+++ Canadian Diamond mining and exploration Co. Caps & Change:
[see below list for info, comments]
List, sorted by decling market cap, as per 1/1/05
. 2/25/05 YTD Market
. Close Change Cap
Aber Diamond 41.75 -1.6% 2,407,749,471
Tahera 0.49 30.7% 314,774,210
Energem Resources 2.51 32.1% 298,041,168
Shore 5.01 71.0% 338,554,523
Stornoway 1.77 -1.7% 128,562,525
Etruscan 1.75 -5.4% 119,246,785
Mountain Province 1.89 5.0% 99,396,701
Ashton 1.35 28.6% 103,165,684
Archon 1.65 10.0% 80,056,833
Kensington 1.74 64.2% 105,506,141
Diamondex 0.78 -13.3% 47,869,867
SouthernEra Dia 0.44 -12.0% 37,567,384
Diamond Fields 0.435 4.8% 30,005,605
Spider Resources 0.185 27.6% 36,080,248
Diamonds North 1.04 7.2% 29,040,254
Sudbury Contact 0.82 5.1% 25,605,423
Twin 0.19 -7.3% 22,106,914
Metalex 0.88 3.5% 22,961,968
China Diamond 0.125 -3.8% 21,052,082
KWG Resources 0.19 8.6% 22,476,508
Dianor Inc. 0.52 65.1% 31,435,959
Cantex Mine Devel 0.055 -8.3% 15,257,411
Shear 0.45 32.4% 21,494,883
Consolidated Global 0.36 -40.0% 9,437,516
Mountain Lake Res 0.7 -9.1% 13,969,740
GGL 0.205 17.1% 15,566,725
Strongbow 0.365 12.3% 13,483,870
True North Gems 0.42 -2.3% 11,250,751
Arctic Star 0.225 -2.2% 10,802,896
Majescor 0.17 -22.7% 8,013,542
Pele Mountain 0.21 -4.5% 9,721,580
Band-Ore 0.23 -11.5% 8,358,158
Camphor Ventures 0.73 17.7% 9,425,880
Caldera 0.085 -10.5% 5,878,560
Snowfield Develop 0.18 -10.0% 5,815,404
Hudson Resources 0.56 16.7% 6,843,213
Dios 0.47 6.8% 6,113,874
Dunsmuir 0.175 0.0% 5,594,065
Int'l Samuel 0.14 -17.6% 4,128,912
Dentonia Resource 0.165 3.1% 4,027,189
Kettle River Reso 0.27 45.9% 1,760,835
List, sorted by highest YTD Change
. 2/25/05 YTD Market
. Close Change Cap
Shore 5.01 71.0% 338,554,523
Dianor Inc. 0.52 65.1% 31,435,959
Kensington 1.74 64.2% 105,506,141
Kettle River Reso 0.27 45.9% 1,760,835
Shear 0.45 32.4% 21,494,883
Energem Resources 2.51 32.1% 298,041,168
Tahera 0.49 30.7% 314,774,210
Ashton 1.35 28.6% 103,165,684
Spider Resources 0.185 27.6% 36,080,248
Camphor Ventures 0.73 17.7% 9,425,880
GGL 0.205 17.1% 15,566,725
Hudson Resources 0.56 16.7% 6,843,213
Strongbow 0.365 12.3% 13,483,870
Archon 1.65 10.0% 80,056,833
KWG Resources 0.19 8.6% 22,476,508
Diamonds North 1.04 7.2% 29,040,254
Dios 0.47 6.8% 6,113,874
Sudbury Contact 0.82 5.1% 25,605,423
Mountain Province 1.89 5.0% 99,396,701
Diamond Fields 0.435 4.8% 30,005,605
Metalex 0.88 3.5% 22,961,968
Dentonia Resource 0.165 3.1% 4,027,189
Dunsmuir 0.175 0.0% 5,594,065
Aber Diamond 41.75 -1.6% 2,407,749,471
Stornoway 1.77 -1.7% 128,562,525
Arctic Star 0.225 -2.2% 10,802,896
True North Gems 0.42 -2.3% 11,250,751
China Diamond 0.125 -3.8% 21,052,082
Pele Mountain 0.21 -4.5% 9,721,580
Etruscan 1.75 -5.4% 119,246,785
Twin 0.19 -7.3% 22,106,914
Cantex Mine Devel 0.055 -8.3% 15,257,411
