Diamond miner with assets in Sierra Leone and Guinea West African Diamonds (WAD, AIM: WAD) has reported an initial diamond production at its Bomboko mine in Guinea and said it was looking to take advantage of growth opportunities in the market by growing business through acquisitions.
In its preliminary results for the full year ended 30 April, WAD reported an operating loss of £247,442 compared to last year’s loss of £228,325, while losses per share narrowed to 0.48 pence from 0.58 pence in 2008. The company had no revenue, but has since achieved an initial production of 433 carats at its Bomboko mine in Guinea after wrapping up its construction in early 2009 and putting it on stream in June, currently averaging 6.5 cpht (carats per hundred tones) at a value of US$116 per carat, including a 16 carat gem that sold for over US$1,000 per carat.
The mine is expected to reach its full capacity by the end of the current year, when it will be capable of producing up to 2,000 carats per month.
The Bomboko licenses are estimated to contain at least 750,000 carats of diamonds. Sampling at WAD’s other major operation in the country, the Droujba licenses, has produced high grades in excess of 100 cpht. Further drilling and testing is to be carried out to establish the economics of the project.
The company is focusing on Guinea, having shifted plant and equipment from both of its operations in Sierra Leone to the Bomboko mine. WAD signed an agreement with Sierra Leone based company Pyramid Resources earlier this month to reopen the Plant 11 tailings project near Koidu, for which it has a 5% royalty on production.
WAD said it was looking to capitalize on the projected shortage in diamond supplies as diamond miners have had little exploration success in the recent times apart from African Diamonds’ (AIM: AFD) discovery in Botswana, while mines have depleted. The company is involved in discussions about possible mergers and acquisitions after talks with a number of other companies failed.
“This impending shortage is the opportunity for WAD. We are a producer of high quality stones. We have known reserves, we are experienced in the industry, but we are too small. Investors, particularly institutional investors, rarely invest in small market capitalisation companies,” said WAD’s Chairman John Teeling.
The company also noted a rapid recovery in diamond prices after a “catastrophic” fall in 2007/2008 with the bounce back most notable in the size and quality range produced in West Africa.