Kaiser recommended....John Kaiser recommended this one back in June,wish I had listened to him then.Heres article:
Things are finally looking up for
Mountain Province Diamonds Inc. (
TSX-MPV, $1.75) says editor John Kaiser.
MountainProvince Diamonds is a Canadian diamond exploration and developmentjunior. The company's primary asset is its interest in the Gahcho Kuédiamond project, one of Canada's largest diamond deposits and thelargest diamond mine under development globally. Gahcho Kué is a jointventure between Mountain Province (49 per cent) and De Beers Canada (51per cent).
MountainProvince has recently published the first ever 43-101 compliantresource estimate which improved on the internal estimate generated byDe Beers in 2005.
"Themarket yawned, which is our opportunity to buy the stock below $2 as aGood Absolute Spec Value Buy before the second obstacle to a pricerecovery into the $4-$6 range disappears."
Mr.Kaiser says a key obstacle for Mountain Province would be De Beers'potential enforcement of its 10-per-cent marketing rights. Underordinary circumstances it would be unthinkable for De Beers tosurrender the marketing rights and the associated 10-per-cent marketingfee. But the current weak diamond market and financial condition of DeBeers represent the sort of unusual circumstances where this type ofconcession would be a win-win for both parties.
Mr.Kaiser explains that De Beers would have to fund only half thedevelopment costs of a project into which it has already sunk $180million. It could avoid potential headaches involving Europeananti-trust complaints.
Plus,valuation issues involving both the Canadian tax authorities and theminority partner would become moot in the context of the sort of pricediscovery mechanism commonly used to divide diamond production amongpartners.
Inshort, it would make Mountain Province attractive as a takeover targetand it would make it easier for the junior to fund its 49-per-centshare of mine construction at Gahcho Kué rather than decrease its stakeand let De Beers fund everything.
Ifsuch a decision is made during the next couple of months it wouldlikely be immediately followed by a definitive feasibility study whichis estimated to cost $8 million and take about 12 months to complete.
"It ismy assessment that a host of factors justifying the fast-trackdevelopment of the Gahcho Kué diamond project are rapidly converging.The timing for a quick double or triple in the price of MountainProvince which brings the implied project value back into the $600-$700million range is imminent."