Since rallying strongly in late November, Metalex settled down in early December in the $2.20 to $2.70 range to await the closing of a $3.5 million financing. Subsequent to this development, Metalex is expected to release news that will outline its most recent exploration results and its plans for 2003. The timing of this much-awaited announcement is crucial. Any news that mentions a near-term drill program is likely to spike the stock higher going into the New Year. However, investors will have to cool their heels until the Toronto Venture Exchange rubber stamps its approval of the financing.

Of course, the catalyst to Metalex surging higher when nearly all of Canada's other diamond stocks are languishing is the leadership of Dr. Chuck Fipke. As we have mentioned in previous articles, Dr. Fipke is the world's most famous diamond explorationist. An Indiana Jones-like figure, he has numerous mineral discoveries to his credit around the world. But his discovery of the $2.5 billion Ekati diamond deposit in Canada's frozen tundra a decade ago made Fipke a household name in the mining business. It also made millionaires of many of the shareholders of his public company, Dia Met Minerals. Its stock catapulted from around $0.40 in late 1991 to over $67 within a year.

So, since word recently leaked out that Dr. Fipke is about to embark upon an ambitious drill program on Metalex's Attawapiskat property in northern Ontario, Metalex has been very much 'in play.' And what's so enticing about this project in a remote, swampy part of Canada's hinterland? First of all, it is located in a region where the world's most famous diamond company, De Beers, has found approximately 20 kimberlite pipes in recent years. They include the large 40-million-tonne Victor pipe. It has revealed enough high quality diamonds to warrant De Beers spending millions of dollars in exploring its potential as a future diamond mine. Secondly, the fact that the notoriously frugal Dr. Fipke is filling up Metalex's war chest to the tune of several million dollars indicates that he is gearing up for a very busy year in 2003. And in diamond exploration, that suggests he is confident of having already located diamondiferous kimberlite pipes.

Of course, only an upcoming drill program will offer the proof in the pudding. But it is well known in the diamond industry that Dr. Fipke is highly adept in the science of geochemistry (a method of zeroing-in on mineral deposits by studying the composition of soil and till samples). He has become so skillful in this sleuthing technique that Dr. Fipke can fairly accurately predict the outcome of each target to be drilled. For instance, a target that exhibits the presence of 'diamond inclusion' indicator minerals prior to drilling is a virtual guarantee of a diamondiferous find. And Dr. Fipke is believed to have found such compelling indicator minerals at several or more high-priority drill targets.

To date, Metalex and its joint venture partner, Arctic Star Diamond Corp (TSX-ADD) have spent $1.2 million on the Attawapiskat project (which Fipke has been systematically exploring for over two years). The fact that Arctic Star, which holds a 20% stake in the venture, has already spent $600,000 on this project suggests that this up-and-coming junior is also very serious about striking paydirt. Arctic Star's ongoing financial commitment will, no doubt, include the drilling of Fipke's top priority kimberlite targets.

Arctic Star has recently won over many investors who see the rationale in participating indirectly in Metalex's fortunes. For such investors, Metalex is deemed a little pricey and rather illiquid, whereas Arctic Star is still quite cheap and trades good volume. In fact, a late November flurry of buying virtually doubled Arctic Star's share price on heavy trading. Arctic Star was first recommended by SmallCapMedia in September at $0.25.

SmallCapMedia believes that both companies will see another run-up in January, following the traditionally soft Yuletide month. And the odds of a drill program revealing highly diamondiferous kimberlite pipes are very much in their favor, thanks to the expertise and track record of Dr. Fipke. Once Metalex's financing is finalized and the news is out, SmallCapMedia will be on-hand to offer timely and incisive commentary. Indeed, we'll be watching these companies very closely as we fully expect Metalex and Arctic to be high flyers in 2003.