Wednesday 23 January 2019 | ShareProphets: The one stop source for breaking news, expert analysis, and podcasts on fast-moving AIM and LSE listed shares
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Hello, Share Scatterers. Diamonds are a glamorous play, but oh, how risky! I’ve thrown the odd thousand at a few miners hoping to find a few glittery winners. But I have usually been disappointed. Some of my long-ago picks are now so low in value that they’re not even worth cashing in. But that, as Shareprophets star contributor Wilders recently pointed out, is the dodgy nature of exploratory mining. However, there are a few diamond miners with impressive assets rather than just high hopes.
Diamond prices haven’t managed to escape the recent commodities rout, but I still see value in this part of the mining sector. Gem Diamonds (GEMD) is a company that I covered back in the summer as a long term buy when it was around the 135p area, and I still believe that to be the case and think the recent drop offers a chance to add and average down.
Coloured stone miner and auctioneer Gemfields (GEM) has agreed to acquire emerald projects in Colombia in a deal that will take the company across the Atlantic from its key African hunting grounds in Zambia and Mozambique to what entrepreneurial chief executive officer Ian Harebottle calls ‘the home of some of history’s most legendary emeralds’ in South America. The company, whose shares have risen from 35.75p when highlighted here in March last year to 62p after hitting 68.25p, is buying a 70% interest in the Coscuez emerald licences in the Colombian Department of Boyaca, near the Venezuelan border.
John Meyer of SP Angel this morning comments on Anglo American (AAL), Central Asia Metals (CAML), Gem Diamonds (GEMD), Horizonte Minerals (HZM), Orosur (OMI), Noricum Gold (NMG) & Weatherly International (WTI) as well as offering a detailed macro view on the news that is shaping global mining and the AIM mining pond.
Production and sales from Gem Diamonds (GEMD)’s flagship Letseng mine in the southern African kingdom of Lesotho declined in the first half of the year, as the fully-listed company had to contend with tough conditions in the rough diamond market and a 19-day shutdown during the first three months on the completion of the initial phase of a plant upgrade. In its latest trading update, London-based Gem, whose shares once traded above £11 but have now fallen from a 221.25p 12-month high to 128.75p, says sales from 70%-owned Letseng fell 18% to $106.3 million (£68 million) in the six months to June.
Diamond miners haven’t generally been performing that well in recent times, and that includes Gem Diamonds (GEMD). But I think the recent drop in share price could actually be a great opportunity to invest in a ‘Gem’ at a great level.
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