Mountain Lake Res 0.7 -9.1% 13,969,740
Snowfield Develop 0.18 -10.0% 5,815,404
Caldera 0.085 -10.5% 5,878,560
Band-Ore 0.23 -11.5% 8,358,158
SouthernEra Dia 0.44 -12.0% 37,567,384
Diamondex 0.78 -13.3% 47,869,867
Int'l Samuel 0.14 -17.6% 4,128,912
Majescor 0.17 -22.7% 8,013,542
Consolidated Global 0.36 -40.0% 9,437,516
This weeks news:
Fri 3:47pm ABZ.TO Canada corporate earnings schedule - Feb 28-Mar 11 - at Reuters
Thu 3:50pm MTX.V Metalex Ventures Ltd - Stock Options - CNW Group
Thu 12:59pm DSP.V Diamondex Resources Ltd.: Extended Term of Warrants - CCNMatthews
Thu 11:06am SDM.TO SouthernEra Diamonds Reports Discovery of New Diamondiferous Kimberlite and Microdiamond Results from its Lac de Gras Project, Northwest Territories, Canada - CNW Group
Wed Feb 23 SGF.TO Shore Gold says diamonds valued at $110 a carat - at Reuters
Mon Feb 21 ACA.TO Ashton Mining of Canada Inc.: Renard Bulk Sample Returns 457 Carats of Diamonds - Business Wire
My Commentary:
Shore stole some of ACA's thunder this week. ACA down 6 cents for the week. Shore closed off its week high of 6.15, clearly a good opportunity to take profits. How long until they announce a financing? finance.yahoo.com
Any comments on DSP's NR: "DIAMONDEX RESOURCES LTD. ("Diamondex") is pleased to announce that it has received TSX Venture Exchange approval to amend the expiry date of 3,812,234 outstanding warrants (the "Warrants") from March 8, 2005, to September 8, 2005. The Warrants will remain exercisable into common shares at a price of $0.85 per common share."
-----------------------
From Franks SH Thread:
"Orion's analyst, George Albino, put out his Research Note today. Its as bullish as it gets. Its too long, but here's some sample comments:
Star Value
· The much anticipated average value per carat has arrived. The Star
Diamond value per carat is $110/ct, with an average modeled value of
$135/ct – this is higher than our expectations of $105/ct.
· The average ‘modeled’ value of $135/ct is the midpoint of the
estimated range of $110/ct-$162/ct. This is based on a statistical
model that estimates the average value of diamonds to be recovered
from the mine based on proportion of large stones.
· With the diamond values in hand, a pre-feasibility study is next.
The study will aim to determine the economic parameters of the project,
along with further exploration and environmental baseline studies.
· At $135/ct, our NAV estimate increases by 79%. Using the $135/ct
value as our new base mode increases our NAV value for the Star Diamond Mine (at 10% discount) to C$689 million from C$385 million.
As a result of the increased NAV, we are adjusting our target price as well. We are increasing our target to C$11.00 from C$6.55.
· We reiterate our Overweight (Speculative) recommendation.
