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Gold/Mining/Energy : REX DIAMOND MINING TSE:RXD -- Ignore unavailable to you. Want to Upgrade?

To: virginijus poshkus who wrote (1829)	10/29/1999 7:49:00 PM
From: George J. Tromp	Read Replies (3) \| Respond to of 2522

Here is the story Vargus: Rex Diamond Mining CEO explains events that caused stock to quadruple Serge Muller, Rex Diamond Mining Corporation Limited.. SERGE MULLER is a President and Chief Executive of Rex Diamond Mining Corporation Limited. (Toronto:RXD.TO). Mr. Muller: Today, we are very much involved in exploration. The diamond business is a very fascinating industry, not only because of the product that embodies all the message of romance, dreams, and emotions. Moreover, I would cite the pure, hard economic facts and figures - this is an industry that produced $7.4 billions worth of rough diamonds a year. This is an industry that, in turn, fuels a $55 billion retail diamond jewelry industry. Looking at the fundamentals, five mines in the world produce about half the world's production. There is a phenomenal concentration here. New mines are rare. Areas that are potential new diamond sources are already explored for the most part. One of the unexplored areas is in Mauritania, a country just south of Morocco. The Northern half of the country is the Sahara desert - almost unpopulated, but with an unexplored and rich underground. There is an operating iron ore mine in the area and our chief geologist, Dr. Luc Rombouts, believed that it represented a very prospective area for diamond exploration. When we started in Mauritania, we were the first. Mauritania had only recently opened up. Until the early 1990s, it was basically a closed country. The resource sector was opened up by the hiring of a World Bank consultant, a fellow Belgian, commissioned to write a new mining code and make it one of the most attractive resource legislation in the world. You can maintain full ownership of your assets. You don't have to let the government have a free carried interest, and the tax code and royalty codes are very attractive. This was really needed in order to attract international investment and develop the country, a vast country with only two million people. Our exploration program last year in Mauritania was extremely exciting. We found diamonds in three areas in that very large concession of ours, which is almost the size of New York State. Today, we have the certainty that in the very near future Rex will end up having three important diamond mines in Mauritania. I will give you a bit of the economics of what diamond mining could represent in terms of profit margins. World averages are such that the cost of production of the ore containing the diamonds is about $24 a ton. However, the wholesale rough value of that same ore is about $52 a ton. You basically double your money mining diamonds. This is why De Beers has been making so much money. This is a very, very profitable industry. But, diamonds are rare. New sources of diamonds are just not readily available. The latest to come onstream is the new Canadian diamond mine in the Northwest Territories, where BHP, an Australian mining major that has recently entered the diamond scene, is now producing diamonds. You know, an interesting change is happening in the industry now. There is a systematic link-up of diamond producers to the retail jewelry industry, all the way to the retail end. You had the link-up a few weeks ago between Aber, the junior partner in Canada of Rio Tinto, and Tiffany's of New York. There is clearly a strategic move developing in the industry. De Beers is also starting to brand its diamonds and offering to the select few willing to pay the premium, diamonds branded with De Beers logo. This is clearly a step towards the downstream retail activities. In the full integration of our group, we go from exploration to production in South Africa, where about 900 people are working in two underground mines. We do our cutting out of Antwerp. Most of the goods, though, are still sold to specialized cutters in the industry. Being an insider of the industry for 20 year, I am aware of the operators' needs and specifications. This way we maximize our prices. It is important because as this is a very competitive industry, you have to target your sales. You have to sell to cutters and polishers only what they need in order to realize the maximum return on your production. Lately, we have even joined forces with talented creators, jewelers and designers of high quality diamond jewelry, with the aim to create our own lines of jewelry containing diamonds from our mines. We are now taking a further step in integrating Rex. In about a month's time, we will be able to offer beautiful Rex branded diamond jewelry for online retail sales through the Internet. We have in the group an Internet and a high-tech section that is working on this project and all will be ready in another month. That will complete the integration of Rex. Rex may still be a junior, but this company has outstanding growth potential. The developments of last year were so positive that our stock has quadrupled in the last half year, rising from CAD $0.75 to CAD $3.00. Have TWST notes emailed to you free: Version: All-Sectors - daily Technology - weekly Healthcare - weekly Consumer - weekly Natural Resources - weekly Industrial & Services - weekly Financial Services - weekly Investing Strategies - weekly Email address: For Subscribers -------------------------------------------------------------------------------- This interview is a small excerpt from a comprehensive interview published in The Wall Street Transcript on 9/20/99. For more information call (212) 952 7400. The Wall Street Transcript does not endorse any of the comments made by interviewees, and does not make stock recommendations. Copyright 1999, Wall Street Transcript Corp. SECTOR LINKS Chemicals Mining & Minerals Oil & Gas