Diamonds North Investor Relations Notes
In line with my theory of an upcoming Diamond bull market, I began my company research by phoning a company called Diamonds North (DDN.V). Why did I decide to call this company first?
Well the one thing that truly makes this company unique among all diamond companies is that it is spinning off its vast uranium assets into a new company to current shareholders called Uranium North. Here is a brief outline of their intentions:
Between 2002 and 2005, Diamonds North aggressively acquired 27 million acres of land prospective for diamonds in Northern Canada. After review of exploration data and historical data, the Company determined approximately three million acres of this land was highly prospective for uranium. By proposing to transfer the uranium assets into a new company, management strongly believes shareholders can capture additional value without dilution to Diamonds North, and without diverting Diamonds North's determination of discovering Canada's next diamond mine.
The new company, Uranium North Resources Corp., will focus on exploring one of Canada's largest prospective uranium land packages. The uranium assets have not been a focus for Diamonds North and have contributed minimal market value to the Company. This transaction exemplifies Diamonds North's business strategy of maximizing value while maintaining its focus on advancing its diamond exploration opportunities.
Under the terms of the proposal, Diamonds North's shareholders will receive one share of Uranium North Resources Corp. for every six shares of Diamonds North Resources Ltd. held on the completion date (to be determined after Diamonds North's Annual General Meeting of May 10, 2006)*. Uranium North will be funded by a planned prospectus offering, followed by a TSX Venture Exchange listing.
This is a bit of a Capstone-like possible speculation because of a dividend spinoff opportunity.
Well anyways, I phoned Diamonds North and I ended up talking to Nancy. She is very nice and knowledgeable so if you don't know anything about the company or diamond mining even, think about giving her a call because she does her job well.
For your information, DDN's market cap is about $38 million with a share price of $0.94.
They have $6 million in the bank which Nancy said should last until the end of the year at least. $4 million will be spent in the coming summer drill program which she said will have plenty of news releases.
Of course the most important (and most difficult to judge) factor of junior mining companies is their management. Nancy said that the president is a BHP alumni. Here is more info from the website:
Mark started his diamond career in the early 90's exploring for diamonds in the Guaniamo district, Venezuela. From there Mark joined BHP & Dia Met Joint Venture, working under the likes of Rory Moore, Hugo Dummet & Charles Fipke at Ekati, where his experience ranged from early exploration to feasibility studies for the Panda & Koala pipes. During this time, 123 kimberlites were discovered, and more than 10 kimberlites were bulk sampled. In 1997, Mark initiated exploration outside of the BHP Ekati Project and become more involved in regional exploration in Canada and abroad managing diamond exploration activity in Eastern Canada and exploring for diamonds in China, Russia and Australia. More recently, Mark was part of the global search team charged with growing the diamond portfolio for BHPB world wide (started the Botswana Initiative). Mark joined Diamonds North Resources as President in April 2002.
The other person with significant diamond experience is Bruce Kielen who is VP of exploration.
Bruce was added to the Diamonds North exploration team in April 2003, and will be involved in all technical aspects of Diamond North's projects. Prior to joining Diamonds North, Bruce spent 7 years at BHP Billiton Diamonds, where he gained exploration experience in Canada (including Nunavut and the Northwest Territories) and internationally including Sweden, the Middle East and Brazil. Bruce possesses a strong technical knowledge of indicator mineral chemistry, assessment of regional terrains and kimberlite target evaluation, especially in glacial environments. He also has experience designing and managing both small and large scale exploration projects.
The thing that is nice with this management team is that they have been together for 3-4 years now working on their goal of finding diamonds in the north. Nancy even boasted that they have a better diamond exploration team right now in the north than BHP!
But don't start thinking that production could begin next year. Far from it. Nancy explained to me that diamond mines take longer to find and develop. In the best case scenario, it could still take 7 to 8 years before production could begin.
Nonetheless, the company is optimistic and they are trying to leverage time and money by using the JV model. Nancy said that over the past few years $45 million was spent on all their properties but only $15 million was from their own money. The rest was from partners like Teck Cominco.
So since I am in the early stages of my diamond research, I can't give any recommendations yet. But I do like the opportunity for getting 2 companies out of 1, especially in 2 great sectors like diamonds and uranium.
Keep in mind that the search for diamonds is probably the most speculative of all mining ventures. The costs are high and dilution is to be expected because of how expensive drilling is.
However, if you hit the jackpot, you really hit the jackpot. So having a small speculative position that if you lost it all wouldn't affect your financial position may be something to think about.
Website: http://www.diamondsnorthresources.com/s/Home.asp
From a simple and quick chart analysis, you can see that their share price has not gone anywhere over the past 2 years. It's actually a little bit lower than 2 years ago. This might mean that the diamond bull market has not yet begun and we may be in for some large gains as we try to catch up to gold, silver, copper, uranium etc.
