ANOTHER MINE ATTACK:
A possible change in the risk/reward weighting. I found this on the Reuter's International Newswire today:
<<<<The attacks came as Australian diamond mining company Ashton Mining said four of its employees -- a Briton, a Brazilian and two Angolans -- were killed in an attack on the Cuango mine Wednesday.
''They were killed in an ambush on their vehicle by an armed band believed to be UNITA rebels while travelling from the Tazua mining area to the project's operational headquarters at Luzamba in Lunda Norte Province,'' Ashton said in a statement.>>>
Aston maintains a 500 person "heavily armed personal security force" and their mine is still subject to attack?.....and with apparent reassurances from the Government that the International mining community would be protected?????
If Ashton's mine can get attacked by Unita with that kind of security, what is DMW to do? (DMW got rid of their mercenary security force.)
Upon hearing this news, I immediately got in contact with DMW. Their response.
<<<<We were just made aware of the attack earlier today. Until we know more about the specifics, I can't comment on our response to the attack vis-a-vis our plans of restarting operations at Yetwene.
Obviously we are deeply concerned that today's killings appears to be another in a growing number of attacks targeting diamond mines in the country, but I until we know more specifics I am unable to comment further.>>>
Now, add to that that DMW needs financing to reopen the mine. Of course there would be a risk tolerance for whoever might want to put up the approx $2million needed. If Ashton's extra-heavily guarded mine in the same area was just subject to an attack, would you cough of that kind of money? I would think twice now given this recent development....which then leads me to my next thought of a recent email from the company, where I asked them "what if the financing wasn't available?"
<<<The worst case scenario is that if financing is not available, the future of our operations in Angola may be in jeopardy.>>>
Furthermore: <<<<The company is relatively cash poor at the present time. The Yetwene mine is designed to be the primary cash producer for the company>>>
My risk/reward tolerance in DMW was based on the following:
1) They could improve security at Yetwene on their own and the Government would do their part to protect as well. Given the Aston attack, apparently they can not.
2) That the attack on the Yetwene mine was a totally random act of violence. Welllll, now it's two "random acts of violence"....or is it random any more?
3) The fighting would not spread any further. The fighting started in Huambo and then Kuito. Then it spread to Melanje which was the limit of my own personal geograpical proximity tolerance. For a map see lib.utexas.edu
An attack on a mine in the Cuango area is beyond my tolerance.
4) The possibility of financing was a reasonably sure expectation. Given the Ashton mine attack...I don't have the same confidence the $$$ will be there. The timing is brutal.
So regretably, I'm out. Everyone has to react to their own risk/reward tolerance, and as of today given the Reuters news, my personal tolerance was crossed. For those with an even higher tolerance, I certainly wish you the very best!! I will continue to do my own DD on the situation, as I'm sure everyone else will as well. Until then, I just have to watch from the side.
My only immediate question is this. Has this news really filtered out yet to the market yet? I looked for a release from Ashton, but there's nothing...and since it just came out today on Reuters, it won't be in press until at least tomorrow. I don't know.
All the best to everyone choosing to stay in. I truly hope the developing situation there turns around for the better.
Regards,
Kevin
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