Diamondcorp Share Discussion Threads

[goodpick] 01/4/2015 00:12

So Liquid Millionaire The share price Angel note says that eps after interest and tax will be over 7p on 2017.We are sitting around 9p. So this is a no brainer on a simple multiple of 10 we should be at 70p + in 2 years time.( - : Assuming the figures are correct.I wonder why the share price target is only 20p then. Something doesn't stack.

[riyazpatel] 27/3/2015 17:21

Liquid millionaire do you have the link to the report please?

[granitetim] 27/3/2015 12:11

[...]
In the small cap market mine developer DiamondCorp (LON:DCP) is making good progress, according to share price Angel, which sent analysts to the Lace mine for a site visit recently.

Analyst Carole Ferguson, in a note, looked ahead to DiamondCorp’s first revenues later this year which will kick start a ramp-up phase through to 2017.

Sanlam Securities, meanwhile, wrote up DiamondCorp peer Stellar Diamonds (LON:STL) citing progress at the Baoule and Tongo projects, and said the value of the former will be better understood by the end of the year.

[liquid millionaire] 27/3/2015 10:51

DiamondCorp (DCP LN) 9.5 pence, Mkt Cap £30.2m – Good progress at Lace Diamond Mine

Buy - Target Price 20 pence (Previously 23 pence)

We have published an update on DiamondCorp today, please click here for the note CLICK FOR PDF

We update on DiamondCorp based on a site visit to the Lace mine in February.
Good progress is being made in developing the mine ahead of block caving.
The company are in the process of establishing a resource and scope for mining of the UK 4 Block.
The opportunity to mine the latter provides earlier commercial cash flows while at the same time continuing full development for block caving at the 47 level.
The recent royalty offer for US$7m provides a cushion during ramp up, de-risking any potential funding gap.
UK 4 block is high grade and presents early revenue opportunity

Underground drilling from the 250m level has found scope for development potential of a high grade zone between the 240 and 350m levels.
The resource potential within the block is higher than previously thought with scope for additional resource and higher grades.
The block is currently being defined for mining in the second half of 2015.
2,000 carats is being targeted for recovery to be able to establish a valuation for the UK4 resource.
Mining of UK4 will use bottom up long hole stoping at the 330m level and truck to the conveyor system being installed for the block cave.
Mining rate at 30 kt a month initially from H2 2015.
Development for a full block cave can be undertaken at the same time

A new block cave is to be established at the 470m level.
Development started in Q1 2013 with 8 km of underground tunnelling to be completed.
A total of 3.5 km has been developed from the new box cut.
2015 sees first revenues from ramp up with 2017F to see step up

First revenues from kimberlite from UK 4 and development ore expected H2 2015.
2017 is forecast to be the first year of commercial production at 442,500 carats per year.
Dec YE



2013A

2014F

2015F

2016F

2017F

Main pipe

cts



0

45,000

180,000

442,500

Tailings

cts

18,600

22,500

22,000

2,500

Net revenue

£m

0.2

0.8

4.8

15.7

40.5

Operating Profit (Loss)

£m

-2.1

-2.0

1.6

8.6

29.0

PBT

£m

-2.2

-3.2

0.2

3.4

23.5

Tax

£m

0.0

0.0

0.0

0.0

0.0

PAT

£m

-2.2

-3.2

0.2

3.4

23.5

Year end cash

£m

2.2

4.7

5.3

2.3

19.2

EPS

p

-0.8

-1.1

0.0

1.1

7.4

PE



NR

NR

NR

8.9x

1.3x

EV/EBITDA



NR

NR

45.0x

5.7x

1.5x

Source: share price Angel Estimates

[darcon] 25/3/2015 06:05

tiger60,

The Slide 15 "Lace Mine Development timeline" shows:

- "UK4 Production ramp up" happening in the period from Q2 to Q3 2015.

- "UK4 Production and positive cashflow" has a red box in the Q3 box and then it is colored in full from Q4 2015 onwards. To me this looks like they are still saying in their Feb 23rd 2015 presentation that full production is targeted to commence at the end of Q3.

Do you perhaps recall the dates of those interviews of Mr. Worthington and Mr Loudon or could you perhaps post the links to them?

[tiger60] 24/3/2015 18:49

Just a couple of discrepancies to point out.

In recent interviews mr worthington talked about a NAV of 39p whilst PL quoted 30p. But what is more interesting is that production which was stated as being q3, and based on information published a maximum of 2 months post end of June is contradicted by the February presentation on their website which shows uk 4 production (page 15 graphic/project plan) as start of qtr 4.

They must align their PR to keep credibilty

Next update due end of April.

[hpcg] 24/3/2015 11:58

People sell for all sorts of reasons whereas people buy for only one reason. Small holders, traders and stale bulls will all create liquidity.

For example I still have a holding from 31 May 2011 which cost 15p per share. If that were my only holding I might be tempted to sell before 15p. As it happens this is dwarfed by my buying since just before xmas last year. I have drip fed at lower prices every few months from mid 2013 through last year, but these are also now minority holdings. People who bought at 5p or lower may also be trimming their exposure.

