THE DIAMOND PAGE — Ocean Diamond lands new listing on CDN

The shares of South African-based Ocean Diamond Mining (ODM) are now being traded on the Canadian Dealing Network under the symbol OCND.

Since its formation in late 1983, the company has mined diamonds using ships equipped to suck diamond-bearing unconsolidated material from the sea-floor off the Southern Atlantic coast of Africa. The diamonds are separated from other material using an X-ray sorter.

The company’s operations began off the territorial waters of the 12 islands skirting the Namibian coast, which, at the time, were still incorporated in the Republic of South Africa.

The mining licence within the 3-nautical-mile limits of the territorial waters of these islands was held at that time by Island Diamonds (IDL), a subsidiary of the Trans Hex Group. In May 1984, ODM became IDL’s sole and exclusive contractor in the mining licence area of the 12 islands. Between 1984 and 1991, geophysical survey operations, bulk sampling and limited mining with small vessels were conducted on the island concessions.

In 1988, prospecting leases on two deep-water sea diamond concessions — areas 6(c) and 14(c), off South Africa’s western coast — were awarded to ODM by the South African government. In April 1994, the prospecting lease agreements on these two sea diamond concessions were renewed for an additional five years. In 1991, ODML signed a deal with Benguela Concessions (Benco) whereby the latter acquired a 49.99% share in each of the two ODM subsidiary companies holding the prospecting leases of concession areas 6(c) and 14(c). Benco can acquire a further 16.68% share of these subsidiary companies, conditional on the expenditure of roughly US$5 million and the awarding of a mining lease by the South African government.

In July 1991, a US$2.5-million financing from a major South African financial institution, Sanlam, enabled ODM to finance the purchase of undersea mining equipment. A converted oil rig supply vessel, which ODM renamed Oceandia, was purchased in 1993.

In August 1991, all the assets and liabilities of Ocean Diamond Mining were transferred from Guernsey to a South African registered company, ODM Southern Africa, and, in January 1992, ODM Holdings (as it became known) acquired a listing on the Johannesburg Stock Exchange. In January 1994, ODM Holdings was added to the Namibian Stock Exchange in Windhoek.

During 1993, ODM expanded its concession acreage by adding two areas — 7(b) and 9(b) — along the South African coast. The following year, the government of Namibia, now in control of its offshore islands, agreed to honor ODM’s mining licence for 15 years.

In June 1994, ODM took over Island Diamonds, thus acquiring direct control over mining rights in the offshore island concessions.

Island Diamonds (now an ODM subsidiary) was awarded prospecting licence 2027 A-I for the seaward extension of these concessions to the 200-metre depth line. This prospecting licence covers a total area of some 5,700 sq. km.

In September 1994, a second major financing, to the tune of US$17 million, covered the commissioning of ODM’s second vessel, the Namibian Gem, which was converted to a full-time mining ship by the following year.

ODM produced 52,310 carats in the 1996 fiscal year (ended March 31) and sold its stones for an average price of US$204 per carat. A year earlier (before the Namibian Gem had been commissioned), production was just 14,289 carats, which sold for an average of US$227 per carat. In both these measures, ODM ranked a distant second to DeBeers Consolidated Mines in off-shore diamond mining.

ODM employs 148 people, 17 of whom work at head office in Cape Town.