We posted on Diamoncorp last month correctly predicting that news was on its way regarding their world-class Lace diamond mining asset.
It looks increasingly certain that the company target to mine over 400,000 tons of Kimberlite over the next 17 months or so will generate Approximately £8-£10 million pounds in revenue, The cash will be used by the company on mine development helping to significantly offset production costs estimated to be approx’ £9-£11 million pounds. (“400,000 tonnes of kimberlite is scheduled to be mined from stoping development during the 17 months of mine development through to November 2012 when full-scale commercial production is expected to be reached”).
Operating margins are being quoted at 46%-60% which is an excellent figure in its self but I would estimate that this figure could change further depending on the quality and the quantity of the grade of diamond extracted. It is widely being discussed within the city that lower levels of Kimberlite at Lace are thought to be higher in quality and quantity. The company have stated thus; “‘At current strong diamond prices, the initial minimum operating margin is expected to be a robust 46%, rising to very high levels if the diamond grade improves with depth as forecast in the geological model”.
The diamond market at the moment has been in recovery with auction houses reporting hotly contested bidding . Diamond packages/Lots have risen in value as demand begins to overtake supply. China and India are voracious lovers of the gem. Diamondcorp will have preliminary figures on grade and caret value this month from the 30,000 bulk sample while July will see the company release the final results from the bulk sampling. It is almost certain that these figures should be excellent given what Diamond corp already know from their geological study. The SP has (as foretold here) begun to rise it is up approx 15% since we first wrote on the stock and has been as high as 16.5p. I would certainly get them on a watch list and at the very least take profit now! Always derisk as & when you can. Under-value at the moment? Yes in my opinion but this is stocks & shares. What goes up will always come down. Watchlist and research!!
NB**Interesting to note that all the tipsters are now jumping over Diamondcorp!