Diamonds -- Brazil, Sierra Leone, Quebec

Thom Calandra |

Trade journals and researchers are pitching diamond mines as the next profit-margin leader in mining.

I believe it is Bain & Co. in Boston that is betting on reduced mine supply of rough diamonds these next five years. Many pundits are starting to forecast rising profit margins at the mine sites -- as much as 25 percent margins at well run operations with high-quality stones and compact capital-expenditures.

The outlook improvement is thanks to advances in mechanized equipment. Also: China and other fresh consumers are willing to pay more once the diamonds become jewelry. And naturally, the fact is, when all the mine-hype is put aside, no one can claim a good-sized diamond find since Zimbabwe in 1997.

[Not counting the Russia flash two years ago that it was sitting on millions of carats beneath a meteorite crater. But hey, that's Russia. It has most of the world's mined diamonds, plus it has FIFA World Cup in 2018.]

I like to tell our TCR family that I have yet to make any money in diamonds. Or gems. Investing in the mines, that is. My largest outlay is to Stellar-Diamonds PLC (STEL:AIM), a London-traded outfit with a coven of former mega-diamond-company types working its fields in Sierra Leone and Guinea. I've been to the flagship property: Tongo in Sierra Leone.

The shares are beyond depressed at 2 pence. Many, many financings for Stellar. What is beyond doubt is the quality of the Tongo project and the integrity of Karl Smithson, founder and CEO. The diamonds are there in the dykes, and the team is getting them into its safekeeping cleanly and without waste or injuries.

See:  www.stellar-diamonds.com for today's update on Tongo grades and activity.

I also own a recent entry into diamonds.

Nouveau Monde Mining I a $4 million market-cap ticket to highly concentrated carbon. That is, a diamond in the rough. Eric Deslauniers is a Quebecois geophysicist in his mid-30s and hungry for carbon. Nouveau Monde (NOU in Canada) is developing a high-grade graphite project in Canada’s Quebec province. This is the latest on its diamond-dog pursuit of stones:

Nouveau Monde Options Waasikusuu Project .

Finally, there is this producing diamond thing in Brazil, and I do not own shares of Dr. Marc Fogassa’s Brazil Minerals (BMIX) .

See: Mineração Duas Barras at www.brazil-minerals.com.

On the ruby front, I own and keep up to date on True North Gems ($TGX:CA). The Greenland operator's shares rebounded this spring and early summer from a 5-cent CAD low to about 12 cents now. What will move this in coming days and weeks is the extent of fair value for its existing hoard of stockpiled gems and ore. The shares are a good chance to gain the 20-cent level this week or next.

Worth A Diamond Read

See: http://www.bain.com/publications/more/metals-and-mining.aspx

Briefly 

TCR family member Peter Epstein wrote this profile and interview -- American Sands Energy (AMSE) . I own it; I know the principals. The article is via InvestorIntel.

-- Thom Calandra

THE CALANDRA REPORT -- $110 yearly: Does Not Recur
THE CALANDRA REPORT -- $110: Will Recur Yearly

 

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