"Flag of Nunavut" by James Leigh — Sodipodi's Clipart Gallery. Licensed under public domain via Wikimedia Commons.
Canadian exploration company North Arrow Minerals (TSXV:NAR) has had a lot of success in 2015, but on Tuesday it hit a bump in the road. The company released valuation results for a bulk sample from the Q1-4 kimberlite at its Qilalugaq diamond project in Nunavut, and unfortunately they came in lower than expected. A parcel of 383.55 carats of diamonds collected from 1,353.37 dry tonnes of kimberlite yielded a value of just $13,795, or $36 per carat. To get a sense of what the market was hoping for, one need look no further than a statement made by John Kaiser of Kaiser Research earlier this year. He told CEO.ca in February, "[t]he killer would be if the diamonds are only worth $100 per carat, then the project is not going to fly." With that in mind, it's not surprising that North Arrow's share price took a hit when the valuation results hit the wire. It closed Tuesday down 55.79 percent, at $0.42; that leaves it down 17.65 percent year-to-date. What went wrong? Speaking to the Investing News Network, Ken Armstrong, North Arrow's president and CEO, explained that two main issues impacted the valuation. The first was the size of the diamond parcel retrieved from the bulk sample. "It is a very small parcel, which makes interpreting the results ... and coming up with a real indicative value very difficult," Armstrong said, adding, "when we went into this whole process we [were targeting] 500 carats of diamonds as a starting point number just to give us an indication of what the value could be."