil deposits. Most metal deposits, however, are formed through fluids flowing through rock, harvesting metals by dissolving them, and then precipitating them in locations where pressure, temperature and chemical receptivity are just right. Most of the time the conditions are not just right which is why there exist zones of mineralization with a vast range of grades.

Economic ore grade is defined by the cost to extract the metal (including the infrastructure) and what you can sell it for. The prices of metals change over time for a variety of reasons, but the grade of a mineralized system never changes. Over the past 10,000 years the energy unit cost has declined as a result of various energy revolutions. But the cost of energy is not getting cheaper, and the energy transition will at least temporarily increase the unit energy cost. Economic grade will thus remain a function of future metal prices over the next 20 years during which the best deposits will be depleted. This poses a peak metal problem for the Gen Z and Millennial generations that can only be solved by a massive reduction in energy costs such as commercialized nuclear fusion could potentially deliver.

Where an open pit copper deposit needs at least 0.3% copper today to be mineable, or an underground copper deposit at least 0.6% copper, if nuclear fusion becomes reality, those economic grades could drop to 0.1% and 0.2% or lower. There is an awful lot of tonnage with those grades that the juniors have found over the decades. And while exploration over the next two decades will still be focused on what counts as economic grade today, all those not good enough systems discovered will be a bounty to be harvested by future generations if nuclear fusion becomes reality. It will be a variation of the China super-cycle of the 2000's when real metal prices increased several-fold as China's scaling up of production created deflation for the cost of goods that more than offset the rise in metal costs. This created a feasibility demonstration boom for the resource juniors who clawed the failures of past exploration cycles out of the closet. Most mineralized systems that outcrop have already been identified, so near surface exploration is not going to excite investors. But under cover exploration has the potential to deliver discoveries with sufficient grade to be feasible to develop over the next two decades. But even when an under cover discovery doesn't meet current ore grade requirements, if there is any scale to the mineralized system it may be a future mine in a fusion powered world.

The only negative implication is for gold, whose economic ore grade threshold would also drop substantially, exposing huge volumes of gold mineralization to profitable extraction. Gold is unique in that most of the above ground stock sits in vaults doing nothing useful, whereas all other metals are fabricated into something that supports the prosperity of the world. While the real price of most metals will not decline in the long run as lower grade deposits get mined thanks to a reduction of energy costs, the real price of gold may decline as the above ground gold stock expands substantially.

Jim (0:15:04): What are the implications of the new Listed Issuer Financing Exemption? Does it promise LIFE for juniors?

The Listed Issuer Financing Exemption or LIFE for short is embedded in National Instrument 45-106 for Prospectus Exemptions which the Canadian Securities Administrators amended to become effective on November 21, 2022. It is an extremely important and timely development for the resource juniors. An OSC Notice September 8, 2022 provides a detailed description of this policy change.

What it does is allow a listed company which is up to date with its regulatory filings and has been a reporting issuer for at least 12 months to conduct a private placement of up to $5 million, or 10% of the market capitalization to a maximum of $10 million, that is immediately free trading. I'm not convinced eliminating the 4 month hold is a good idea for market integrity, though it will eliminate the time bomb effect of stock crushing the market 4 months after the financing was completed. This usually happens when the private placement includes a warrant and placees are eager to flip the stock and clip the warrant as a free ride on the junior's future success.

Previously a financing could only be free trading right away if done under a short form offering prospectus, which is handled by full service brokerage firms. As we know only high net worth investors have an account with a full service broker these days because brokers are asset gatherers not generators of commissions through trading; all the rest do their investing through a discount broker where they never talk to a human for ideas or advice. During the 1980s brokerage firms like Continental and Canaccord which specialized in the resource junior sector would do statement of material fact financings which were immediately free trading and were sold to an army of retail investors. Structural changes, however, have created a situation where short form offering based financings are from a practical perspective not available to retail investors even though they were eligible to participate.

The huge implication of LIFE is that it does away with the accredited investor requirement for participating in a private placement which evolved as the primary financing mechanism in the 1990s. I have been complaining about this requirement for years and have even done technical presentations at PDAC calling for elimination of this requirement.

