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BRC DiamondCore on the hunt for funding partners
Brendan Ryan
Posted: Mon, 17 Nov 2008
[miningmx.com] -- BRC DiamondCore (BRC) has dropped its plans to raise 3m Canadian dollars through a private share placing and is, instead, focusing on finding new partners to help fund its operations in South Africa and the Democratic Republic of Congo (DRC).
BRC president and CEO Mike de Wit said on Monday that BRC was in negotiations to find a partner to help fund its exploration activities in the south of the DRC, similar to the way it had struck a deal with Rio Tinto over the exploration of its properties in the north of that country.
He added that the deal, if negotiated, could generate some funds to be used on BRC’s South African operations which, according to the company’s just-published report for the September quarter, are undergoing a strategic review.
De Wit added it was possible that additional partners in South Africa might get involved in BRC’s
operations.
He declined to name the parties until the negotiations are completed which, he said, could take another three to four weeks.
Likely partners could include De Beers and Gem Diamonds, because both groups are among the few diamond producers with available cash at this point and, significantly, both have exploration operations adjacent to BRC’s properties at Tshikapa in the southern DRC.
The thrust of the exploration work in this particular region is to find the host kimberlite pipes, the source of the extensive alluvial diamond deposits being mined by a number of operators in the southern DRC.
Conventional geological theory has been that these pipes are in neighbouring Angola and that the diamonds were washed north into the DRC, but that is being questioned by geologists at De Beers, Gem and BRC.
De Wit is one of the world’s most experienced diamond geologists and had a long career with De Beers before moving to BRC.
Industry sources say the three companies believe the alluvial diamonds they are recovering in the Tshikapa region have come from nearby kimberlite pipes, because they do not show signs of having been transported long distances in the rivers.
The BRC quarterly report underscores the company’s difficult financial position. On September 30, BRC had $1.21m in cash and a working capital deficit of $9.3m, compared with $0.93m cash and a working capital deficit of $4.3m at end-December.
BRC’s only source of revenue is from its bulk sampling operations in South Africa. Those are now being hit by the general drop in diamond prices, which is also affecting the larger, high-quality stones produced from alluvial operations along the Orange River.
The report said: “Net revenue generated from the bulk sampling activities amounting to $6.47m during the first nine months of 2008 is adequate to support, but not grow, the South African
operations.”
De Wit said the review of SA operations was aimed at developing a “global resource” for the Paardekraal kimberlite deposits, as well as an assessment of how best to expand the Silverstreams alluvial project where management would like to double plant capacity.
The BRC share price quoted on the Toronto Stock Exchange is sitting at a 52-week low of C$0.5, compared with a 52-week high of C$7.
On the JSE, the share price has recovered marginally from 210c to 400c on minimal trading volumes. That compares with a 12-month high of R36.
The BRC report makes little reference to the outcome of the legal dispute with former black economic empowerment (BEE) partner Sefalana, other than a note under “risks and uncertainties”.
This states: “Disputes between the company and a BEE entity could therefore interfere with the company’s ability to conduct one or more of its projects in South Africa, which could have a material adverse
effect on the company.”
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