In the media

DiamondCorp eyes gem deal flow as it seeks to build ‘critical mass’

31 March 2008

Source: Mineweekly

Author: Matthew Hill

Emerging diamond producer DiamondCorp, which debuted on the JSE on Monday morning, has plans to more than triple its market capitalisation to over £100-million by positioning itself as an alternative partner for those exploration companies seeking to develop new mines.

Currently, the company has only one producing asset, the Free State Lace mine, but a number of mergers and acquisitions are on the cards, CEO Paul Loudon told Mining Weekly Online.

“Consolidation is certainly going to happen in the years ahead,” he said in an interview at the Johannesburg bourse.

“A lot of the companies that are listing may not, in their own right, be able to achieve critical mass, and it’s a logical progression from where we are,” stated Loudon.

“There’s been a fundamental change in the diamond industry, and as we grow and move forward, as well as developing new projects, mergers and acquisitions are likely,” he said.

Loudon went on to say that the company needed to grow its market capitalisation significantly.

“We have a market capitalisation right now of about £32-million,” he stated. What we have to look at as a company, is how we get that into a market capitalisation in excess of £100-million, because once you’re over £100-million, then you get onto the radar screens of different investors,” he said.

“Our aim is to do that through our own organic growth, as well as through mergers and acquisitions to give us that critical size,” said Loudon, declining to comment on how quickly the company would like to reach this target.

However, he did stress that DiamondCorp would carefully choose its targets.

PARTNERSHIPS IN PROSPECT

On the topic of joint ventures, Loudon said that DiamondCorp was constantly in discussions.

“We want to be able to stand to be an alternative partner for a junior that makes a discovery, rather than them having to go to De Beers or BHP Billiton,” he said. “We’ve demonstrated that we can put diamond mines into production faster and more efficiently than a major can.”

He said that the company was keen on developing projects mainly in Southern Africa.

“We are very interested in Lesotho; we are very interested in Botswana and Namibia,” commented Loundon.

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