To be an accredited investor you need to have a net worth of at least $1 million not including your net equity in your residential real estate. Or have household income in excess of $200,000 for the past 2 years. That meant the vast majority of the potential investing capital pool was ineligible to give their money directly to a company so it can fund its projects. Instead, retail investors were limited to buying in the open market paper being dumped by millionaire placees clipping their free lunch warrant.

The reasoning behind this restriction was that if you weren't a millionaire you didn't have the smarts to assess the risks of investing in a private placement with a 4 month hold restriction. Never mind that you are wealthy because you are a highly paid doctor but know nothing about exploration and mining. Or a successful real estate developer. Or even a trust fund baby snorting coke and pretending to be useful by working for an NGO. If you were not worth at least $1 million you are not smart enough to understand the risks of a private placement. In addition to the implicit contempt about the intelligence of non-millionaires, it has had a paternalistic dimension. If you aren't a millionaire you should not be allowed to expose yourself to the risk of loss. Only if you were a friend of management or a member of the financial sector were you eligible to participate in a private placement.

The stupidity and hypocrisy of this stance was that it was perfectly OK for non-millionaires to use a discount broker to blow their brains out buying some pump and dump stock read about on reddit.

The closest the regulators came to reform was a listed shareholder exemption for non-millionaires which was cynically designed to be useless as a fund-raising mechanism. It limited one to a maximum of $15,000 per year per company, and created all sorts of verification obstacles. But worst of all, once a company announced such a financing, anybody who heard about it and liked the company's story, but didn't already own stock, was ineligible. This exemption was dead on arrival.

Most of the LIFE financings announced so far have been done as brokered financings where the attraction is the commissions and the immediate free trading nature of the financing. But some companies have announced non-brokered versions and are working their way through the kinks in this process. The first step is to file a document on SEDAR describing the terms of the financing.

The harder step is to collect the documentation and money from subscribers who contact the company, and sort out the delivery of the share and warrant certificates. This is a work in progress but I am very pleased the regulators created the LIFE exemption and are allowing non-brokered LIFE financings.

What motivated the regulators to change their mind? I think there were two factors at work.

One is that Canada's resource junior eco-system is rivaled only by that of Australia, but the accredited investor restriction was starving the Canadian juniors of access to risk capital, especially the earlier stage juniors not backed by financial sector principals. The limited number of accredited investors actually interested in the junior resource sector was also pretty much "owned" by a small group of well-organized management teams. This harmed the diversity of the resource junior eco-system because a small elite captured the risk capital inflow while the majority toiled in a wilderness devoid of accredited investors.

In addition Ottawa has woken up to Canada's potential role in supplying the critical minerals needed to make the world's energy transition possible. As an example, the nature of Lithium Mania 2.0 is quite unique in that we have a deposit style that has never been of economic interest to mining companies until recently, and resource juniors are well suited to finding and delineating pegmatite deposits. The big companies do not have the flexibility to mount a Great Canadian Pegmatite Hunt. They will be in the wings to pounce when a big discovery is made. Rio Tinto is developing new processing technology to create spodumene concentrates with a higher lithium content than the 5%-6% ranges for chemical and technical grades. When major mining companies like Rio Tinto move into the pegmatite mining space by taking out the more advanced former juniors, there will be a scramble by juniors to find more deposits because what is visible is still insufficient to fulfill the projected ten-fold supply expansion needed to make EV replacement if ICE cars a reality by 2035. But if you only allow millionaires to feed the juniors, most of the eligible juniors, especially the toiling geologist type, will be starved of cash and accomplish little.

The other factor may have been the realization that the younger Gen Z and Millennial generations were putting their money into spurious gambling ventures like crypto currencies and getting blown up. Buying Bitcoin at $65,000 only enriches the libertarian ideologue braying about the freedom of superior individuals, criminals laundering their profits, and cyber-thieves from places like North Korea and Iran. Losing money on Bitcoin does not make the world a better place. Losing money on a legitimate exploration junior does make the world a better place because new mineral wealth is created by the collective action of legitimate resource juniors. Cryptocurrency is just a wealth transfer mechanism.