Summary and Investment Outlook
Shore Gold released the diamond parcel value for the Star kimberlite on
Wednesday, February 23. We had expected this to be a defining moment for the Star project – if the diamond value had come in materially below the $100/ct mark we believe the potential returns on the project might not have
justified Shore going to the next stage of evaluation for this large, but low-grade, diamond deposit. In the event, the estimated value exceeded our expectations. The company reported that the value of the 3,050 carat parcel was $110/carat, based on the average of four valuations provided by different groups. The groups included WWW International (which acts as the government diamond valuator for the NWT), R. Steinmetz and Sons (affiliated with Shore Gold shareholder Magma Diamonds), and the diamond marketing groups of global mining giants Rio Tinto and BHP Billiton. The four groups produced a consistent picture. As is common in the diamond world, the groups responsible for the valuations are not keen to be associated with a specific value. However, we do understand that all four estimates were very close, with the difference between the high and low estimates within 6%.
The modeled value is key. Even with a 3,000 carat parcel it is likely that
large diamonds are underrepresented in the diamonds sent in for appraisal. As a result Shore, in common with other companies evaluating diamond projects (e.g. Tahera, De Beers) uses modeled values. The models are empirical, and intended to more accurately reflect the value of stones recovered during commercial scale mining. The modeled values were provided by WWW. This group, in addition to its role as government valuator, has extensive experience in evaluation of diamonds and diamond projects. Undoubtedly Rio Tinto and BHP have the capability of making similar estimates, but these were not within the scope of their involvement with Shore.
The $135/carat is the best estimate for revenue for Star. The range of
modeled values was from $110/ct to as much as $162/ct. Even with 3,000 carats recovered there were only 33 stones greater than 5 carats. The company intends (as we discuss below) to increase the scope of the bulk-sampling program to obtain more large diamonds to better tie down the values of the stones.
An additional 10,000 tonnes will be mined. Shore would ideally like to see a
recovered parcel of 6,000 carats to obtain better representation of large stones, and to reduce the “error bars” around the modeled value.
What Does All This Mean for Shore?
In our view, these data strongly support the idea of an economic diamond
deposit at Star. In our view, the grade/diamond value combination suggests that a profitable mine can be developed at Star. By our estimate (using cost forecasts detailed in our February 9, 2005, initiation report) the project has the potential to provide an after-tax IRR in excess of 30%.
What Is It Worth?
Wednesday’s data was a huge step forward in assessing Star. We previously published tables that gave indicated IRRs and project NPVs at different diamond prices (as well as sensitivities to the US$/C$ rate and diamond grade). We have now inserted the modeled $135/ct value into our model and the results are as shown below (see Exhibit 1 and 2).
We remind readers that, by our estimates, Canadian diamond producer
Aber is trading at essentially its 0% NAV. In our view this represents the
maximum potential upside for Shore – the 10% discounted NAV we employ for our target is a reasonable reflection (in our view) of what De Beers paid during its hostile bid for Winspear Resources in 2000.
Exhibit 1. Orion Target Price (previous, using $105/ct)
Star NPV (10%) - 15cpht, $105/ct ($MM) $385.0
FD Working Capital ($MM) $53.6
TOTAL ($MM) $438.6
Shares FD (MM) 81.7
NAV/sh ($C) $6.55
Source: Orion Securities
Exhibit 2. Orion Target Price (current, using $135/ct)
Star NPV (10%) - 15cpht, $135/ct ($MM) $690.0
FD Working Capital ($MM) $53.6
TOTAL ($MM) $743.6
Shares FD (MM) 81.7
NAV/sh ($C) $11.00
Source: Orion Securities
Summary and Conclusions
With these data we are more confident that a diamond mining industry will
emerge in Saskatchewan. Shore Gold has been a “discovery in slow motion” – the available data have pointed to the likelihood of a mine since we first saw the project three years ago. It has taken the company three years – working at a pace that put many other projects to shame – to reach this point. With an aggressive project through the third quarter (and possibly beyond) Shore will have an immensely better understanding of the project by year-end.
We continue to rate Shore Gold an Overweight (Speculative), but we haveraised our target price to C$11.00 (see our note of February 23) to reflect the better-than-expected diamond values."
LMBF |
