DIAMOND PAGE — Diamond merchants make their pitch

Canadians have made progress but still have a long way to go when it comes to exploiting diamonds, according to two analysts who spoke at the recent Manitoba Mining, Minerals and Petroleum Convention.

David James of Richardson Greenshields recalled that the opening shot of the still-active rush in the Northwest Territories was a press release dated Nov. 5, 1991. In it, Dia Met Minerals (TSE) reported the discovery of 81 diamonds from 59 kg of drill core from the Point Lake kimberlite pipe. Since then, he said, “the learning curve has taken us to the realization that the first party into production will have an obvious advantage in finding a niche in the 100-million-carat-per-year diamond market.”

Another speaker, Jean-Pierre Colin, president of Toronto-based JP Colin Securities, talked about flow-through financing. He devoted much of his presentation to the potential advantages of diamond mining.

Colin, the chief proponent of Caratax Diamond Exploration Partnership Fund, told assembled executives that the diamond play is too big to ignore. He also warned that domestic companies are being largely shut out by allowing international giants such as BHP Minerals, RTZ (NYSE) and Ashton (TSE) to capitalize on discoveries made by Canadian juniors.

Alluding to estimates of $US300 million in gross annual earnings, an 85% profit margin, and long life for average-sized diamond mines, Colin raised more than a few eyebrows in the generally conservative audience. Later, he told The Northern Miner that it has been difficult attracting the highly speculative investment needed for diamond exploration. He added, however, that the rewards can be enormous.

“We like our portfolio and what it has to offer the investor. And from our standpoint, it is the best lottery in the world. It may take some time, though, to convince Canadian investors that it’s real and here for the long term.”

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