We have been favouring diamond stocks already for a while. There are two companies going in production in Canada within weeks: Mountain Province Diamonds (MPV) in the Northwest Territories and Stornoway Diamond (SWY) in northern Quebec. Additionally the third largest diamond producers by value in the world, Dominion Diamond (DDC), is trading at a very low level and yields just over 4%.
We should also watch carefully Kennady Diamonds (KDI). The company controls 100% of the Kennady North diamond project immediately adjacent to the Gahcho Kué diamond mine currently being operated by De Beers (51%) and Mountain Province Diamonds (49%). Encouraging bulk sample results have been published in September. The company could potentially strike a deal with De Beers similar to the deal with Mountain Province Diamonds or MPV could be interested to take over Kennady Diamonds.
We believe all four stocks have great potential. Exciting times are ahead for these diamond companies.
- De Beers Reports Solid Results from Its 8th Sight Sale of 2016: Scotiabank Diamond Analyst Craig Johnston this morning flagging that overnight, De Beers disclosed results from its eighth global sightholder sale of 2016, which closed last Thursday. The total provisional value of the sight was $485 million, above the ~$200 million (unconfirmed) value of the comparable sight in 2015 and lower than the $639 million value of last month's sight. Consistent with previous disclosure, De Beers did not discuss pricing. That said, Rapaport's diamonds.net noted that prices were "steady."
Source: De Beers/Anglo American Plc, Rapaport, Scotiabank GBM.
Results from the sight were slightly higher than De Beers' own expectations, which took into account normal seasonal demand patterns as well as the shortened time between this sight and the previous sight. Craig thinks the results could be reflective of manufacturers accelerating demand in order to cut and polish rough diamonds ahead of upcoming holidays and the seasonally strong sales period (near the end of the year). De Beers also noted that demand for rough diamonds within the sight continued to reflect the improved midstream trading environment as compared to last year.
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