Monday, March 8, 2021

Dowgate’s note on Lucara paints bullish picture as BOD waits on fate

Dowgate Capital Stockbrokers said on Friday the latest announcement by
Lucara Diamond Corp that its recent exceptional diamond tender has
surpassed previous tender presents an interesting read for its
peer ÔÇô Botswana Diamonds.

Lucara on Thursday said its first tender of the year which consisted
of 20 diamonds from Karowe mine, totaling 1,191 carats, fetched total
gross revenues of US$50.5m (about P440 million) at US$42,347 per
carat. The highest value diamond stone (167.1 carats) was sold for
US$12.7m.

President and CEO of the Botswana Stock Exchange listed company,
William Lamb, said the stone tender now establishes Karowe, as “one of
the world’s leading diamond producers by value”.

Dowgate, which acts as Joint Broker to Botswana Diamonds pointed out
that investors should watch the developments as history could repeat
itself. The BOD team discovered Karowe, which is producing diamonds
that are talk of mining industry.

“Lucara’s announcement provides an interesting read across to AIM
listed Botswana Diamonds plc (BOD), which is exploring the PL117
licence, which lies just 10km from the Karowe mine,” the firm said in
a note.

Samples taken from PL117 on the recent fieldwork programme are
currently being analysed in the labs by BOD’s Russian JV partner
Alrosa, with the objective of identifying targets to be drilled. Full
results from the fieldwork programme should be announced soon.

Alrosa will be applying its own exploration technology that has been
used successfully in Russia to locate diamondiferous kimberlites
beneath the Siberian tundra overburden, but has not been exploited in
Africa, and Botswana in particular, where the challenge is to look
below the deep sand cover of the Kalahari.

“Moreover it is important to highlight again that the management team
behind BOD made the AK6 (Karowe) kimberlite discovery, when the ground
was held by African Diamonds in partnership with De Beers,” said
Dowgate.
“Investors will be looking to see if history can repeat itself at
PL117 and potentially at other ground held in Botswana, in BOD’s JV
with Russian diamond mining group Alrosa”.

Dowgate added that unlike Lucara’s share price, which has tripled over
the last 12 months and risen by 23 percent in the last three months,
Botswana Diamonds shares have traded sideways in the same period.

“With the exploration programme at PL117 now gearing up over the next
few months as drilling commences, and against the background of a firm
diamond pricing market and positive news from nearby Lucara, we
believe the climate looks favourable for a rally in the share price of
Botswana Diamonds plc.” Lucara’s next exceptional stone tender will be scheduled for the third quarter of this year.

RELATED STORIES

Read this week's paper