Black Swan consolidates Brazil diamond interests under turnaround specialist
By: Tim Wood
Posted: 03/18/2001 08:00:00 PM | © Miningweb 1997-2001
NEW YORK -- Toronto, Frankfurt and Berlin listed Black Swan [TSE: BSW] has been just another post Bre-X ugly duckling with a share price bubble to rival any Nasdaq moon shot. However, in recent months the BSW price has snuck back up to levels last seen two years ago, underpinned by extraordinarily large volumes.
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While those who bought BSW at the bottom in October last year have already had a chance to more than double their investment, there's reason to believe higher prices are possible. More so if a London AIM listing is achieved.
After a patchy history that left the company in financial trouble 18 months ago, its institutional backers asked turnaround specialist Ken Judge of Hamilton Capital Partners to step in.
Judge, an Australian with a worldly bearing and tailoring to match his Monte-Carlo address, wasted little time in sweeping clean and putting the old Black Swan staff to flight. He is also a director of London listed Kenmare Resources which recently raised £3.4 million for its Moma titanium project in Mozambique.
Originally launched in 1983 as one of a number of Australian go-go gold stocks, Black Swan's primary assets are alluvial and kimberlite diamond prospects in the state of Minas Gerais, Brazil. Another key asset is Stephen Fabian, president of the company who combines an investment banking and mining background with grass roots knowledge of the company's leases since he's a Brazilian permanent resident and the only senior staffer to stay on.
The firm has also retained its strong institutional ties with some of the biggest names in the business keeping a tight hold on a rather small float.
BSW is now positioned to benefit from the consolidation of diamond leases in the state, many of them placed in jeopardy by tighter permitting conditions and the continued fall-out from the 1995-'97 scramble. Prior to the deflation caused by the Bre-X scandal, two-dozen firms, flush with soft financing, poured into Brazil. Only three or four of the original firms survived, the others all forfeiting their claims along with their reputations.
One of the first companies to deal with BSW was CDNX listed South Atlantic Resources. Its ambitions stalled after falling foul of permitting and licensing laws, South Atlantic agreed in February to sell its Santo Antonio River Valley alluvial and kimberlite concessions to BSW for just $1.5 million over four years. The new properties are almost contiguous to BSW's concessions along the Paranaiba River and come with a trial mining processing plant, operations facilities, heavy earth moving equipment and 250 hectares of farming property according to Judge.
Judge says results from the properties in the last three months have been exceptional with 762 carats of mainly high quality stones recovered by BSW during a three-month trial period on its first property. BSW's average sales are a more than respectable $700 per carat . The region has a successful history with 12 gem quality stones of over 100 carats each recovered on the Santo Antonio property alone, with ten of those exceeding 300 carats each. Artisanal miners found a 351 carat monster on BSW's property a year ago.
BSW is not selling its diamonds through De Beers, preferring instead to deliver them directly to New York, but says it maintains a good relationship with the organization.
"The firms' common interest relates to kimberlite exploration in the Serra da Canastra region where DeBeers is believed to have found the first kimberlite resource linked directly to alluvial gravels, although development planning for a mine still has some way to go. BSW and DeBeers almost equally divide ownership of this promising region," adds Judge.
For investors, it may not be the mineral potential that excites, but Black Swan's backyard knowledge of Minas Gerais, particularly with the government crackdown on regulatory compliance. If it can demonstrate some synergies from the South Atlantic acquisition, then the 18-month target price of C$2 per share won't be a fantasy.
A decision on an AIM listing is expected to be made by the middle of the year. |