The chart looks delicious!

[granitetim] 24/3/2015 10:55

L&G may still be offloading ! We just don't know?
I would like to think they would want them back under the new circumstances!

[hpcg] 23/3/2015 12:46

The most difficult thing to do is buy at new* highs, but I've been doing that all year.

*Obviously not completely new, but this is the highest since Sep 2011. We will never see absolute new highs, though I would be more than happy if that happened.

[ged5] 23/3/2015 11:52

Yes, consolidation is a better word to express what I was thinking. There's certainly no way I would sell any at this stage. Resource upgrade to come and production not too far off. You might say imminently if you listen to some companies. ;)

[hpcg] 23/3/2015 10:18

Retrace maybe, but since 15p is on the short term horizon it seems a little too soon to take profits. I would think more likely to consolidate before next leg up, similar to last month.

[ged5] 23/3/2015 10:09

Great to see us in double figures again. It's been a long time since we were last there. 10.25p being paid.

Looking overbought now so maybe a little retrace at some point soon before it continues on its merry way.

[curlly] 19/3/2015 14:10

nice move north today

[darcon] 18/3/2015 22:00

Northland Capital Partners state: "Based on our estimates the royalty will generate US$55.1m for Acrux over the 26 year mine life c. US2.1m per annum, which sounds punchy. However, the royalty will be tax deductible and the Black Economic Empowerment Partner will have to also contribute to its share of the financing, through a deferment of income. As a result, the royalty only reduces our NPV10 of DiamondCorp’s 74% interest in the project by US$8.9m (excluding exchange rate movements). While the additional financing had a relatively small negative effect on our valuation, changes to exchange rates and the improvement in the Company’s net cash position result in an increase in our valuation to 17.4p from 15.6p per share."

Source:

proactiveinvestors.co.uk/columns/northland-capital-partners-view-on-the-city/18023/northland-capital-partners-view-on-the-city-accesso-technology-group-diamondcorp-and-sphere-medical-18023.html

[ged5] 17/3/2015 17:34

Thanks JAF. It's also on the home page of the website along with the Proactive Investor's article.

Interesting that Northland thought the same as we do on here about funding. Of course Panmure is the house broker.

[jaf1948] 17/3/2015 16:45

Interview with Paul Loudon (thanks to poster jupiternmars on LSE):



Best part: he says that the share price ought to be trading between 15p and 20p now. Let's hope he's right and we get there soon.

[tiger60] 17/3/2015 15:38

Can't argue that the mkt sees it as a positive but personally unsure why unless institutional investors were fearing a placing. Anyway if it's a blue day I am happy but the mechanics mistify me.

[jaf1948] 17/3/2015 15:23

Tiger,

I prefer to think of it as money going towards ramping up production rather than just funding. Also, if we do 'lose' up to $50m, think of the profit that we will therefore be making.

I still see it as positive and so does the market so far.

[tiger60] 17/3/2015 14:09

But what happened to those recent interviews with pl where he states no more funding? I am surprised by the mkt reaction. Disappointed it could cost us plus $50m

[paxman] 17/3/2015 13:58

hpcg its $140,000

[hpcg] 17/3/2015 10:10

I think I went through the same instantaneous set of emotions as everyone else. Ultimately though the beneficial thing is we pay back through success; whilst it dents returns it does not add to risk. I haven't done any analysis as to estimate the cost over time (change in NPV should be less than -3%) but in a sense it doesn't matter since the share price was sitting at a greater discount than the royalty.

Does anyone know what the structuring fee is? "The Royalty also incurs a 2% structuring fee on the Advance."

I can read that as 2% of 7 million; 140,000. Or royalty is 3*1.02 = 3.06%. I don't think I can read it as 3+2 = 5% royalty.

Whatever, it looks to have kicked off the next leg up.

[ged5] 17/3/2015 10:08

2011 since we last saw these prices. Start of the long awaited re-rate? Or will we have to wait for confirmation of the agreement?

Good post Darcon. Thanks for pointing out the net v gross.

[darcon] 17/3/2015 09:38

This looks like being a positive as it means that they potentially won't need to seek any additional funding from shareholders to accelerate development or if any hiccups arise in the final steps to production.

I like the fact that they have the right to buy back the royalty in the future.

The fact that Acrux agreed to this financing indicates that Acrux are confident in the potential operation and that the mine will shortly enter into production. Of course, that is to be confirmed in the due diligence.

The other part I like is that the royalty is "net" and not gross. I have seen gross revenue royalties in another case which is more harmful to the NPV economics. A net royalty is fairer and more appropriate for all parties.

Hopefully no issues arise in Acrux's due diligence. I suspect there could be a further fillip to the price upon completion of the due diligence and confirmation that Acrux is ready to fund.

[ged5] 17/3/2015 09:20

I have to admit this announcement took me a little by surprise. I was under the impression we were funded through to production.

Once I got over that, I agree with you JAF this does look beneficial. To raise that amount (if it's concluded) without issuing equity or debt is quite simply fantastic. If the mine produces to expectation then I don't think the 3% royalties will be a hardship.

The market has reacted favourably.