Why would younger retail investors gamble on Bitcoin? Because they saw how stacked the system is against them making money through more legitimate means and saw the momentum trend as a fast path to wealth. That, of course, has reversed and will have a hard time re-establishing an uptrend. Betting on Bitcoin requires no thinking at all, just an impulse. Buying resource juniors requires a fair bit of research, but retail investors do have time to research the resource juniors and make intelligent decisions. They can form social media clubs to collaborate in the research process. Why not let them buy private placements with warrants and be in a position to clip the warrant and flip the stock as they rove from one junior to another? Instead of the risk capital coming from a handful of millionaires and being funneled into deals where the funnelers have vested interest that may not have been created through much wisdom, why not allow a large and diverse market of thinking people to give money directly to juniors?

There will be teething problems for non-brokered LIFE financings. Collecting ten $5,000 checks from retail investors rather than a $50,000 check from an accredited investor will be ten times as much work for the junior. Probably more because retail investors have no experience navigating the maze of paperwork where a half dozen boxes that need to be checked are buried inside 50-100 hundred pages of boilerplate. It is possible that LIFE will not mean new life for resource juniors if the logistics are not simplified. But this decision to drop the accredited investor requirement creates a will to streamline the process.

Ideally somebody will set up a central clearing system where individuals register and establish their jurisdiction and where they want their digital certificates deposited. Then there needs to be a system of online documents supplied by the company where the retail investor checks the boxes. If you live in Saskatchewan which tends to unduly restrict its residents, and the financing is not cleared for that jurisdiction, you never see the option. So eligibility to participate in a financing is automatically determined.

It becomes a first come first serve process with a key part being the payment system. Wiring small amounts makes no sense. The problem with LIFE and retail investors is the logistics of dealing with a hundred $5,000 subscriptions. This needs to be streamlined. If this happens I think the Canadian resource junior system will flourish. I wish to thank the Canadian regulators for creating this exemption for retail investors, who now have incentive to learn how the resource junior sector works.

Monthly History of TSXV Resource Financing Activity by Type

Breakdown of TSXV Resource Financing Activity

Breakdown of TSXV Private Placement Activity by Sector
Jim (0:27:03): What did you think of the Sequoia micro diamond results reported by Arctic Star?

Arctic Star reported micro diamond results on December 5 for 6 holes drilled into the Sequoia kimberlite complex discovered last year. The drill program was done in May and finished in early June. The company published the micro diamond results as a composite which results in a distribution curve that is slightly lower than last year's results, but maintains the slope which is key to expecting bigger macro diamonds. When you combine the two data sets the curve suggests a macro grade potential in the 20-30 cpht range. That is low for what has been developed in the Arctic, but it is encouraging that the micro diamonds in general continued to be clear and white. While I was pleased to see the original macro grade potential largely confirmed, the market, however, wanted bigger and better, not just confirmation of what it already knew, so it hit the bid and the stock is languishing at $0.02.

The 2022 holes were drilled from 2 pads centered 100 m apart in the middle of a north-south oriented gravity anomaly about 500 m long and 100-150 m wide. Two holes were vertical and two holes were drilled east and west from each pad. The Jack Pine kimberlite drilled in the early 2000s is located at the southern end of this sinuous elongated complex of what appear to be multiple eruptive phases.

Arctic Star has not yet disclosed a breakdown of the micro diamond results per hole and the geologists are still sorting out the internal geology of the intersections. But Pat Power has told me that some of the intersections had lower counts on a normalized basis than others. Exploration VP Buddy Doyle believes that Sequoia is a series of kimberlites, some of which may be higher grade than others and have different quality diamond populations.

For example, the Jack Pine kimberlite explored by Majescor in the early 2000s, which extends the Sequoia structure another 300 m to the south, yielded micro diamond results from a 786 kg sample that indicates zero macro grade potential. It is not uncommon for a structural zone of weakness to be invaded by different kimberlite emplacements, kimberlite magmas that sampled different parts of the lithosphere before finding the common gateway at surface. One eruptive phase can be very high grade while the one next to it near barren.

