Clifford Elphick
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» Petra posts a maiden profit
» Botswana may trump diamond wealth
» Pangea mulling Toronto listing


Diamond juniors turn in mixed results
Julie Bain
Posted: Tue, 01 Apr 2008

[miningmx.com] -- NEWS from diamond exploration and development companies was coming in thick and fast this week with spades full of hope as they seek the next big discovery, and move to get mines up and running to generate cash flows.

On Monday, Pangea DiamondFields, a mid-tier diamond producer and exploration company, whose CEO is well-known South African mining entrepreneur Rob Still, said it had one project at pilot mining stage, four at bulk sampling, with one of these proposed to move into bulk sampling early in 2008.

At its Dimbi project Pangea started producing and exporting diamonds, with the first sale of a parcel of diamonds made in Antwerp achieving an average price of US$166 per carat. At its Longatshimo River project the bulk sampling plant and equipment was successfully delivered and the plant is set to start up this year.
the world's seventh largest diamond mine
Illustrating some of the difficulties of exploring in the wilds, Pangea said the equipment for the bulk sampling plant had to travel 4,700km overland journey from South Africa to the Democratic Republic of Congo, via Namibia and Angola.

Pangea has ten projects in its portfolio located in the Central African Republic, Democratic Republic of the Congo, South Africa and Angola. The company recorded a loss for the year ended December 31 of $19.0m (2006: $14.9m).

Another AIM-listed company Firestone Diamonds said turnover increased 224% to £1.9m (H1 2007: £0.6m) while profit increased to £2.4m (H1 2007: £0.1m) in the six months to December 31 2007. The rise, according to Firestone, was the a result of its joint venture diamond recovery operation, Bonte Koe, with De Beers reaching full production capacity.

For exploration and development companies the profit is not really the issue, they have to show investors they are keeping costs down and that they have finance enough to keep exploration is progressing.

Firestone said in the six months its focus was in Botswana where it is the largest holder of diamond exploration rights surrounding Botswana's kimberlite fields, with approximately 26,000 square kilometres now under license. At its Tsabong project in Botswana Firestone said an independent data review concluded that Tsabong had a "real chances of discovering an economic large sized diamondiferous kimberlite".

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Gemfields Resources, listed on Aim, said this week it secured the Fabergé brand for its gems, excluding diamonds, from Brian Gilbertson's Pallinghurt Resources.

Not only do gem companies have to find and mine their stones, some then have to foray into the luxury goods market, either selling to traders or producers who market gems, for example De Beers. For the brave they can go all the way up the value chain taking their gems from mine to high street.

"Fabergé Limited has agreed to grant Gemfields an option to acquire a worldwide and exclusive 15 year licence to use the Fabergé brand name in respect of gemstones (excluding diamonds)," said the company.

In the six months to the end of December 2007, Gemfields said it had $5.1m in the bank, down from $7m in the same period in 2006. The big difference this year was there was no revenue from emerald sales in the period compared to $769 generated in the same six months in 2006.

In the half year Gemfields conditionally agreed to acquire Rox Limited ("Rox", a Pallinghurst Resources portfolio company) giving it control over a 75% interest in the Kagem emerald mine in Zambia, which Gemfields says is the largest emerald mine in Zambia.

GEM Diamonds, headed by former De Beers executive Clifford Elphick and listed on the FTSE-250 exchange, released an update yesterday saying the company had reached the final stages of construction of the second plant at its Letšeng Mine in Lesotho. Gem differs from the other companies mentioned as it is producing significant amounts of diamonds.

"Final commissioning is continuing and full production from this gravity fed DMS plant is expected to be reached during the second quarter of 2008," it said. "The existing Recovery Plant will now service both treatment plants. The successful conclusion of the commissioning will see the doubling of Letšeng Mine's hard rock processing capacity from 2.6mtpa to 5.2mtpa and making it the world's seventh largest diamond mine by throughput," Gem said.

Another AIM-listed company Mano River Resources is making plans to list is subsidiary Stellar Diamonds and has completed a pre-IPO placing of 2,375,000 new ordinary shares of 1 pence each in Stellar, raising gross proceeds of £2.375m, said Mano.

Mano is the largest shareholder in Stellar, holding 63% of the enlarged issued capital. Stellar's CEO Karl Smithson said the funds raised would primarily be used to strengthen the company's portfolio ahead of achieving a listing on AIM.

"The proceeds from the placing will be used to continue development of near term production projects at the Kono underground trial mining project in joint venture with Petra Diamonds in Sierra Leone and the 100% owned Mandala alluvial diamond project in Guinea. Additionally, the proceeds will be used to advance key diamond exploration activities and for general working capital purpose," said the company.