Stockhouse’s mining investors have already been introduced to
Diamcor Mining Inc (
TSX: V.DMI,
OTCQB: DMIFF,
Forum) in a full-length feature article from
November 15, 2018. That article had a dual focus: alerting investors to improving fundamentals in this sector (especially at the high end of the market) and providing a snapshot of DMI’s exciting Krone-Endora Project.
Krone-Endora is a 5,888 hectare land package located in South Africa, the renowned global leader in diamond production. More specifically, Krone-Andora is situated directly adjacent to
the world-famous Venetia Diamond Mine, owned by none other than De Beers. Indeed, Diamcor acquired Krone-Endora from De Beers during a unique window of opportunity.
Diamcor has been in the news in recent months, announcing several additional diamond sales as the Company efficiently advances Krone-Endora toward commercial production. Investors wanting a deeper understanding of operations should refer to the original feature article.
Unlike all metals and most other minerals, the value of diamonds varies according to several qualitative factors rather than simply being a function of “grade”. However, even mining investors unfamiliar with this sector can learn a considerable amount through several metrics:
- Value ($’s per carat)
- Carat size of individual stones
- Gem-quality and “special” designation
The Venetia Mine itself is not only known for its overall production levels and its standing as one of the world’s most prolific diamond mines It is also famous for producing a high ratio of gem-quality diamonds. This is reflected in price. While the industry average for rough diamonds falls around $90 per carat, Venetia’s diamonds have consistently achieved average price levels of $200 per carat.
With that context, investors can judge recent sales from Diamcor’s Krone-Endora Project. Three, separate sales have occurred, on
December 3 and
December 20, 2018, and on
February 6, 2019. The highlights for investors:
- Total proceeds of over US$1.3 million
- Average price per carat: US$273.45 (February 6), US$158.60 (December 20), and US$218.82 (December 3)
- Various larger “Special” gem-quality diamonds: a 44.09 carat rough diamond and lower quality 37.0 carat stone
In previous sales, Krone-Endora has already yielded rough diamonds
as large as 91.07 carats. The CEO of Diamcor Mining, Dean Taylor framed these results for investors and also offered an update on Project development:
“We are pleased with the results of this tender and the sale price realized. We are equally as pleased with the recovery of the 44.09 and 37.0 carat rough diamonds which we believe is attributable to the additional crushing modifications recently completed at the Project. The modifications are performing well and allowing us to process all size fractions moving forward. Our efforts are now focused on increasing volumes and normalizing operations for the longer-term.”
For investors who haven’t read the original feature and are wanting a clearer view of the Big Picture, Krone-Endora (and Diamcor) offers extremely interesting potential. It starts with the mining-friendly geology.
The rare (“elluvial”) geological formation provides Diamcor with a significant area from which diamond-rich ore can be harvested with simple excavation, no drilling/blasting or underground mining required. The existing,
NI43-101 resource has a potential value in the $100’s of millions.
This means that the Company has not only been able to move toward full commercial production with (relatively) low cap-ex, it will also benefit from below-average operating costs due to this mining-friendly geology. But mining valuations have been depressed. DMI’s market cap is a mere $14.7 million.
For investors who are wary of current conditions – despite the enormous valuation upside – one more aspect of Diamcor’s operations will be of great interest to investors. The Company already has a strategic alliance in place on this Project, with none other than
Tiffany & Co Canada, a subsidiary of world-famous Tiffany & Co (NYSE: TIF).
Tiffany has invested US$10 million (roughly equal to DMI’s current market cap) in Krone-Endora in exchange for first right of refusal on Project production at then current market prices. The
exception is that Diamcor reserves the right to retain all “special” quality diamonds, defined as anything 10.8 carats or larger.
De Beers, Tiffany & Co, Diamcor Mining. One of these diamond giants is DMI’s neighbour. The other is the Company’s partner. Elite company. For investors looking for the best value opportunity of the three, the clear winner should be obvious.
diamcormininginc.com
FULL DISCLOSURE: This is a paid article of Stockhouse publishing.