If you assume an area 500 m long by 150 m wide by 300 m deep and apply a specific gravity of 2.6 you will get a tonnage footprint of 58,500,000 tonnes. That is larger than the reality will prove to be because the kimberlites will taper at depth. So it is reasonable to knock the tonnage footprint into the 20-30 million tonne range which is substantial compared to the individual Diavik pipes. Buddy Doyle believes that Sequoia requires another round of delineation drilling in order to define the internal kimberlite geology of this complex before proceeding to the next step of mini bulk sampling for grade. The market probably didn't like this implicit deferral of macro grade confirmation into 2024 either, but that is why diamond exploration is so much more difficult that exploring for gold or lithium.

Arctic Star is also considering delineation drilling of the Finlay kimberlite which received the most attention from De Beers when it explored the Hardy Lake block during the 1990s. Arctic Star tested a magnetic lobe this year that juts to the southeast of a magnetic anomaly representing the Finlay pipe. The Arbutus sample was only 143 kg and its micro diamond distribution curve suggests a 10-20 cpht grade potential. But its diamonds were described as aggregates and fragments. Aggregate diamonds are not gem quality, and the fragments imply crushing during extraction and processing of the sample. A couple weeks after the Arbutus results were reported in mid September Chuck Fipke produced a report gushing about the chemistry of Arbutus core he examined, but at this stage it is not clear how representative that sample's indicator mineral chemistry is of what Arctic Star submitted for caustic fusion. Finlay's magnetic anomaly has a much smaller footprint than the gravity anomaly associated with Sequoia. Combined with Arbutus it has a tonnage footprint limit to a depth of 300 m in the 10-20 million tonne range. De Beers has never revealed micro diamond data or indicator mineral chemistry related to Finlay which may have been the most promising of the couple dozen kimberlites it found in the 1990s testing magnetic anomalies. If all De Beers observed in the micro diamonds were aggregates it is unlikely it would have drilled 7 holes into Finlay. The reason De Beers never did anything was that the size was insufficient to support a standalone mine operated by De Beers.

It may be worthwhile for Arctic Star to revisit Finlay with several holes in order to understand the macro grade potential. Arctic Star's goal is not to establish a new cluster of kimberlites that can be developed on a standalone basis like Diavik's 4 high grade pipes. The purpose at Diagras is to find diamondiferous kimberlite tonnage with decent value carats that could be mined and trucked to the nearby Ekati and Diavik facilities which are approaching depletion and the onset of reclamation liabilities. Buddy Doyle has suggested to me that properly delineating Sequoia and testing Finlay in H1 of 2023 would cost about $3 million. Arctic Star has about 212 million issued and 358 million fully diluted. The dilution comes from 115 million warrants, mostly at $0.10, of which 39.6 million expire Mar 31, 2023. This warrant overhang represents a lid at $0.10. But that lid is 5 times higher than the current price. Pat Power does not want to roll back the stock again. He's done 3 since 2011 totaling 240:1 and his exploration VP Buddy Doyle is quite fed up having to rebuild his share position from scratch.

One option for Arctic Star is to pursue a LIFE financing aimed at a younger retail audience. For example, what if Arctic Star tried to do 150 million units at $0.02 with a full warrant at $0.05? What if this attracted hundreds of retail investors who are actually funding the next work program rather than just eating paper dumped by the millionaire warrant clippers who hold the overhanging lid of warrants? Sure the dilution will limit the price upside, but if Arctic Star gets taken out at $0.20 for $100 million that will be a ten-bagger from the initial bet, and a 4 bagger from the $0.05 warrant bet. The new LIFE exemption could be a godsend for resource juniors like Arctic Star which have been abandoned by accredited investors and are willing to cultivate an audience of younger retail investors.

Arctic Star Exploration Corp (ADD-V)

Bottom-Fish Spec Value
Diagras Canada - Northwest Territories 2-Target Drilling D

Map showing location of Sequoia relative to Ekati and Diavik

Diagras location map for kimberlites found by De Beers and Arctic Star

EM, Magnetic and Gavity Anomalies for Sequoia Complex

Finlay-Arbutus Magnetic Map & Arbutus Core Photo

Sequoia Micro Diamond Results Table

Micro Diamond Distribution Curves for Diagras Pipes compared to others

Table of Existing Arctic Star Warrants
Disclosure: JK does not own any companies mentioned; Arctic Star is Bottom-Fish Spec Value rated

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