RE: News outhaving done some digging and having spoken to JR, heres my take on where we are at.....
Diamond stocks (like everything else) are getting hammered down by margin calls. Brokers are under pressure to move margin calls off their books rather than paying interest on borrowed money. Rumour has it that a couple of Toronto brokers are under extreme pressure and may go under.
Once the 3rd and final tranche is out of the way, Northern will be in a position to start supporting the stock - research notes, promotion, equity sales desk etc. Currently Northern as lead arranger of the PP are prohibited from doing anything beneficial for the DOR sp. In the absence of support, buying institutions are having a field day, forcing down the sp further everytime DOR agrees to reprice at the behest of the institutions - vicious circle controlled by vulture capitalists. In fairness to Northern, they have managed to raise money, where other companies have had to cancel financings.
DOR has enough cash now to keep the show on the road - which in itself will stave off any undervalued, unwelcome, aggressive approach from anyone trying to take us out on the cheap. Flow thru monies will pay for continuing diamond analysis/exploration, and the hard cash for the DMS plant will be raised when the dust has settled on the current market mayhem. DOR will sit tight and husband the current cash until things improve. The fundamentals of the company are unchanged.
The nailed-on certainty of diamond shortages is starting to loom large in the investment community.... every CEO is pointing to it, every analyst is aware of it, but investors are still sitting on the sidelines. China and India will drive demand so it doesnt matter as much if the west is mired in recession. We are at the bottom now so expect an Autumn turnaround in all diamond stocks. The upswing should prove as violent as the downswing. As an example of the price rises which are happening currently, Harry Winstons Q1 '08 results show that they mined 30% less ore, and did so at a 10% lower grade than last year, yet they only experienced a 2% fall in revenue........ therefore the prices they are achieving have improved by 35%-40%...... Obviously they are a vertical operator with a retail arm so the increased margin is probably largely attributable to the retail aspect of their business, but the picture is clear whether you are looking at rough or polished diamonds..... we are near the bottom of a very steep incline in diamond prices over the next couple of years....
Consolidation is coming..... ask yourselves which major will be most interested in the Mori JV which is showing very exciting coloured diamond counts..... Rio Tinto, owners of the 'pink' Argyle mine spring to mind.... Rio have bigger fish to fry currently with regard to their current dance with BHP.... but consolidation is coming for juniors as well as majors...
Permits lodged around 20-25 june.... Government have 50 days to respond
Also John Ryder will be delivering a paper at the 9th International Kimberlite conference in Germany. I might get him to collar Roger Morton at the event and shake some information out of him in respect of the Brazilian play that some of us are following...... what do you reckon Bish, HM?
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