Monday, January 25, 2021

Botswana Diamonds confident fundamentals will remain very strong

Botswana Diamonds (LON:BOD) is confident the fundamentals of diamonds will remain very strong as it progresses its exploration in Botswana, Cameroon and Zimbabwe.

In a statement accompanying its interim results, the group said while a number of producing mines are nearing the end of their lives, demand for diamond jewellery is booming.

According to Botswana Diamonds, China, India and other Asian countries are on target to be bigger by 2020 in total diamond consumption than the US is today – about 40 per cent of world demand.

Annual growth rates in these countries are in double digits in contrast to flat European demand and annual growth rates of 5 per cent in the US.

“Overall the future looks very bright with an increasing gap between global rough supply and diamond jewellery demand.”

In Botswana, which it calls ‘the home of diamonds’ and which is home to five of the world’s 20 producing hard rock kimberlite mines, it is expecting first results from exploration in the second half of 2012.

If and when targets are identified, Botswana Diamonds will form a 50/50 joint venture with its domestic partners to lodge licence applications and to undertake fieldwork.

In Cameroon, a sampling programme is underway recovering up to 300 tonnes of rock from three areas identified in the earlier work.

Once the rocks have been confirmed as containing diamonds, which the group is confident they will be, it will undertake a larger bulk sample to identify grade and diamond value.

Results from the current work are due mid-2012 with the next phase beginning at the end of this year.

Finally, in Zimbabwe, the company has a 49/51 joint venture with local partners on a series of claims in the Masvingo/Beitbridge area thought to contain kimberlites. A small bulk sample is underway to demonstrate whether or not they contain diamondiferous kimberlites.

Chairman John Teeling said: “The future for diamonds is bright. BOD is well placed with good ground, funds and skills to successfully explore. Exploration is a high risk venture but the potential rewards make the risk worthwhile.”

The company reported a pre-tax loss of £207,000 in the six months to end-December 2011.
Broker Westhouse Securities welcomed the report, repeating its ‘strong buy’ recommendation and price target of 5.5 pence on the stock, which represents a significant premium to yesterday’s closing price of 4.13 pence.

Analyst Rob Broke highlighted the recent fundraising by BOD, which has boosted its war chest to ┬ú1.5 million from ┬ú169,000 at the end of 2011. The funds will cover the company’s exploration expenses across its portfolio in the coming year.

“BOD offers investors exposure to a management team with a successful record in diamond exploration, having discovered Karowe before it was sold to Lucara Diamond Corp,” Broke said in a note. (Proactive Investors)

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