Broker Charles Stanley has repeated its 'buy' recommendation on Diamondcorp (LON:DCP), saying the company offers an "attractive" long term investment with first production expected in 2014.
Its full year results, issued on Monday, reminded that its Lace operation in South Africa continues on schedule and importantly, on budget, notes analyst Kieron Hodgson.
"We anticipate that whilst news flow may be limited, the pace of construction at Lace will not," he says, noting that the necessary financing package is in place.
"The processing plant is due to be re-commissioned in the coming weeks with kimberlite tailings producing diamonds for sale, depending on market demand, by the end of the year."
"Unlike many other commodities, diamond prices have been positive to date, in line with our longer term forecasts.
"We believe that certain categories have risen by as much as 10-15%, with an average of 5-10% across all categories. We believe that there could be a significant re-rating opportunity for the shares if prices at the proposed tenders achieve those modelled to date."
The broker has increased the price target to 9.2p from 8.5p.
"This has been raised slightly in response to the depreciation of the South African Rand positively impacting costs.
"We reiterate our buy recommendation as we believe that as the project nears completion, the perceived discount to NAV will diminish."
Like most early stage mining companies, Diamondcorp is loss making, but losses reduced markedly in 2012 to £3.53mln from £4.24mln the year before.
Cash at the end of 2012 stood at £4.32mln.