www.diamondcorp.plc.uk
DiamondCorp plc is an emerging diamond producer focused on maximising shareholder value through the development of high margin diamond production assets. The company is incorporated in the UK and the highly prospective diamondiferous regions of South Africa and Botswana are its chosen areas of operation.
DiamondCorp’s £2 mln insurance payment is a great result, says Ocean Securities
DiamondCorp’s (LON:DCP) receipt of £2 million from an insurance settlement is a great result for the company, according to analysts at Ocean Equities.
Yesterday the South Africa based diamond mining firm revealed an agreement with its insurer over a claim for damage to timbers and pumps in the vertical shaft at the Lace mine. The timbers were damaged incurred during heavy rains earlier in this year.
It also clarified that this particular shaft will be used for ventilation rather than ore hoisting, in the current underground mine development plan.
“(DiamondCorp) would have had to deal with the damaged timbers and pumps in the vertical shaft with or without this settlement from the insurance company,” said
“From this settlement DiamondCorp is adding £2m to its balance sheet without suffering any dilution to share holders.”
The analyst is bullish on the stock and says DiamondCorp has lined up two potential re-rating events for the near future.
“Firstly, drilling results at its Jwaneng South project will indicate whether there is an economic concentration of diamonds in the two pipes being tested,” he explained.
“Given the positive earlier stage results we expect that these results will be positive, and should DiamondCorp’s projects be even a fraction as profitable as its nearby neighbour’s operation, the shares should re-rate accordingly.
“The other re-rating event will be the signing of an alternative development financing agreement for the Lace mine.”
According to Ocean DiamondCorp is in an advantageous position because it is now debt free and it can tie project development debts to its hard assets at the processing plant.
“We remain in a high diamond price environment in spite of the recent correction, which should be viewed in respect to the longer term trends in the market which saw diamond prices reach record highs in Q3’11 from recent lows over a short period.
“This has been brought about by inventory building across Asia to meet new retail demand. The current buoyant diamond market conditions and the expected strong profit margin from the Lace mine make it an attractive asset for debt financing.”
