Harry Norman: Hello, this is Harry Norman for Proactive Investors, and welcome to another Proactive audio interview. Today is the 9th of February 2011, and I’m talking with John Teeling, executive chairman of Botswana Diamonds and listed on the Aim Market mining sector. Stock ticker BOD, share price of 5.5 pence, market cap 5.52 million pounds sterling. Web address: botswanadiamonds.co.uk.
John, thank you very much for joining us for this interview somewhere in Southern Africa.
John: I’m delighted to be able to talk to you; I hope the sound holds up. I’ve spent the last two weeks in Botswana and Zimbabwe.
Harry: Please give investors a brief introduction to Botswana Diamonds, and the company’s business strategy.
John: Botswana Diamonds is focused on late stage projects in Botswana. It also has some earlier stage projects in Botswana, Zimbabwe and Cameroon.
We listed on AIM last Wednesday 2nd of February as a spin off from African Diamonds which had been acquired by Lucara, part of the Lundin Group
Harry: What do the Botswana Diamonds team bring to diamond exploration and diamond project development?
John: We delivered a kimberlite mine in Botswana. One of the very few kimberlite mines currently being developed in the world. So we can bring success. We are a very experienced team technically, and we also have wide experience in operating in Africa for the last 25 years.
Harry: What are your plans for your advance stage exploration projects in Botswana?
John: We have three projects that are very advanced stage. This is the AK8 kimberlite, the AK9 kimberlite, and the BK5 kimberlite. We have worked on these for 8 years in different companies and they are now at the stage where they must be bulk sampled. We know how big they are; we know they contain diamonds, what we don’t know how many diamonds per tonne, and the value of each carat.
We have commissioned in the last couple of days an 11 thousand tonne bulk sample costing 1 million US dollars of which 9 thousand tonnes will be from BK5, and approximately 1000 each from AK8 and AK9. That will tell us the value of a tonne of ore in the ground and then we can make a judgement as to whether that is commercial or not.
Harry: Why is Botswana considered the best address for diamond exploration, development and production John?
John: The best diamond mines in the world have been discovered in Botswana. Orapa is the biggest diamond mine, Jwaneng mine is the richest diamond mine, and indeed the richest mine of any type in the world. There is a cluster of 80 plus kimberlites in the Orapa region, almost all of which contain diamonds. And there have been 6 mines discovered there. Considering there are only 15 active diamond mines in the world, that is some achievement. Also there are less than 600 kimberlites ever discovered in the world with diamonds, and a big percentage of those are in Botswana.
It is expected that this success rate will continue, and then in the coming years there will be another 2, 3 or 4 new diamond mines in Botswana.
Harry: Botswana Diamonds has interests in the Marange and the Murowa districts of Zimbabwe. What’s compelling about these assets, and what are your thoughts about doing business in Zimbabwe?
John: Marange is possibly the biggest diamond field in the world. It differs from every other known diamond field in that it’s what’s known as a paleo-placer. Originally alluvial that has been changed over time to produce very complicated metallurgy and mineralogy. It’s a very rich deposit, exceedingly rich, up to 100 times richer than similar areas in Botswana or South Africa. It’s been known for some years but only in recent years has it been exploited.
We have been working for two years with local partners and with the government itself in partnership to try and get a license. It would be a major boost to the company if we could get a license, but unfortunately title is uncertain and there is no certainty that we will actually get the license.
The Murowa assets are different in that they are kimberlite pipes similar to Botswana and South Africa, where we have the experience. These are around the Rio Tinto diamond mine there, and they are known to contain diamonds. We’ve had them for a couple of years, we will move to either sample, drill or drop in this year.
Harry: What can you tell investors about Botswana Diamonds 75% interest in 8000 square kilometres of licenses in the Mobilong district of Cameroon?
John: Highly speculative but massive potential. Historically Cameroon had no diamonds, while my colleague David Horgan was out there he was introduced to the possibility of diamonds in the East of the country and he went to see it in the rainforest. He found a Korean diamond company mining. There are no Korean diamond companies either, so that’s a first. It appears to be similar to Zimbabwe in that it’s a paleo-placer, relatively flat lying, shallow alluvial type operation. A local company we knew immediately applied for the adjacent ground and we are negotiating to joint venture with that company. Assuming we are successful, and that the license is issued, we will then spend a few months finding out exactly what we have, sending in geologists to the site, to map and to sample. But there is massive potential at this stage.
Harry: What is Botswana Diamonds financial situation John?
John: We inherited two and a half million dollars from the takeover of African Diamonds. Some of that has gone on the listing, but there’s $2.1 million left in the kitty. $1 million of that will be spent on the bulk sampling in Botswana. That will be spent between now and the last quarter of the year. More will be spent on the Cameroon and the early stage projects in Botswana, and hopefully some will be spent in Zimbabwe if we get our license.
We are fully funded under all eventualities, until this time next year.
Harry: What can investors expect from Botswana Diamonds over the next 12 months John?
John: An active flow of information. Hopefully some of the results will show that we have a commercial discovery in Botswana. Results from these bulk samples will start to flow from about June. Between then and now we should have the announcement of the Mobilong license and possibly an announcement of a license in Zimbabwe. There is a very active program for the company running through the rest of this year.
Harry: What are your thoughts on diamond supply and diamond price trends John?
John: The fundamentals are wonderful. There are few diamond mines in the world, the big ones are old. The Botswana diamond mines must go underground and it costs billions. The Argyle mine in Australia is now underground and the Canadian mines are mature. The demand is rising because of Chinese and Indian demand, and that’s expected to continue.
The good fundamentals have already been reflected in the fact that prices have risen above the 2008 peak level. They may not be able to continue rising like this, but at the moment the diamond space is a very good space to be. With growing incomes in emerging economies, and with young ladies still wanting diamonds, the fundamentals look really good.
Harry: Remember Proactive Investors is not an investment advice service. Make sure you register at proactiveinvestors.co.uk for our weekly newsletter which will keep you informed about our articles, interviews and events.
Thank you for listening.
END AUDIO