F.P. Article - DiamondWorks set for production at second Angolan mine
By PAUL BAGNELL
Mining Reporter The Financial Post
Tuesday, June 23, 1998
DiamondWorks Ltd. expects to begin commercial production at a new
diamond mine in Angola by the end of this month, the company said
yesterday. Vancouver-based DiamondWorks has begun testing its diamond recovery plant at the Yetwene mine site in northeastern Angola.
Yetwene is expected to produce 100,000 carats of diamonds a year, at an average cost of US$200 to US$250 a carat.
Last July, the company began extracting diamonds at its Luo mine, about 100 kilometres south of Yetwene. Luo is expected to turn out 80,000 carats a year. Both mines produce diamonds from alluvial gravel lying near the banks of the Chicapa River. DiamondWorks says the two mines, when they are running at full capacity, will put the company among the top "three or four" publicly traded diamond producers in the world.
ÿAs operator of the Yetwene mine, the company will receive 50% of
profits under an agreement with partner SML Yetwene, a private Angolan
company. ÿShares of DiamondWorks (DMW/TSE) closed yesterday at $1.10, unchanged from Friday. John Hainey, an analyst at Yorkton Securities Inc. in Toronto, said investors are waiting for the company to establish a track record of diamond production.
He said DiamondWorks' large public float -- it has 95.5 million shares
outstanding -- is another reason for the low share price.
Political risk associated with Angola is a third factor keeping the
price down, he said. ÿThe country was gripped by civil war between 1975 and 1994, when a ceasefire was signed between the government and the rebel National Union for the Total Independence of Angola.
Spokesman Bill Trenaman said so far DiamondWorks has operated in Angola without incident. The Yetwene site was developed under budget, mainly because it could transport material by truck through former UNITA strongholds, he added.ÿLast year, when the company built the Luo mine, materials had to be flown in because of security fears. It employs two security companies at the mine sites, one to safeguard the diamonds and the other to protect its employees.
On May 22, the manager of an Angolan diamond project operated by
Toronto-based SouthernEra Resources Ltd. was shot to death by bandits
believed to be former UNITA members.
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