Arctic Star Diamond Corp.
TSX VENTURE : ADD

Arctic Star Diamond Corp.

August 31, 2010 14:53 ET

Arctic Enters Into an Option Agreement With Big Red Diamond Corp. on a Rare Earth Element Property Near Sept-Iles, Que.

VANCOUVER, BRITISH COLUMBIA--(Marketwire - Aug. 31, 2010) - Arctic Star Diamond Corp. (TSX VENTURE:ADD) is pleased to announce that it has entered into an option agreement with Big Red Diamond Corp. ('Big Red') on the J6L1 Rare Earth Elements ('REE's') project located 52 kilometers northwest of Sept-Iles, Que. Arctic Star can earn a 50% interest in the J6L1 project by issuing 1,000,000 million shares of the company, spending $500,000 in exploration expenses on the project by December 31, 2011 of which $75,000 must be spent by December 31, 2010.

As previously announced by Big Red in a news release dated December 8th, 2009, Big Red commissioned an airborne survey in September 2009 on its property consisting of 86 claims or approximately 4,715 hectares. The airborne survey was carried out by GeoData Solutions GDS Inc. using a high sensitivity magnetometer to map geology and structure using a spectrometer to map radioactive minerals. An independent interpretation of the airborne survey was subsequently compiled by geological consultant Dr. Danielle Giovenazzo, PhD, PGeo.

The findings of the report showed several anomalous areas outlined within the survey. The high-resolution spectrometric and magnetometer survey showed the presence of a circular feature, measuring five by five kilometers, with a highly magnetic centre and annular fault, or ring dikes, marking the outer periphery of this complex. Another circular feature was partially covered and is located in the eastern portion of this survey. These circular magnetic patterns are similar to those associated with other REE properties such as Quest Rare Minerals Ltd. Misery Lake project. Regional geological maps indicate the J6L1 magnetic feature is associated with a monzonite intrusion. However, due to the presence of niobium, zirconium and other REEs, it is likely that this intrusion has been misidentified in the past.

Based on the encouraging conclusions of the airborne survey, Arctic Star will actively participate in further developing this promising property. Further compilation of all of the historical exploration work conducted by SOQUEM in the area will be completed in the first part along with a prospecting and sampling field campaign to follow-up on some of the anomalies identified. In the second part, Arctic Star will proceed with the verification of the local geology followed by mapping and drill testing worthwhile targets.

Rare earth elements (REE), which include minerals such as dysprosium, terbium, thulium, lutetium and yttrium, are widely used and indispensable in the fields of electronics, aviation, atomic energy, and mechanical manufacturing. They are essential elements to many of the new emerging green technologies such as hybrid and electric vehicles, and wind power generation. Further recent Chinese REE export restrictions have fueled worldwide concerns and interest for alternative REE deposits.

The proposed transaction is subject to TSX Venture Exchange approval.

ON BEHALF OF THE BOARD OF DIRECTORS OF ARCTIC STAR DIAMOND CORP.

Patrick Power, President

Forward Looking Statements

This press release contains projections and forward-looking information that involve various risks and uncertainties regarding future events such as: (a) the closing of the option to acquire an interest in a rare earth property; (b) the likelihood that the property has rare earth; (c) the work program to be conducted by Arctic; and (d) the establishment of the joint venture. Such forward-looking information can include statements based on current expectations involving a number of risks and uncertainties and are not guarantees of future performance of Arctic such as the willingness of the parties to close the transactions, the approval of the transaction by the Exchange, satisfactory results of the due diligence investigation on the Property, our ability to raise financing, geological information resulting in changed plans for exploration, our ability to contract equipment and labor, current economic conditions and the state of mineral exploration and mineral prices in general. These risks and uncertainties could cause actual results and Arctic's plans and objectives to differ materially from those expressed in the forward-looking information. Due to conditions precedent to closing, and the risk that these conditions precedent will not be satisfied, the Arctic can offer no assurance that it will close the Transaction. These and all subsequent written and oral forward-looking information are based on estimates and opinions of management on the dates they are made and expressly qualified in their entirety by this notice. Except as required by law, Arctic assumes no obligation to update forward-looking information should circumstances or management's estimates or opinions change.

Neither the TSX Venture Exchange nor its Regulation Services Provider (as that term is defined in the policies of the TSX Venture Exchange) accepts responsibility for the adequacy or accuracy of this release.

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